• Attractive valuations for listing companies
• Bull run to continue in 2025
• Foreign funds to enter following rating upgrade
• US rate cuts favour CSE

The Colombo Stock Exchange (CSE) is currently processing 4-5 Initial Public Offerings (IPOs) amidst the attractive valuations on offer in the equity market due to the current bull run.

Speaking to The Sunday Morning Business, CSE Chairman Dilshan Wirasekara revealed that there were around 4-5 IPO applications being processed at present at the Colombo bourse amidst improved interest in the market as a result of the record-breaking bull run currently being observed in the CSE.

He stated: “When market valuations rise, companies want to get listed because they will get a higher multiple. Therefore, if the current bull run sustains itself and we have a good year in 2025 as well, we will definitely see more companies expressing interest in getting listed.”  

Wirasekara further revealed that two green bond issuances were currently being processed by the CSE, of which one issuance was in its final stages and could be announced before the new year or immediately thereafter.

He further revealed that the CSE was fairly optimistic that 2025 would be a good year for the bourse given the low interest rate regime in the country, which would see investors enter the equity market in search of a higher yield. 

Furthermore, he pointed out that the ongoing macro-level developments would favour the growth of the market in 2025.

“We have seen robust GDP growth of around 5.5% for the third quarter of 2024. We expect the economy to continue to grow at around the 5% level. 

“This is likely to help because disposable income will rise, cash flow will improve, liquidity will come in, and people will look to invest it in the market. The biggest development will be the elimination of the country’s default status,” he opined.

According to him, once Sri Lanka emerges from its default status with the recent rating upgrades by rating agencies, portfolio funds will start investing in the country.

Accordingly, he pointed out that in 2024, foreign participation in the CSE had only been at around 12-15%, whereas prior to 2018, foreign participation in the market had been as high as 40-45%. Therefore, he was of the opinion that if such foreign funds were to enter the market, it would facilitate the further extension of the current bull run.

Wirasekara also pointed out that the external environment was also conducive to the growth of the CSE because the US Federal Reserve had announced that there would be further interest rate cuts in 2025, which would see increased interest in the CSE from frontier and emerging market funds.