- ASPI surpasses 2024 forecasts
- Bull run led by large cap and blue chip counters
- Second-tier counters to commence moving
Market sources anticipate the current bull run in the Colombo bourse to continue into the new year, as a result of which they will be amending their previous projections with regard to the movement of the equity market in 2025.
Speaking to The Sunday Morning Business, First Capital Holdings Chief Research and Strategy Officer Dimantha Mathew pointed out that according to their projections at the beginning of the year, they had expected the benchmark All-Share Price Index (ASPI) to reach 13,000-14,000 basis points by the year.
However, the post-election bull run observed in the Colombo Stock Exchange (CSE) has seen the ASPI shatter all projections, surpassing its previous all-time high to reach 14,600 basis point levels.
Mathew further claimed that they expected the current bull run in the CSE to continue into the new year without a significant cooling down period due to the low interest rates and the attractive valuations of the market, which is currently trading at a Price-to-Earnings (P/E) ratio of around 8.5-9x.
Commenting on their forecasts for 2025, he stated: “We are reviewing our forecasts for next year, because this year’s June and September earnings (of listed companies) significantly outperformed our expectations, as has the Gross Domestic Product (GDP).
“The figures announced are significantly higher than what we had anticipated. Therefore, we are looking to update our initial forecasts. We haven’t finalised it yet, but we should have some numbers ready by next week.”
He said that although they had expected GDP growth during the third quarter of 2024 to be around 2-3%, the actual figures had significantly overshot their forecasts, reaching 5.5%.
Speaking to The Sunday Morning Business previously, Mathew had revealed that the original forecast for 2025 had been for the ASPI to reach 15,000 basis points.
He further stated that the current bull run in the CSE was mainly driven by big cap and blue chip counters, which had been trading at significantly undervalued levels as a consequence of the sovereign default in 2022.
Therefore, with the pending credit rating upgrade and the opening up of the economy around the corner, he expected second-tier counters to commence moving, pushing the bull run on.
The benchmark ASPI has been on a sharp upward trajectory since September, which saw the index gain over 4,600 basis points from around 10,575 basis points, reaching over 14,630 basis points.
A similar trajectory was observed in the Standard & Poor’s Sri Lanka 20 (S&P SL20) index, which has also gained close to 1,500 basis points since September, reaching over 4,400 basis points from 2,925 basis points on 12 September.