📈 CSE Poised for Growth in 2026 Amid Low Rates

The Colombo Stock Exchange (CSE) remains a lucrative investment avenue for 2026, supported by a low interest rate environment and improving corporate fundamentals, according to Softlogic Stockbrokers. Despite the $ 4.1 Bn impact of Cyclone Ditwah, the market continues to show resilience. • Market Performance (2025): • ASPI gained 41% YoY, with Market Cap crossing Rs. 8 Trillion (+41.67%). • Total market turnover surged by 129% to Rs. 1.23 Trillion. • S&P SL20 recorded a 26.6% increase. • Valuations remained attractive with a PER of 10.73x and PBV of 1.45x. • Sector & Corporate Earnings: • Total corporate earnings grew 16% to Rs. 512 Bn (first 9 months of 2025). • The Banking sector led the recovery, contributing 38% of total earnings. • Construction, Manufacturing, and Services sectors all showed robust momentum. • Macro-Economic Context: • Budget deficit contracted by over 73% following a 37% rise in tax revenue. • Inflation (CCPI) was contained at 2.1%, while the CBSL maintained the OPR at 7.75%. • Foreign investors were net sellers with an outflow of Rs. 38.6 Bn, though renewed inflows are anticipated in 2026. • Outlook: The economy is shifting toward cautious optimism. With reconstruction efforts underway and support from the IMF, World Bank, and ADB, mid-single-digit GDP growth is projected for 2026.