The main index of the Colombo Stock Exchange (CSE), the All Share Price Index (ASPI) is forecasted to reach the 15,000 mark in the first quarter of the year before negative returns start to materialize from the second quarter onwards with possible shocks, according to First Capital Research.
“With strong Dec-21 earnings and negative real interest rates, we expect ASPI returns to be strong in the shorter term resulting in the ASPI potentially rising to the 15,000 mark within the 1Q2022,”First Capital said in its Investment Strategy Report 2022 released today.
Last week, the Central Bank of Sri Lanka (CBSL) raised policy rates by 50 basis points as inflation skyrocketed to double digits throughout the last year, reaching a new peak in December last year.
It cautioned that Sri Lanka could be in for a major shock within the next 3-12 months, thereby, it recommended to reduce risks by aggressively shifting to defensive counters.
“We believe that Sri Lanka could be in for a major shock within the next 3-12 months, thereby, our long-term view is to reduce risk by aggressively shifting to defensive counters while we expect a possible negative return in the broader market in 2H2022,” it advised.