Successive months of losses at CSE worry investors; Rs. 90 b dividend windfall to rescue?

Tuesday, 1 April 2025 03:45 - - {{hitsCtrl.values.hits}}

The Colombo stock market last week ended March suffering its second consecutive month of losses, raising concerns among investors and promoters.

The indices suffered a 4% dip on top of over a 3.6% dip in February. This saw both indices turning year-to-date (YTD) negative.

Some analysts said that having gained by 50% in 2024 – thereby becoming the second best performing frontier market – followed by a 4% gain in January, the Colombo Stock Exchange (CSE) saw a correction and consolidation thereafter.

Though remaining very attractive in terms of valuation, the CSE has been struggling in recent weeks.

Brokers are hopeful that buying will return at CSE with the onset of impressive dividends by listed entities, especially the banks which accounted for over 50% of the total.

As per Capital Trust, investors stand for a Rs. 88 billion dividend windfall in March and April. Last week, Hayleys PLC and listed subsidiaries announced impressive interim and final dividends, which have been welcomed by the market.

Last week’s ‘Invest Sri Lanka’ forum organised by the CSE and the Securities Exchange Commission (SEC) saw various speakers reiterating Colombo’s attractiveness as well as the future upside.

However, despite the approval of the 2025 Budget by Parliament and release of the International Monetary Fund’s (IMF) latest tranche of funding, as well as high dividends by listed companies, local investor sentiment remains besieged. Some linked it to apparent slow progress in decisive actions on the part of President Anura Kumara Disanayake-led National People’s Power (NPP) Government to kick-start growth, new capital expenditure etc., whilst the private sector too appears to be still maintaining a wait and see stance.

To see a realistic rebound, brokers and promoters have only two weeks before the Sinhala-Hindu festivals in mid-April and failure would mean lacklustre sentiment will persist longer.

NPP members showcased the sharp gains in the CSE after the Presidential poll in September and the Parliamentary Elections in November as a vote of investor confidence, but with consecutive monthly losses up to March, the new Government now cannot ignore the dismal performance of the capital markets nor the uneasiness among investors, according to some analysts.

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