Sri Lanka’s equity market ends 2025 as region’s 3rd best performer

By Nishel Fernando

Sri Lanka’s equity market concluded 2025 on a robust trajectory, securing its position as the third-best performing market in the region, according to the data released by CT Smith Securities.

The benchmark All Share Price Index recorded a significant year-on-year (YoY) growth of 41.9 percent, closing the year at 22,624 points. This impressive rally placed the Colombo Stock Exchange just behind South Korea, which led the region with a staggering 75.6 percent gain and Pakistan, which recorded a 45.0 percent increase.

The Colombo bourse outperformed the other regional peers such as Vietnam, which grew by 40.9 percent and major markets like India and China, which posted gains of 10.5 percent and 18.4 percent, respectively. The S&P SL20 index, representing the most liquid stocks, also reflected this positive sentiment, rising by 26.6 percent YoY to close at 6,157 points.

Market activity saw a dramatic resurgence in 2025, with total market turnover more than doubling to Rs.1,233 billion, compared to Rs.538 billion in the previous year. The average daily turnover surged to Rs.5,181 million, from Rs.2,233 million in 2024.

This liquidity was driven largely by specific high-growth sectors. The retailing sector emerged as the top performer, recording a massive 12-month gain of 169.4 percent, followed by transportation and telecommunication services, which grew by 120.0 percent and 116.9 percent, respectively. In terms of daily turnover contribution, the banking sector led the market, followed closely by capital goods and diversified financials, indicating a strong investor appetite for the established financial and industrial counters.

Despite the domestic bullishness, the bourse witnessed a widened net foreign outflow. Foreign investors recorded a net outflow of Rs.38.6 billion in 2025, a significant increase from the Rs.9.9 billion outflow observed in 2024. A heavy selling pressure was seen in blue-chip conglomerates, with John Keells Holdings witnessing the highest net foreign selling of Rs.9.8 billion, followed by CT Holdings with Rs.6.1 billion and Hatton National Bank with Rs.4.1 billion.

However, foreign interest remained selective and strong in other areas; Cargills (Ceylon) attracted the highest net foreign purchasing of Rs.2.6 billion, while Dialog Axiata and Digital Mobility Solutions Lanka saw inflows of Rs.2.1 billion and Rs.905 million, respectively.

Individual company performances were notably volatile, yet lucrative for the risk-takers. Colombo Dockyard emerged as the top gainer for the year, with a massive 1,112 percent increase, followed by East West Properties and York Arcade Holdings. On the other hand, Nation Lanka Finance and Apparel Holdings were among the top losers for the year.

The market also saw successful capital market activities, including the listing of InsureMe Insurance Brokers, which delivered a post-listing return of over 310 percent. Despite the foreign exits, the local buying pressure kept valuations attractive, with the market trailing price-to-earnings ratio moving to 10.7x, from 8.9x the previous year.

Source : DailyMirror