• Foreign investors will wait for economic stability, not just market hype
• November budget is a crucial indicator of confidence for their return

Sri Lanka’s equity market will have to wait till 2026-27 for the foreign investors to fully enter the market, as foreign investors will want to see economic stability, Softlogic Stockbrokers Chief Executive Officer Dihan Dedigama said.

In an interview with Softlogic Stockbrokers, he said that foreign investors will not enter the equity market now due to the hype created with the All Share Price Index (ASPI) passing 20,000.

“We are one or one and a half years from where they (foreign investors) will enter the market; they will want to see economic stability, they are not going to come because the market has hype,” he said.

He added that foreign investors have been beaten in the past by investing in the market at times, hence they will wait for economic stability to enter the market.

By the end of 15 August, net foreign purchases at the Colombo Stock Exchange (CSE) stood at Rs. 256 million, with foreign trades surpassing 2,000.

Dedigama said that the November budget is going to be crucial, as the foreign investors will look at how the budget plays out and what will be in the budget that will give them some confidence.

“We are looking at 2026, 2027, before real foreign investors come on the back of confidence continuity,” he said.

Further, he said in the current investment environment, overall investors do not have anything other than equity to invest, as the treasury bills and corporate bonds are below 8% with the low interest rate regime.

He added that the stock market has a diversified portfolio that will give good returns to investors.