Ruvini Fernando, chief executive officer of Guardian Fund Management Ltd., which yesterday re- launched the U.S. dollar-denominated Sri Lanka Fund, comments on the South Asian island’s stock market and economy. Fernando spoke in a telephone interview from Colombo.
Sri Lanka’s benchmark Colombo All-Share Index has climbed more than 90 percent this year, lagging behind only Mongolia among global benchmarks tracked by Bloomberg. Guardian’s open- ended mutual fund will invest in stocks listed on the Colombo Stock Exchange.
On the stock market:
“As corporate profits will expand with investment and the depth of the market will grow, it is not expensive. We have a three-to-five year investment horizon.
‘‘Sri Lanka is different from other frontier markets as it offers both high-growth opportunity and is in a unique situation of being in a place of transformation. The postwar economy will see Sri Lanka become a middle-income emerging economy with strong fundamentals.’’
On the economy:
‘‘The government’s infrastructure drive is the base for strong economic growth and will be a fundamental platform enabling the private sector. The growth process starts with financing, and the banking sector is already doing well.
‘‘Tourism has been under performing so the immediate gains are huge. There also will be further gains as capacity in hotel rooms increases.
‘‘The construction sector is also supporting the process of development and with the economy growing, there will be higher consumption power.’’
Sri Lanka’s $42 billion economy is estimated to grow 8 percent this year and may expand as much as 9 percent in 2011, as the island emerges from a 26-year civil war, Central Bank Governor Nivard Cabraal said Dec. 6.
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