Lanka to benefit from global re-balancing
Sri Lanka is well positioned to benefit from the current global
rebalancing of power and it could become one of the top places in Asia
for investment, Ceylon Asset Management, Economic Advisor and Director
Michael Preiss told Daily News Business.
He said Sri Lanka’s ports, tourism and technology development
(specially Information technology) has created a strong competitive
“Its well educated and young English speaking population will benefit
from global opportunities,” he added. Preiss said in December 2009 when
he predicted that Sri Lanka’s economy would grow by 6 to 8 percent by
2010 giving an interview to an English newspaper no body believed it,
when even the Central Bank expected only 4.5 percent growth and today it
has become a reality with 8 percent GDP growth.
Sri Lanka will immensely benefit from global rebalancing as people
look for safer areas for investments.
The recent over subscription of the US$ one billion Sri Lanka
sovereign bond issue by seven and half time is clear evidence for this.
The money in the West will increasingly flow to Asia because of the
economic vulnerability the West faces today and Sri Lanka is well
positioned to benefit from this major shift taking place.
He said previously the super cycle of the global economy was mostly
focused on the US, Japan and Europe. Now however it is emerging and
frontier markets like Sri Lanka are the bright spots of the global
Riots and youth unrest in London and unemployment along with
increased life expectancy is imposing huge pension costs, and straining
government deficits in western countries.
The United States defaulting on its debt obligations and suffering a
rating downgrade is the new reality of where investors, reconsider what
is safe and what is risky.
As China and India are expected to become the largest economies in
the world by 2030 and the US and Europe will decline in relative
“I came to Sri Lanka after one year recently and witnessed a huge
difference from the Katunayake airport itself as well as Colombo city.
Tourists who visited Sri Lanka in the recent past have also conveyed a
very positive message to the world about the country and its people. All
these points count in favour of Sri Lanka,” he said.
The current political stability in Sri Lanka and the Country Rating
upgrade to BB- by Fitch has inspired confidence among foreign investors
to over subscribe for the Sovereign Bond issue and to increase
allocations to Sri Lankan assets.
The Colombo Stock Exchange has more than tripled in value during 2009
and 2010. However, the market has declined recently, despite strong
earnings growth offering compelling valuations. Preiss said in the
global context Sri Lanka offers strong earnings momentum as well as GDP
growth, compared to many western economies with subpar growth therefore
this is a perfect time to invest in Sri Lanka,” he said.