• ASPI surpasses all-time high, market poised for further growth in 2025
• Valuations remain attractive, signalling mid-phase of extended bull run 
• Low interest rates drive investors toward equities amid bullish sentiment  
• Analysts forecast ASPI to hit 15,000 as market re-rates to higher PE ratios  

The current bull run observed in the Colombo Stock Exchange (CSE), which saw the benchmark All Share Price Index (ASPI) surpass its all-time high, is still in its mid-phase and far from the apex of the run, with plenty of room to move further upwards, market sources believe. 

Speaking to The Sunday Morning Business, First Capital Holdings Chief Research and Strategy Officer Dimantha Mathew pointed out that although the ASPI had gained over 170 points on Wednesday (4) to close at 13,511.73 points, surpassing the previous record of 13,462.39 points set on 19 January 2022, the current valuations of the market were far more attractive than back in January 2022. 

In particular, he pointed out that the Price-to-Earnings (PE) ratio of the banking sector currently stood at only 6x, lagging behind the rest of the market. 

He further stated: “Considering the effects of inflation, the market is trading at a PE ratio of around 10x. We believe the market can re-rate to around 12x. Therefore, we are targeting 15,000 basis points for 2025.” 

Mathew also pointed out that when the ASPI reached its previous all-time high on 19 January 2022, the market had been trading at a PE ratio of around 12x. This time around, however, the ASPI has reached its new all-time high of 13,511.73 points with a market PE ratio of 10x, indicating that the market still has room to move upwards.

Therefore, he stated that the current bull run was still in its mid-phase, far from the apex of the run, and thus they expected the current bull run to continue for some time.

Mathew further stated that due to the current low interest rates, there weren’t many investment options for investors that could offer a comparable return to those on offer in the equity market. 

Accordingly, he claimed that they expected interest rates to continue to be at the current low levels over the period from December to February 2025, adding that therefore it was entirely possible that the current bull run would continue over that period, which would see the ASPI hit 15,000 sooner rather than later. 

The ASPI has been on a sharp upward trajectory since September, which saw the index gain close to 3,500 basis points from 10,575 basis points to reach its new all-time high of 13,511.73 points on Wednesday (4) and has since continued its upward trajectory, setting fresh all-time highs in the following days.

A similar trajectory was observed in the Standard & Poor’s Sri Lanka 20 (S&P SL20) index, which has also gained over 1,150 basis points since September, reaching over 4,500 basis points from 2,925 basis points on 12 September.