Sri Lanka’s Stock Market Is Up 30% In 2021 And Has Doubled From Its 2020 Lows
While attention in the U.S. may be focused on the ongoing short squeezes in a few select names, the Sri Lankan stock market – as a whole – isn’t far behind.
Stocks in Sri Lanka have returned a “world beating” 30% so far this year, Bloomberg noted on Wednesday. The returns are eye popping, especially given that we are only 28 days into the new year.
Traders in Sri Lanka have bought $802 million worth of equities this month, the report notes, which is 45% of last year’s total domestic purchases. The domestic inflows come as many overseas investors leave the market, selling a net $25 million in shares in January. In 2020, overseas investors had outflows of $273 million.
Joshua Crabb, a Hong Kong-based money manager, told Bloomberg: “As the pandemic rebound got underway, abundance of global liquidity, substantial rate cuts and domestic retail participation have helped fuel the rally. Keep in mind the currency has also weakened, which makes exports more competitive, encourages tourism and introduces inflation, which helps nominal assets like equities.”
The country’s Colombo Stock Exchange All Share Index tumbled in March 2019 with global markets as a result of the global pandemic and localized political uncertainty. But the country’s central bank cut its key rate by 200 basis points and has provided liquidity, prompting the nation’s market to scream higher.
The market has doubled off of its lows and the country has now even re-opened some of its airports for international tourism again. The country also recently approved the Oxford/AstraZeneca Covid vaccine for emergency use, providing another tailwind for the market heading into the Spring.
Crabb concluded: “In the near term, I would expect the market to consolidate its gains. At current valuations, we really need to see an improvement in the economy and in company earnings to see another leg up.”
Thu, 01/28/2021 – 19:10