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📈 Sri Lanka Investment Outlook: "Very Compelling" Crisis Reset

Hosking Partners, Sri Lanka’s largest foreign capital market investor, highlights a rare investment window as assets trade well below their long-term potential following the economic "reset." • Market Valuation & Opportunity The scale of capital destruction has left established businesses trading below replacement costs. Foreign participation in the CSE fell sharply post-2020, creating significant valuation distortions that favor patient, long-term investors. • Sector Breakdowns • Property & Hotels: Identified as high-recovery sectors due to limited new capacity and depressed valuations. • Banking & Finance: Private credit contracted from 60% to 40% of GDP, while mortgage credit stands at a mere 2.7% of GDP, signaling massive room for expansion. • Construction & Diversified Conglomerates: Core areas where Hosking Partners deployed capital during the crisis. • Key Economic Indicators • Market Cap: Declined by ~70% in US$ terms during the downturn, allowing for acquisitions at fractions of rebuild costs. • Portfolio Growth: Hosking’s holdings have more than doubled since early 2023, aided by lower inflation and currency appreciation. • Strategic Outlook Sustained progress depends on disciplined fiscal policy and domestic bond market development. Sri Lanka is positioned to benefit from capital scarcity and potential economic integration with India, contrasting with "overcrowded" global tech themes.

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🇱🇰 Unit Trusts: Building a Nation of Investors 📈

Sri Lanka's SEC Chairman, Senior Prof. Hareendra Dissabandara, highlights Unit Trusts as a vital tool for financial inclusion & national economic growth. • What are Unit Trusts? They allow collective investment, pooling money from thousands of small investors for professional management in shares, government securities, & other assets. Each investor owns "units" and shares returns. • Why are they crucial for Sri Lanka? They enable ordinary citizens, even with small savings, to become investors, channeling idle money into productive investments, strengthening the capital market & national economy. • New National Initiative: "සැමට fකdටසක් – සැමට ඒකකයක්" (A Share for Each – A Unit for Everyone) • Proposed to the Government, aiming for every Sri Lankan household to own at least one unit in the capital market. • Rs. 1 billion from the Government, with additional contributions from SEC, CSE, stockbrokers, & listed companies. • Targets ~263,000 families, providing an initial investment credit of Rs. 3,000 - 5,000 into a CDS account. • Focuses on guiding low-income & rural families towards safer, professionally managed Unit Trusts. • Empowering Individuals: • Earn better returns on savings, potentially outpacing inflation. • Encourages financial discipline & regular saving. • Builds wealth over time through compounding (e.g., Rs. 3,000/month could grow to over Rs. 1 million in 15 years). • Nation Building: Individual investments flow into Sri Lankan companies & government projects, creating jobs & expanding the economy. • Safety & Regulation: All Unit Trusts are managed by SEC-approved & supervised fund management companies, with funds held by independent trustees (banks) to ensure investor protection & transparency. • How to Start: Very simple. Visit a Licenced Unit Trust management company/agent, fill a form, and start with as little as Rs. 1,000 - Rs. 5,000. No technical knowledge needed. • Myth Debunked: Investing is not just for the rich nor is it gambling. It's about owning a share in productive assets, managed professionally to help build wealth safely & gradually.

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Assetline Finance Opens Landmark Rs. 5 Billion Debenture Issue 📈

Assetline Finance, part of the David Pieris Group, opens subscriptions today (Dec 9) for its inaugural listed debenture issue, aiming to raise up to Rs. 5 billion. • This marks their first entry into the listed debt capital market, seeking funding diversification, enhanced liquidity, and long-term financial resilience. • The issue involves 50 million debentures, each with a face value of Rs. 100 and a five-year tenor, approved for listing on the Colombo Stock Exchange. • Rated 'A' with a Positive Outlook by Lanka Rating Agency, reflecting strong creditworthiness and robust capital. • Proceeds will expand the company's lending portfolio, support product innovation, and strengthen its funding base, contributing to national economic activity by increasing credit access. Strong H1 FY25/26 Financial Performance: • Total assets surged to Rs. 72,712 million (nearly 40% growth). • Lending portfolio grew by 42% to Rs. 60,651 million, driven by strong demand in SME, micro-enterprise, and mobility-based segments. • Profit Before Tax reached Rs. 2,940 million; Profit After Tax Rs. 1,416 million. • Asset quality improved: Gross Stage 3 Loan Ratio reduced to 4% (from 9.7% YoY). • Capital Adequacy Ratio at a strong 18.45% (as of Sep 2025). • Operational efficiency maintained with a Cost-to-Income Ratio of 39.8%. Manager to the issue: Capital Alliance Partners Ltd. (CAL). Investors are encouraged to review the prospectus.

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💡 Banking Innovation for the Gig Economy: Addressing Ephemeral Income

• The Gig Economy (freelancers, platform workers, content creators) is a major, growing employment segment globally, yet traditional banking products (loans, mortgages) fail to accommodate their volatile, irregular ('ephemeral') income streams. • Challenges: Gig workers face severe credit access barriers (due to traditional scoring models), budgeting difficulties, and short-term liquidity gaps, often forcing them towards alternative lenders. • Strategic Opportunity for Banks: By failing to design tailored products, banks risk losing this digitally-engaged segment to fintechs. Adapting products builds long-term loyalty and demonstrates social responsibility. • Innovative Solutions Worldwide: • Dynamic Savings: Automated micro-deposits (e.g., 'round-up' features in the UK) that adjust to daily/weekly earnings. • Flexible Credit: Revolving credit lines with repayment schedules aligned to real-time income patterns (India, North America). • Income-Sensitive Planning: Digital tools using predictive algorithms to help workers anticipate lean months and plan tax obligations. • Safety Nets: Integration of micro-insurance and income protection (e.g., Southeast Asia's GrabPay/Gojek Pay) with earnings-tracking features. • Key Takeaway: Serving ephemeral wealth requires "ephemeral solutions"—flexible, adaptive products that move away from rigid, one-size-fits-all models to ensure financial inclusion and unlock new revenue streams.

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