Saturday, September 23, 2023
HomestocksIs Sri Lanka the new investment darling?

Is Sri Lanka the new investment darling?

Should Sri Lanka's market be on your radar after its strong start to the year bucked the downtrend in most emerging markets?

The Colombo market's All-Share Index has tacked on around 4 percent so far in January after gaining nearly 5 percent in 2013, even as many of its regional counterparts have lost ground.

Additionally, while many regional markets experienced outflows of foreign funds last year amid concerns over tighter liquidity after the U.S. Federal Reserve first broached the idea it would begin to taper its asset purchases, the Colombo market saw net foreign inflows of almost 22.9 billion Sri Lankan rupees in 2013.

(Read more: Investors to eye riskier markets in 2014: Control Risks)

Some regional markets have raised interest rates to try to prevent fund outflows, but Sri Lanka has been lowering its rates.

"We have seen inflation at the lower levels. We have been seeing the growth at the right levels. We have seen the external sector coming back to fairly robust level. So all those gave us the confidence that we were on track to having inflation at lower levels in the future," Ajit Nivard Cabraal, the governor of Sri Lanka's central bank told CNBC.

He expects the economy will grow around 8 percent in 2014, citing two major developments: the end of the civil war in 2009 and the repositioning of the economy toward services.


Most Popular