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FINANCIAL CHRONICLE™ » EXPERT CHRONICLE™ » Sri Lanka - Interesting opportunity for foreigners

Sri Lanka - Interesting opportunity for foreigners

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Antonym

Antonym
Vice President - Equity Analytics
Vice President - Equity Analytics
In this post, the writer (Daniel Greenberg) describes Sri Lanka as 'An Emerging Economy that is Increasingly Attractive to Foreign Investors'.

Greenberg cautions that we should stick to our newly created policies - aimed to create a knowledgeable labor force, improve infrastructure, and reduce debt. He concludes that foreign investors recognize our economic improvements and are more willing to invest in the Sri Lankan economy now that the country is more politically stable.

http://bigemergingeconomies.wordpress.com/category/sri-lanka/

Share this post on: redditgoogle

rocksan

Post Sun Jul 17, 2011 12:45 pm by rocksan

Yes, we could have attract more foreign investors if the politcos didn't play havoc with rule of the country starting from HR violations, Katunayake incident, CPC petrol fiasco, CPC fuel hedging deal, Sri Lanka Cricket and so on and so forth. Don't think those are only internal matters no they are not investors look in to these matters as well how the country governed and reputation to HR.

Anyway we have lot of international pressure due to india also pressing on the issue of CH4

RichDad

Post Sun Jul 17, 2011 2:31 pm by RichDad

Antonym thanks for the update. Hope our market will benefit with these kind of recommendations and true enough rocksan hope the authorities and officials won't do something stupid like that again.

But today papers read, Sri Lanka loses race in hedging payments. How will this US$340 million (Rs. 37.4 billion) case will have an impact on the market?

http://www.sundaytimes.lk/110717/BusinessTimes/bt01.html

UKboy

Post Sun Jul 17, 2011 3:11 pm by UKboy

1st of all I need thank Antonym for opens a valuable thread (its bit rare nowadays)
2ndly I would like to thanks Rocksan for summarise all the negative impacts/challengers we have at the moment.
Personally I think still Sri Lanka is an OK (I would give 5 or 6 out of 10) country for foreign direct investments FDI. But sadly I don’t think we have proactive people at the highest level in BOI to attract more and more FDIs. Sri Lanka is well known for a country without any policy last at least for 10 years. Also any FDI has to wait so long before they can start up a business in Sri Lanka.
Our senior offices always mixed up things. Recent Shangri La chaos, Kalpitiya Islands lease chaos are typical examples for that.

Antonym

Post Sun Jul 17, 2011 4:18 pm by Antonym

@RichDad wrote:But today papers read, Sri Lanka loses race in hedging payments. How will this US$340 million (Rs. 37.4 billion) case will have an impact on the market?

http://www.sundaytimes.lk/110717/BusinessTimes/bt01.html

In March 2009, our foreign exchange reserves stood at US$ 1.3 billion. By the beginning of 2011, that had gradually increased to US$ 6.6 billion; the latest available figure is US$ 7.0 billion (July 2011). Now, if we have to pay US$ 340 million, that means nearly 5% of our forex reserves will go.

To put this figure of US$ 340 million in perspective, it is roughly equal to:
- One month's remittances from our migrant workers or
- The cost of six weeks of petroleum imports.

RichDad

Post Sun Jul 17, 2011 5:09 pm by RichDad

@Antonym wrote:In March 2009, our foreign exchange reserves stood at US$ 1.3 billion. By the beginning of 2011, that had gradually increased to US$ 6.6 billion; the latest available figure is US$ 7.0 billion (July 2011). Now, if we have to pay US$ 340 million, that means nearly 5% of our forex reserves will go.

To put this figure of US$ 340 million in perspective, it is roughly equal to:
- One month's remittances from our migrant workers or
- The cost of six weeks of petroleum imports.

OMG! Such a huge loss! It's likely this will be put on the shoulders of the public with an increase in local fuel prices. And this particular incident will leave negative marks on foreign investors' scorecard about SL.

Commercial High Court in London demands to pay US$ 162 million (Rs 17.8 billion) along with the interests!

I can't believe this bloody idiot CPC chairman Asantha de Mel!! Now it's on public's shoulder!!

http://www.colombopage.com/archive_11A/Jul14_1310656205CH.php

rocksan

Post Sun Jul 17, 2011 5:19 pm by rocksan

Very true UKBOY BOI is in a mess, see the ST article

http://www.sundaytimes.lk/110710/BusinessTimes/bt01.html

I may have posted a some negative facts, but truth is bitter and I cannot see any rosy pictures in this country
politicos creating havoc

Note : Thank you for the guy who gave me negative it really encourages Laughing

UKboy

Post Sun Jul 17, 2011 5:59 pm by UKboy

@rocksan wrote:
I may have posted a some negative facts, but truth is bitter and I cannot see any rosy pictures in this country
Dont give it up rocksan, most of my - reps for criticising GREG. Many other - reps for posts didnt look right at that time but slowly and steadily all become the bitter truth. Im not surprised to see yours..! day by day you get used to these things.

avatar

Post Sun Jul 17, 2011 7:58 pm by Academic

@RichDad wrote:Antonym thanks for the update. Hope our market will benefit with these kind of recommendations and true enough rocksan hope the authorities and officials won't do something stupid like that again.

But today papers read, Sri Lanka loses race in hedging payments. How will this US$340 million (Rs. 37.4 billion) case will have an impact on the market?

http://www.sundaytimes.lk/110717/BusinessTimes/bt01.html

Technically this is a legal contact so it is bonded. A party cant deny payments just because a position converted into loosing. The problem with this hedging activity is not considering/hedging downside risk of oil prices. In a way, as someone observed the trend oil barrel behaved at that time, it was commonly expected oil prices go up further. Hence, at the point CPC entered into the agreement, few argued against it. If anyone criticized CPC at that time (before oil price started declining) "my hat-off to him/her".

Further, though not related, I expect oil prices to decline/stabilize in near future as global economy slow down decreases demand for oil. IMHO, this is the point what CPC missed at that time.

chamith

Post Sun Jul 17, 2011 8:37 pm by chamith

Hey UKBoy...

Didn't you go for the channel 4 protest today in London?
Watch channel 4 news today to see if they say anything.
I heard that they are going to broadcast 'killing fields' again. The same thing happen to NEWS OF THE WORLD should happen to channel 4 as well.

chamith

Post Sun Jul 17, 2011 8:46 pm by chamith

@Academic wrote:
@RichDad wrote:Antonym thanks for the update. Hope our market will benefit with these kind of recommendations and true enough rocksan hope the authorities and officials won't do something stupid like that again.

But today papers read, Sri Lanka loses race in hedging payments. How will this US$340 million (Rs. 37.4 billion) case will have an impact on the market?

http://www.sundaytimes.lk/110717/BusinessTimes/bt01.html

Technically this is a legal contact so it is bonded. A party cant deny payments just because a position converted into loosing. The problem with this hedging activity is not considering/hedging downside risk of oil prices. In a way, as someone observed the trend oil barrel behaved at that time, it was commonly expected oil prices go up further. Hence, at the point CPC entered into the agreement, few argued against it. If anyone criticized CPC at that time (before oil price started declining) "my hat-off to him/her".

Further, though not related, I expect oil prices to decline/stabilize in near future as global economy slow down decreases demand for oil. IMHO, this is the point what CPC missed at that time.

Some says its due to the bubble, n it blew up. As i remember prices went as high as 112$ and fall down to 108$ or something n they picked up a bit again. Then again one of they Oil organization decided to put some millions of oils into the open market to cool down the prices. This is the 2nd time the organization had to release their reserves to stable to oil prices. Due to all these the increasing price of oil came to a halt, but i m sure the game will continue in couple of months.

avatar

Post Sun Jul 17, 2011 9:00 pm by Aamiable

@Antonym wrote:In this post, the writer (Daniel Greenberg) describes Sri Lanka as 'An Emerging Economy that is Increasingly Attractive to Foreign Investors'.

Greenberg cautions that we should stick to our newly created policies - aimed to create a knowledgeable labor force, improve infrastructure, and reduce debt. He concludes that foreign investors recognize our economic improvements and are more willing to invest in the Sri Lankan economy now that the country is more politically stable.

http://bigemergingeconomies.wordpress.com/category/sri-lanka/



CSE also need to demonstrate that stock exchange in investor friendly, …no more credit bubbles,… regulations remain unchanged, reliable and dependable…. Then only CSE can expect more investments. Smile

player

Post Sun Jul 17, 2011 9:34 pm by player

@Antonym wrote:In this post, the writer (Daniel Greenberg) describes Sri Lanka as 'An Emerging Economy that is Increasingly Attractive to Foreign Investors'.

Greenberg cautions that we should stick to our newly created policies - aimed to create a knowledgeable labor force, improve infrastructure, and reduce debt. He concludes that foreign investors recognize our economic improvements and are more willing to invest in the Sri Lankan economy now that the country is more politically stable.

http://bigemergingeconomies.wordpress.com/category/sri-lanka/

major drawbacks
*lack of supply and demand for new issues on primary markets(will be in upcoming IPOS)
*inefficient markets,where security prices do not reflect all available info,
*serious lack of liquidity(you cant get out easily with min losses,cnt do large block orders)
*inadequate market regulations,security registration,disclosure practices

that's why foreigners dont come.......they need to enter and exit as they wish in anytime

avatar

Post Sun Jul 17, 2011 9:55 pm by invest-abc

@UKboy wrote:1st of all I need thank Antonym for opens a valuable thread (its bit rare nowadays)
2ndly I would like to thanks Rocksan for summarise all the negative impacts/challengers we have at the moment.
Personally I think still Sri Lanka is an OK (I would give 5 or 6 out of 10) country for foreign direct investments FDI. But sadly I don’t think we have proactive people at the highest level in BOI to attract more and more FDIs. Sri Lanka is well known for a country without any policy last at least for 10 years. Also any FDI has to wait so long before they can start up a business in Sri Lanka.
Our senior offices always mixed up things. Recent Shangri La chaos, Kalpitiya Islands lease chaos are typical examples for that.

I agree with your comment on saying that SL lacks proactive people at the highest level in BOI to attract more and more FDIs. But, I totally disagree with your comment on SL is an OK country (ranked 5 to 6 out of 10) for FDI's. I think this is a total underestimation of the potential and where we at the moment. I believe SL is one of the best places for FDI's. At the moment in the Global economy ASIA is the place to be. ASIA has 5 out of the ten fastest growing economies in the World. Based on the latest IMF figures we are at the 9th place in the World rankings in terms of real GDP Growth rates. Even if we look at the other South Asia countries like Bangladesh / Pakistan etc. the amount of red tape and corruption in these countries are way beyond what we have here. India is bit better comparatively. I think with the good intellectual capital backed by long lasting peace and political stability will keep SL at top of the list in terms of attracting foreign investments in the future. This is just my opinion...

avatar

Post Sun Jul 17, 2011 10:39 pm by Academic

@chamith wrote:
@Academic wrote:
@RichDad wrote:Antonym thanks for the update. Hope our market will benefit with these kind of recommendations and true enough rocksan hope the authorities and officials won't do something stupid like that again.

But today papers read, Sri Lanka loses race in hedging payments. How will this US$340 million (Rs. 37.4 billion) case will have an impact on the market?

http://www.sundaytimes.lk/110717/BusinessTimes/bt01.html

Technically this is a legal contact so it is bonded. A party cant deny payments just because a position converted into loosing. The problem with this hedging activity is not considering/hedging downside risk of oil prices. In a way, as someone observed the trend oil barrel behaved at that time, it was commonly expected oil prices go up further. Hence, at the point CPC entered into the agreement, few argued against it. If anyone criticized CPC at that time (before oil price started declining) "my hat-off to him/her".

Further, though not related, I expect oil prices to decline/stabilize in near future as global economy slow down decreases demand for oil. IMHO, this is the point what CPC missed at that time.

Some says its due to the bubble, n it blew up. As i remember prices went as high as 112$ and fall down to 108$ or something n they picked up a bit again. Then again one of they Oil organization decided to put some millions of oils into the open market to cool down the prices. This is the 2nd time the organization had to release their reserves to stable to oil prices. Due to all these the increasing price of oil came to a halt, but i m sure the game will continue in couple of months.

The barrel hit 147 before decline. See some 2008 news articles on this http://money.cnn.com/2008/10/10/markets/oil/index.htm .

UKboy

Post Mon Jul 18, 2011 12:05 am by UKboy

@invest-abc wrote:
I agree with your comment on saying that SL lacks proactive people at the highest level in BOI to attract more and more FDIs. But, I totally disagree with your comment on SL is an OK country (ranked 5 to 6 out of 10) for FDI's. I think this is a total underestimation of the potential and where we at the moment. I believe SL is one of the best places for FDI's
Hello invest-abc,
I said STILL Sri lanka is an OK country. I dont think we can give more than 6/10 for Sri Lanka. Yes Sri Lanka may have the potential but unless someone come forward and clear the path, no point talking about the potential.
@invest-abc wrote: At the moment in the Global economy ASIA is the place to be. ASIA has 5 out of the ten fastest growing economies in the World. Based on the latest IMF figures we are at the 9th place in the World rankings in terms of real GDP Growth rates.
Agree Asia is growing fastest & dont forget all our main competitors are also in Asia. China, Vietnam, Indonesia, Philippine, India etc all give us high level of competition when it comes to FDIs.

@invest-abc wrote: Even if we look at the other South Asia countries like Bangladesh / Pakistan etc. the amount of red tape and corruption in these countries are way beyond what we have here. India is bit better comparatively.
Pakistan sits out of FDI radar unless Pakistan origin people come and do investments. Remember Bangladesh always provides cheaper labour than us. Large scale labour consuming manufacturing plants tends to select Bangladesh ahead of Sri Lanka. Luckly their political situation is not so good nowadays.
India always stays ahead of us. Cheap labour & huge domestic market look very attractive.

@invest-abc wrote: I think with the good intellectual capital backed by long lasting peace and political stability will keep SL at top of the list in terms of attracting foreign investments in the future. This is just my opinion...
This is exactly why I gave 5-6 out of 10. We have the political stability but we are lacking of crystal clear policies. Our production cost is too high & its a major negative point. FDI may come for tourism sector in future but manufactruing sector I highly doubt it Rolling Eyes

Even for call centres , Sri Lanka sits behind countries like India and philippine.

If I'm a foreign investor I would select Vietnam ahead of Sri Lanka. Sorry Its the truth. But same as you I hope things will change soon rather later.

avatar

Post Mon Jul 18, 2011 6:49 am by invest-abc

@UKboy wrote:
@invest-abc wrote:
I agree with your comment on saying that SL lacks proactive people at the highest level in BOI to attract more and more FDIs. But, I totally disagree with your comment on SL is an OK country (ranked 5 to 6 out of 10) for FDI's. I think this is a total underestimation of the potential and where we at the moment. I believe SL is one of the best places for FDI's
Hello invest-abc,
I said STILL Sri lanka is an OK country. I dont think we can give more than 6/10 for Sri Lanka. Yes Sri Lanka may have the potential but unless someone come forward and clear the path, no point talking about the potential.
@invest-abc wrote: At the moment in the Global economy ASIA is the place to be. ASIA has 5 out of the ten fastest growing economies in the World. Based on the latest IMF figures we are at the 9th place in the World rankings in terms of real GDP Growth rates.
Agree Asia is growing fastest & dont forget all our main competitors are also in Asia. China, Vietnam, Indonesia, Philippine, India etc all give us high level of competition when it comes to FDIs.

@invest-abc wrote: Even if we look at the other South Asia countries like Bangladesh / Pakistan etc. the amount of red tape and corruption in these countries are way beyond what we have here. India is bit better comparatively.
Pakistan sits out of FDI radar unless Pakistan origin people come and do investments. Remember Bangladesh always provides cheaper labour than us. Large scale labour consuming manufacturing plants tends to select Bangladesh ahead of Sri Lanka. Luckly their political situation is not so good nowadays.
India always stays ahead of us. Cheap labour & huge domestic market look very attractive.

@invest-abc wrote: I think with the good intellectual capital backed by long lasting peace and political stability will keep SL at top of the list in terms of attracting foreign investments in the future. This is just my opinion...
This is exactly why I gave 5-6 out of 10. We have the political stability but we are lacking of crystal clear policies. Our production cost is too high & its a major negative point. FDI may come for tourism sector in future but manufactruing sector I highly doubt it Rolling Eyes

Even for call centres , Sri Lanka sits behind countries like India and philippine.

If I'm a foreign investor I would select Vietnam ahead of Sri Lanka. Sorry Its the truth. But same as you I hope things will change soon rather later.

Uk Boy, Thanks for your explanation...Just a word about Bangladesh..I think still we have the edge over Bangladesh. Even though, Bangladesh provides cheap labour, their productivity stands way below SL. So even most Garment Manufactures who have shifted to Bangladesh have realized that their ultimate labour cost per unit is same or higher compared to SL. Furthermore, regular power cuts and the energy problem is much worst than SL. High Red tape & Corruption also adds to the problems. However, a key highlight in Bangladesh is that their distribution / transport cost is much low due to use of natural gas instead of petrol.

Anyway, agree with you that SL has a long way to go and given the right direction there is always the high potential to be successful. Lets hope for the best bounce bounce

RichDad

Post Mon Jul 18, 2011 9:01 am by RichDad

Sri Lanka received a record $236 million of foreign direct investment in the first quarter of 2011, with the tourism industry attracting most of the inflows, the island’s Board of Investment said June 7.

The economy is expected to grow sustainably at around 8 to 9 percent over the medium term as confidence is further bolstered and investment picks up.

Sri Lanka has a number of challenges including high fiscal deficit, lack of infrastructure and high dependence on short-term foreign financing,” said Morten Bugge, chief investment officer at Kolding, Denmark-based Global Evolution AS, said July 15. The country also has “high growth, attractive labor costs and a unique strategic geographical location that could be the opportunity for the future, especially in port activities.
It's good time the country work on the challenges and capitalize on the strengths.

The central bank has refrained from boosting rates since 2007, breaking with Asian nations from India to Thailand that have tightened monetary policy to damp price pressures.

Sri Lanka’s inflation will ease over time and the nation’s monetary conditions support faster expansion, according to the International Monetary Fund, which in April disbursed $218.3 million to Sri Lanka as part of its $2.6 billion loan package.

“We would like to see if the improved peace conditions can also attract more foreign direct investment and tourism,” Global Evolution’s Bugge said. “Sri Lanka is a good story. I would like to see some of the things above being handled before additional rating upgrades.”

This kind of positive WOM and recommendations will be favorable on SL and in a time some wealthy nations are suffering, if we build on our strengths with correct strategies while facing and overcoming the weaknesses SL will be able to repeat recent history!!

http://www.bloomberg.com/news/2011-07-18/sri-lanka-rating-raised-to-positive-by-moody-s.html

RichDad

Post Mon Jul 18, 2011 4:45 pm by RichDad

Malaysian investors too eye on Sri Lanka.

MALAYSIAN businessmen should make a beeline for Sri Lanka to take advantage of new business opportunities that have been popping up there since the end of the conflict and return of political stability in the island state, said Tan Sri Soong Siew Hoong, Chairman of the SMI Committee of the Federation of Malaysian Manufacturers (FMM) who had recently returned after leading a trade delegation to Sri Lanka.

“The presence of so many heavy duty trucks and container vehicles all over the island indicates a sharp pick-up in exports and imports and manufacturing activity compared to three years ago”, he added.

Sri Soong is interested in rubber Wink
“The Sri Lankan government is eager to create employment and the country has vast natural resources especially rubber. Malaysians can set up industries to manufacture a wide range of rubber goods for the South Asian and world markets,” Tan Sri Soong said.

I like the way Sri Soong thinks Smile
“Sri Lanka is now going through what Malaysia went through in the ’60s, evolving from an agricultural economy to a manufacturing and industrial economy. We have 40 years of manufacturing experience which we can share with Sri Lanka especially in the field of small and medium industries,” he said.

http://colombostockwatch.com/2011/07/sri-lanka-beckons-malaysian-investors-%E2%80%93-fmm/

Seems like the foreign investors has foreseen Sri Lanka in another 10 years time! I feel we have a bright future ahead! sunny

RichDad

Post Wed Jul 20, 2011 10:31 am by RichDad

Foreigners' eye on SL

S&P revises Sri Lanka outlook to positive, ratings affirmed

Standard & Poor’s Ratings Services yesterday revised its outlook on the long-term foreign currency sovereign credit rating on Sri Lanka to positive from stable.

At the same time, Standard & Poor’s affirmed its ‘B+/B’ foreign currency and ‘BB-/B’ local currency sovereign credit ratings on Sri Lanka. The outlook on the long-term local currency rating is stable. The transfer and convertibility (T&C) assessment is unchanged at ‘B+’.

“We revised our outlook on the foreign currency rating to reflect the improving external liquidity, progress in addressing structural fiscal weaknesses, the Government’s effort to keep inflation near that of trading partners,” said Standard & Poor’s credit analyst Takahira Ogawa.

“We expect investment to edge upward to 28% of GDP, boosting per capita growth to about 6.5% per year. If the business environment improves to boost net foreign direct investments above 2% of GDP, stronger growth may be possible,” Ogawa said.

http://www.ft.lk/2011/07/20/sp-revises-sri-lanka-outlook-to-positive-ratings-affirmed/

UKboy

Post Wed Jul 20, 2011 11:37 am by UKboy

@RichDad wrote:Sri Lanka received a record $236 million of foreign direct investment in the first quarter of 2011, with the tourism industry attracting most of the inflows, the island’s Board of Investment said June 7.


That is the only escape route BOI has at the moment.
Last few yeas Dialog saved them big time now its only tourism.

avatar

Post Thu Jul 21, 2011 12:04 am by manula

@Academic wrote:
@RichDad wrote:Antonym thanks for the update. Hope our market will benefit with these kind of recommendations and true enough rocksan hope the authorities and officials won't do something stupid like that again.

But today papers read, Sri Lanka loses race in hedging payments. How will this US$340 million (Rs. 37.4 billion) case will have an impact on the market?

http://www.sundaytimes.lk/110717/BusinessTimes/bt01.html

Technically this is a legal contact so it is bonded. A party cant deny payments just because a position converted into loosing. The problem with this hedging activity is not considering/hedging downside risk of oil prices. In a way, as someone observed the trend oil barrel behaved at that time, it was commonly expected oil prices go up further. Hence, at the point CPC entered into the agreement, few argued against it. If anyone criticized CPC at that time (before oil price started declining) "my hat-off to him/her".

Further, though not related, I expect oil prices to decline/stabilize in near future as global economy slow down decreases demand for oil. IMHO, this is the point what CPC missed at that time.

Yes.. when the Hedging contract is signing the oil barrel price was going high. but dont foregt chinese company has advcie that time oil barrel price is going to fall.. but no one listen.. and main is no word on oil price fall.. fro mthis only we can get a idea about our officals. Simple newton law.

avatar

Post Thu Jul 21, 2011 5:48 am by Aamiable

@RichDad wrote:Foreigners' eye on SL

S&P revises Sri Lanka outlook to positive, ratings affirmed

Standard & Poor’s Ratings Services yesterday revised its outlook on the long-term foreign currency sovereign credit rating on Sri Lanka to positive from stable.

At the same time, Standard & Poor’s affirmed its ‘B+/B’ foreign currency and ‘BB-/B’ local currency sovereign credit ratings on Sri Lanka. The outlook on the long-term local currency rating is stable. The transfer and convertibility (T&C) assessment is unchanged at ‘B+’.

“We revised our outlook on the foreign currency rating to reflect the improving external liquidity, progress in addressing structural fiscal weaknesses, the Government’s effort to keep inflation near that of trading partners,” said Standard & Poor’s credit analyst Takahira Ogawa.

“We expect investment to edge upward to 28% of GDP, boosting per capita growth to about 6.5% per year. If the business environment improves to boost net foreign direct investments above 2% of GDP, stronger growth may be possible,” Ogawa said.

http://www.ft.lk/2011/07/20/sp-revises-sri-lanka-outlook-to-positive-ratings-affirmed/



In the meantime, if quarterly financials also maintain standards, ...positive trend in CSE can be achieved. ......Good financial reports seem to be emerging... one by one.

Smile

UKboy

Post Fri Jul 22, 2011 1:57 am by UKboy

1000% true.

https://www.youtube.com/watch?v=bmYuTRma7yI

RichDad

Post Fri Jul 22, 2011 2:46 am by RichDad

@Aamiable wrote:
In the meantime, if quarterly financials also maintain standards, ...positive trend in CSE can be achieved. ......Good financial reports seem to be emerging... one by one.
Smile

Yes, the value gems will never let the sophisticated investors down who had faith on them.
Longing to see the some good quarterly reports one by one... pirat

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