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Tundra Fonder AB Founding Partner/Chief Investment Officer Mattias Martinsson
Tundra Fonder AB Founding Partner/Chief Investment Officer Mattias Martinsson yesterday in Colombo expressed confidence that Sri Lanka can once again be a safe haven for emerging market investors.
Tundra Fonder is a Swedish asset manager specialising in frontier markets, the new emerging markets. 13% of its Assets Under Management (AUM) is in Sri Lanka, the third largest after Pakistan (33%) and Vietnam (16%).
Making a presentation titled “A Comparative Analysis on Sri Lanka’s Stock Market within the Asian Frontier Markets” at the Colombo Stock Exchange (CSE)-Securities and Exchange Commission (SEC) organised ‘Invest Sri Lanka’ forum yesterday, Martinsson said Sri Lanka has pre-conditions for a return to safe-haven status and given the country’s strategic edge from geographic location, services sectors such as tourism and logistics have great growth prospects.
He also acknowledged the reset in Sri Lanka following the political and economic crisis of 2022. It was emphasised that size was not everything, citing the example of Singapore, which, despite being small, managed to attract very high Foreign Direct Investment (FDIs).
In his presentation, he listed a large number of listed companies, good corporate quality, positive perception, and no capital gains for foreigners as positives of Sri Lanka. However, high transaction costs (100 basis points versus 15-20 basis points in peer markets) and low liquidity were listed as negatives or constraints.
Martinsson also stressed the importance of minimising currency risk.
He also said that Sri Lanka needs adequate investments in improving physical and digital infrastructure and that this could be done by leveraging Public-Private Partnerships (PPPs). “Fiscal responsibility is essential as risks remain,” Martinsson said.
He also emphasised the need to improve liquidity at the CSE, noting that it is the core driver of long-term valuations in emerging and frontier markets.
