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The market forward PE for 2012E is between 10-11X if companies grow between 25-30%. Our economic growth is quite impressive and we must hope the Western Economic crisis recovers so the global economy moves smoothly. This will ensure some FDI for us.
Next year couple of major hotels will start building and they will bring in FDI for this. Banks are going to borrow abroad and bring in more dollars. There is plenty of land in Colombo identified for development and with the picking up of few projects more foreigners will get attracted.
When looking at the market, it is well poised now. Trading at around trailing14-14.2X if you take Sept results into account and CSE mentions 15.7X but without taking September results into consideration. These are good valuations for emerging markets.
With market projected to be trading at forward 10-11X we can expect the market to pick and move towards a safe 8500-9000 points over the next year easily provided domestic and Global conditions remain stable/improve.
This can be justified by the fact that there are good valuable companies trading between 6-10X and their prices will pick up with their staggering growth. I feel the rally will be driven by banks and finance sector with attractive 2011E earning and future growth prospects. My only fear is that when a sector does well, the government pokes its finger there. So lets wait till the budget tomorrow to see.
Currently over the last week valuable low PE high good growth fundamental stocks were on the top of turnover list indicating intelligent investors collecting these stocks.
When there is a diamond (CSE emerging market with good future value) on the floor, very soon someone will spot it!
Cheers!
Next year couple of major hotels will start building and they will bring in FDI for this. Banks are going to borrow abroad and bring in more dollars. There is plenty of land in Colombo identified for development and with the picking up of few projects more foreigners will get attracted.
When looking at the market, it is well poised now. Trading at around trailing14-14.2X if you take Sept results into account and CSE mentions 15.7X but without taking September results into consideration. These are good valuations for emerging markets.
With market projected to be trading at forward 10-11X we can expect the market to pick and move towards a safe 8500-9000 points over the next year easily provided domestic and Global conditions remain stable/improve.
This can be justified by the fact that there are good valuable companies trading between 6-10X and their prices will pick up with their staggering growth. I feel the rally will be driven by banks and finance sector with attractive 2011E earning and future growth prospects. My only fear is that when a sector does well, the government pokes its finger there. So lets wait till the budget tomorrow to see.
Currently over the last week valuable low PE high good growth fundamental stocks were on the top of turnover list indicating intelligent investors collecting these stocks.
When there is a diamond (CSE emerging market with good future value) on the floor, very soon someone will spot it!
Cheers!
