Financial & Investment News
View all(12)## Patient Capital Rebuilding the North: $ 5M Deployed 📈
Veteran banker Rajendra Theagarajah, via the Cinnamon Global fund, has outlined a "patient-capital" model to drive sustainable wealth in Sri Lanka’s Northern Province, moving away from charity toward long-term growth. • Overall Investment & Strategy Total Deployed: Approximately US$ 5 Mn over four years. Focus: Growth-stage enterprises (not startups/seed funding). Model: Revenue-linked returns instead of traditional collateral or interest. Ticket Sizes: Typically US$ 25,000 – 50,000 per entity; largest single investment at US$ 700,000. • Sector Breakdowns & Verticals Agriculture: Focus on value addition and heritage rice (expanded to 350+ farmers). Aquaculture & Fisheries: Supporting coastal economic development. ICT/BPM: Innovative ventures to retain local talent and prevent urban migration. Logistics: Services supporting the broader regional ecosystem. • Key Impact Highlights Financial Inclusion: Transitions informal businesses into the formal banking system through governance and compliance support. Agricultural Tech: Implementation of soil mapping and AI-driven crop advisory for heritage rice. Export Potential: Targeting UK and US markets for low-glycemic rice varieties. Local Empowerment: Focus on Tamil-language engagement and grassroots trust-building to bridge knowledge gaps.
Gold & Silver Markets Shaken by Global Crash: Implications for Sri Lanka 📈
The global financial landscape witnessed a seismic shift as gold and silver prices suffered a sharp collapse, erasing an estimated US$ 3 Trillion in market value within 90 minutes. Driven by algorithmic selling and mass profit-taking, the "flash crash" has critical repercussions for Sri Lanka’s export-driven economy. • Market Breakdown & Volatility • Gold prices plunged to approximately US$ 5,135/oz, while silver fell to nearly US$ 109/oz. • Locally, 24K gold reached a milestone of Rs. 435,050 per 8g (1 sovereign) earlier in February before the correction. • The crash was accelerated by high-frequency trading and margin calls, impacting global liquidity. • Sector Impact & Exports • Gems & Jewellery: As a net importer of gold for manufacturing, Sri Lanka faces extreme volatility in working capital and inventory valuation. However, the sector showed resilience in 2025, with Diamonds, Gems & Jewellery exports estimated to grow 46.15% YoY (reaching US$ 23.91 Mn in Dec 2025). • Apparel & Textiles: Remained the top revenue driver, earning US$ 4.9 Bn in 2025 (+5.34% YoY). • Tea: Export earnings reached US$ 1.5 Bn (+4.97% YoY) in 2025. • Economic & Policy Outlook • Total exports for 2025 reached US$ 17.25 Bn (+5.6% YoY), with a US$ 20 Bn target set for 2026. • Global volatility pressures the Sri Lankan Rupee and complicates Central Bank reserve valuations, as gold is a key component of official foreign exchange reserves. • Experts advise a shift from price speculation to margin protection and design-based value addition for local stakeholders.
Unit Trust Industry Hits Rs. 610 Bn Asset Milestone 📈
Sri Lanka's unit trust industry recorded a strong start to 2026, with Assets Under Management (AUM) growing 6.1% YoY to surpass the Rs. 600 Bn mark by end-January. • Overall Growth: Total AUM reached Rs. 610 Bn, marking a 3.8% increase from December 2025. The industry now comprises 84 funds managed by 16 companies. • Sector Performance: • Equity-related funds were the primary driver, doubling YoY to Rs. 67 Bn and surging 10.2% in January alone. • Fixed income funds maintained steady growth, rising 2.9% YoY. • Investor Participation: The industry added 3,110 new unit holders in January (+35.0% YoY), bringing the total investor base to 147,020—a 25.7% YoY increase. The shift toward equity reflects high investor confidence in capital market performance and a strategic move toward long-term capital appreciation. The Unit Trust Association of Sri Lanka (UTASL) continues to focus on enhancing financial literacy and accessibility to further integrate retail investors into the formal economy. _Data based on UTASL January 2026 industry report._
## 📈 Understanding Unit Trust Disclaimers in Sri Lanka
The Unit Trust Association of Sri Lanka (UTASL) clarifies that mandatory disclaimers in unit trust advertisements are designed to protect investors, not fund managers, by ensuring transparency and realistic expectations. • Core Purpose of Disclaimers Since unit trusts are market-linked—investing in government securities, bonds, and equities—returns are subject to market volatility. The SEC strictly prohibits guaranteed returns to prevent misleading investors. • Decoding Key Phrases • "Yield is variable": Indicates returns fluctuate based on interest rate shifts (for money market funds) or share price movements (for equity funds). • "Past performance is not indicative of future performance": A reminder that historical gains do not guarantee future results due to changing economic conditions. • The Role of Documentation • KIID (Key Investor Information Document): A mandatory SEC-regulated document detailing fund risks, fees, and suitability. • Fact Sheets: Provide concise, regular updates on fund performance and asset allocation. • Sector Significance Unit trusts promote financial inclusion by offering professional management and diversification to retail investors. This industry, comprising 16 licensed companies, plays a vital role in mobilizing capital for national economic growth. _Note: Information based on industry insights provided by UTASL on February 17, 2026._
Sri Lanka Investment Forum 2026: Focusing on Green Transition & Economic Recovery 📈
The Board of Investment (BOI) is set to host the Sri Lanka Investment Forum 2026 on 30 March at Cinnamon Life, Colombo. Partnering with the EU, ADB, and ESCAP, the event aims to showcase the nation's landscape for sustainability and tech-driven growth. • Core Theme: Investing in Sri Lanka’s green and connected future, with a heavy focus on renewable energy, green finance, and economic recovery strategies. • Sector Highlights: • Manufacturing: Emphasis on value-added processing, pharmaceuticals, and industrial manufacturing. • Services: Focus on logistics, integrated warehousing, and aviation services. • Infrastructure: Opportunities in technology/innovation parks, university towns, and "cinema cities." • Leisure & Recreation: Targeted growth in nautical tourism, waterfront developments, and theme parks. • Key Features: The forum will include an exclusive EU-SL Investor Dialogue, B2B matchmaking sessions, and deep dives into green finance instruments to fund the transition. • Support: Co-funded by the European Union with strategic support from the ADB and UN ESCAP to align with international sustainability standards.
📈 SME Forum: SEC & CSE Target Regional Business Growth
The Securities and Exchange Commission (SEC) and Colombo Stock Exchange (CSE) are hosting an issuer forum today, 13 February 2026, in Weligama. The initiative aims to bridge funding gaps for regional businesses by encouraging engagement with the capital market. • Overall Market Strength (2025): • Market Capitalisation: Exceeded Rs. 8.5 Trillion. • New Listings: 25 total (including 6 new companies raising debt and equity). • Innovative Instruments: Introduction of Blue Bonds, Green Bonds, and Sustainable Bonds. • Key Focus Areas for SMEs: • Transitioning to the Empower and Diri Savi boards for easier listing. • Strategies for succession planning, governance, and wealth management. • Reducing reliance on traditional bank credit in favor of risk capital. • Strategic Outlook: The forum highlights a shift toward broad-basing companies across Sri Lanka. By leveraging a buoyant market—noted for significant volume increases—SMEs in sectors like tourism and agribusiness can access mid-to-long term capital to catalyze expansion.
📈 TESS Agro to Raise Rs. 250 Mn via Private Placement
TESS Agro PLC has announced a strategic shift in its funding plans, opting for a private placement of shares to raise Rs. 250 million, replacing a previously proposed debenture and warrant structure. • The Deal: The company will issue up to 125 million ordinary voting shares (approximately 18.5% of issued voting shares) at Rs. 2.00 per share. • Investor: The shares are to be issued to Oman-based SE Capital Trading SPC. • Purpose of Funds: Proceeds are earmarked for the repayment of existing borrowings, meeting working capital requirements, and funding capital expenditure. • Financial Context: As of Dec 2025, the company reported long-term borrowings of Rs. 343.3 million and short-term debt of Rs. 156 million. Net assets stood at 39 cents per share. • Market Reaction: Following the announcement, TESS Agro voting shares closed at Rs. 2.10 (down 10 cents), while non-voting shares remained unchanged at Rs. 1.50. The move is part of a broader capital restructuring for the agriculture and export sector firm and remains subject to shareholder and regulatory approvals from the CSE and SEC.
📈 2026: A Catalyst Year for Sri Lankan IPOs
Asia Securities projects a robust phase for Initial Public Offerings (IPOs) in 2026, driven by macroeconomic stability, regulatory reforms, and favorable monetary conditions. • Market Outlook & Drivers Low interest rates are shifting funding preferences from debt to equity, offering permanent capital without debt-servicing strains. The Colombo Stock Exchange (CSE) plans a digital listing portal and a 7-day review process to expedite market entry. Secondary market liquidity and valuation benchmarks have improved following a strong recovery post-2022 crisis. • Economic Context Government Revenue has recovered to over 15% of GDP, meeting critical debt-restructuring framework targets. 2025 marked the third consecutive year of a primary surplus, with Sri Lanka outperforming IMF targets. External debt obligations are capped at under US$ 2.5 Bn per year for 2026-2027, significantly improving sustainability. • Private Sector & Investment Private sector credit growth exceeded Rs. 200 Bn per month since mid-2025, with credit-to-GDP at 31.3%. Current investment-to-GDP stands at 27%; reaching 6% economic growth requires this to hit 30-31%. Recent success: Cable Solutions Ltd (listed Aug 2024) saw its share price more than double from Rs. 7.50 to over Rs. 15. • Strategic Benefits Listings are expected to improve corporate governance and succession planning for family-owned businesses. Emphasis remains on increasing participation from State-Owned Enterprises (SOEs) and private firms to expand market capitalization.
📈 Equities Outperform Traditional Assets in Sri Lanka
A 5-year analysis ending December 2025 highlights the superior wealth creation potential of equities over fixed income and real estate in the local market. • Market Performance The Colombo Stock Exchange (CSE) ASPI recorded a 5-year CAGR of ~27.28%. Capital invested at end-2020 more than tripled by end-2025. Annual gains: 41.89% (2025), 25.5% (2024), and 49.66% (2023). • Comparative Returns Fixed Income: T-bills and bank deposits averaged ~10% annually, often yielding negative real returns when adjusted for inflation and taxes. Real Estate: Hampered by high transaction costs (8–10%), low liquidity, and rental yields rarely exceeding mid-single digits. Gold: Underperformed productive assets over full cycles; globally, equities (8.1%) outpaced gold (6.7%) from 1990–2025. • Sector & Unit Trust Insights Diversified equity unit trusts saw 5-year CAGRs exceeding 20%. Balanced funds underperformed pure equities due to fixed-income "drag." Equity growth is driven by corporate earnings reinvestment and valuation normalization post-economic crisis. • Key Takeaway While fixed income is essential for liquidity, long-term wealth accumulation in Sri Lanka is most effectively achieved through equities, benefiting from compounding and business growth.
📈 2026 Financial Outlook: The Rise of the ‘Intentional Consumer’
Sri Lanka enters 2026 with a strategic shift toward financial resilience, as households navigate a "cost of living crunch" despite stable inflation. Amidst a projected GDP growth of 3.2% - 5.0%, consumer behavior is evolving from impulsive spending to "intentional" daily habits to preserve disposable income. • Overall Economic Context • Inflation: Projected to average 2.8% in 2026, remaining below the Central Bank’s 5% target due to subdued demand. • Reserves: Gross Official Reserves reached US$ 6.8 Bn by end-2025, the highest since the crisis. • Exchange Rate: The LKR is under pressure, with forecasts around Rs. 307.8 per US$, raising the cost of essential imports. • Key Consumer Trends for 2026 • Loud Budgeting: A shift toward vocalizing financial boundaries, reducing the social pressure to spend and fostering shared financial values. • Micro-Saving: Adoption of "round-up" resolutions to the nearest Rupee on digital transactions—a modern "penny jar" for the ICT/BPM enabled economy. • Tactical Retail: Growth in "yellow sticker" shopping and a 24-hour "cooling-off" period for online checkouts to combat retail impulse spending. • Sector Impact • Retail & FMCG: Supermarket markdowns are reducing monthly food bills by up to 30% as price sensitivity peaks. • Banking: Increased focus on micro-savings and digital "Pay by Bank" features to mobilize domestic liquidity. • Apparel & Textiles: High-margin sectors face pressure as Gen Z consumers prioritize value and brand authenticity over fast fashion.
Investing for Success: The Case for Simplicity 📈
A "Keep It Simple and Smart" (KISS) strategy is recommended for retail investors to achieve long-term goals with minimal stress and decision fatigue. • Investment Strategy: Shift from complex stock-picking to low-cost index funds or target-date funds that automatically adjust risk based on retirement timelines. For 5-10 year goals, high-quality bond index funds or moderate-risk allocation funds are advised. • Economic Context: While the Colombo Stock Exchange (CSE) saw the ASPI gain over 40% in 2025, experts warn against "market timing." Consistent saving is emphasized as more critical than chasing record returns. • Market Performance: The CSE remains a key vehicle for wealth, with the market trading at a P/E of 10.5x. Industrials and Renewable Energy are currently leading growth, though a simple diversified approach helps mitigate volatility. • Psychological Gains: Streamlined portfolios reduce management stress and ensure easier transitions for family inheritance or shared financial management. _Provisional data indicates Sri Lanka's 2026 GDP growth is projected at 4-5% by CBSL, supporting a stable long-term outlook for simplified equity investments._
NTB Secures US$ 70 Mn IFC Funding for SME Recovery 📈
• Nations Trust Bank (NTB) has secured a US$ 70 million debt financing package from the International Finance Corporation (IFC), marking the first post-crisis multilateral debt transaction in Sri Lanka's financial sector. • Funding Breakdown: • US$ 50 million: Senior unsecured loan. • US$ 20 million: Global Trade Finance Program line. • Target Sectors: • Primary focus on Small and Medium Enterprises (SMEs), particularly women-owned businesses. • Aims to bridge the SME financing gap, which currently exceeds 20% of national GDP. • Economic Impact: • The investment signals a return of international investor confidence in the banking and financial services sector. • Supports national recovery by providing credit access to segments vital for employment and inclusive growth. • Context: Based on provisional data, this is a strategic move to address the credit shortfall for the private sector following the 2022 financial crisis.