Sri Lanka’s currency, despite coming under pressure from an appreciating dollar, still supports sound investment in the equity market, the Wall Street Journal reported.
The Journal, in its Frontiers segment published yesterday, quoted from research done by frontier-focused investment bank Renaissance Capital Analyst Daniel Salter, who believes that Sri Lanka has the right ingredients to be a strong investment.
The excerpt on Sri Lanka from the article is given below.
Focusing on key indicators such as recent credit growth, currency overvaluation and external debt levels, the firm found Pakistan, Egypt, Kenya, Tunisia and Sri Lanka could also present problems for investors if the market environment worsens—for example, through intensifying trade disputes or further appreciation in the dollar.
Sri Lanka may suffer less than most, though, Salter notes, as it tends to be among the economies least affected by changes in the dollar’s value. Investment firm Aberdeen Standard Investments’ Senior Investment Manager James Thom believes Sri Lanka’s market has great potential.
“Although the economics and politics can be a bit challenging, the market’s looking pretty cheap at the moment,” he said. Thom, whose fund takes a stock-picking approach to building its portfolio, notes the macroeconomic and political picture in the South Asian nation can be misleading. “That’s creating opportunities for us at a company level,” he said. “All the ingredients are there for [a break-out].”