Sri Lanka Outlook 2018- Strategy Report

Sri Lanka Strategy Report – January 2018

•  The GoSL is expected to continue its fiscal consolidation, in line with the IMF’s extended fund facility agreement thresholds, with a focus on strengthening of macroeconomic fundamentals and implementing structural reforms
• Forward market valuation of 9.6x for 2018E is at a discount to regional peers. The local equity market has been a laggard amongst regional peers, primarily due to relatively high interest rate pressures and lack of clear policy direction over the past two years, though both aspects seem to be shifting now. Consequently, the market is expected to witness gains in 2018E
• After a considerable delay, Local Government elections are being held island wide on 10 Feb 2018. Though a relatively minor election with low voter turnout, the outcome of same will indicate the strength and standing of the current coalition Government
• GoSL has also set its sight on attracting US$50bn worth of investment in the next five to ten years and is focused on accessing bigger markets through free trade agreements with India, China and Singapore
• The Megapolis development project, Colombo Financial City and development of Hambantota port to open up greater investment opportunities for both domestic and foreign investors.  Further, the GoSL called for a request for proposal (RFP) to find investors for two state-owned hotels, Grand Hyatt Colombo and Hilton Colombo, with potential partial listings of other SOEs also in the pipeline

*** All valuations and market data in this report are as at 05 January 2018***

Source: CT CLSA

Image Courtesy: CT CLSA