Hardman & Co. Leaders in Corporate Research
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Leaders in Corporate Research
The Sri Lankan Equity Market
World’s Top Performer in 2010.
12 January 2011
The Sri Lankan equity market finished the year 96%* higher than itstarted it, making it the top performing equity market in the worldduring 2010.
Every Asian and Emerging Market Investment fund of any sizeneeds to obtain some knowledge of this market.
Key facts on the Sri Lanka stock market are:
There is rapid eps growth. The last quarterly earningsfigures for the market were up 202%. The 22 largestcompanies showed eps growth of 71% for the first ninemonths of 2010.
earnings growth forecasts do not yetreflect the proposed reduction in Corporation Tax, whichwill boost both quoted company eps and economicactivity generally.
Last year’s stock market growth was achieved without‘hot money’ inflows from abroad. Overall, there was a net
of foreign money during the year, particularlyduring the first nine months.
The market p/e ratio is higher than many comparatives.This is, however, based on historic earnings.
Nationally, GDP growth in 2010 is expected to be 8%, thefastest rate of growth since 2002. The growth is comingfrom all three main sectors of the economy, i.e. theservice industry (including tourism), manufacturing andagriculture.
The national Budget deficit, while significant, isnarrowing. Rising inflation, driven by food and oil imports,is more of a concern, but the Central Bank believesinflation will remain in single digits in the coming year.
The national economy is becoming more open. Theimport duty on vehicles was halved last year, andcustoms duties for raw materials and capital equipmentreduced.
There are as yet no ETFs for the Sri Lanka market.Hardman & Co has produced this research is association with AsiaSecurities, Sri Lanka’s premier, and largest, stockbroking firm.Hardman & Co will be regularly producing research written by
’ analysts over the coming months.
Asia Securities’ senior management will be visiting Londonshortly in order to meet investment managers and strategists at leading UK investment funds. Please phone or email for details.
* As measured by the Colombo All Share Index
TOP 5 SECTORS FULL YEAR 2010
Trading +462%Stores & Supply +314%Motors +232%Services +148%Banks Finance & Insurance +141%
BOTTOM 5 SECTORS FULL YEAR 2010
Land & Property +39%Telecoms +34%Healthcare +24%Construction & Engineering +16%Investment Trusts -6%
TOP 5 SECTORS OVER 3 MONTHS
Construction +10.3%Information Technology +9.2%Oil Palms +8.3%Motors +3.8%Stores & Supply +2.3%
BOTTOM 5 SECTORS OVER 3 MONTHS
Financial Services -8.1%Healthcare -8.4%Power & Energy -12.6%Footwear -14.1%Land & Property -16.0%
Roger Hardman/RobinAbeyesinhe/Sonia Kaur
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