By: Staff Writer
March 31, Colombo (LNW): James Johnstone, Co-Head and Portfolio Manager of the Redwheel Emerging and Frontier Markets Team, has highlighted Sri Lanka’s strategic potential in global manufacturing through foreign joint ventures.
Speaking at the ‘Invest Sri Lanka’ Investor Forum, organized by the Colombo Stock Exchange (CSE) and the Securities and Exchange Commission (SEC), he addressed over 100 foreign investors and fund managers, underscoring the nation’s economic prospects.
Redwheel, a global investment management firm established in 2000, specializes in investment strategies across developed and emerging markets, including equities, convertible bonds, and income solutions. Johnstone emphasized that Sri Lanka has strong prospects in services and commodities, aligning with Redwheel’s Frontier Markets Equity Strategy’s three key growth pathways. He also identified several Sri Lankan companies as attractive investment opportunities under this framework.
Johnstone commended Sri Lanka’s recent macroeconomic stabilization efforts and noted that tourism and remittances are poised to drive growth. However, he pointed out that Sri Lanka’s market capitalization, at just 15% of GDP, lags behind regional peers like Vietnam (59%) and Indonesia (40%). A stable currency, he stressed, is crucial for further financial growth.
As of March 31, 2025, Sri Lanka’s capital market is rebounding strongly, mirroring broader economic recovery trends. The All Share Price Index (ASPI) and the S&P SL20 index registered remarkable returns of 49.7% and 58.5%, respectively, in 2024, reflecting renewed investor confidence. Additionally, the market recorded a net foreign inflow of USD 66.5 million and a record capital raise of USD 568.61 million in the same period.
Government-led economic reforms have been instrumental in this turnaround. The National Export Development Plan (2025-2029) aims to accelerate export-driven growth, while expanding Free Trade Agreements (FTAs) with ASEAN countries promises to enhance trade opportunities. Furthermore, the introduction of a National Tariff Policy is expected to create a more predictable trade environment, benefiting both domestic and international investors.
The March 2025 ‘Invest Sri Lanka’ forum in Colombo attracted over 100 international delegates and around 400 local participants, highlighting the country’s progress since the 2022 economic crisis. Key regulatory officials reaffirmed Sri Lanka’s financial stability and predictability, reinforcing the nation’s readiness to attract global capital.
Sri Lanka’s external sector has also shown notable improvement, with February 2025 reporting a higher current account surplus than the previous month. Overall, the country’s capital market is on a strong growth trajectory, fueled by economic reforms, increased investor confidence, and strategic initiatives for long-term sustainability.
