Shehan Bartholomeuz, Chief Executive of LOLC Securities, unpacks the post-crisis performance of Sri Lanka’s equity market and shares how the company enables investors to unlock opportunities through personalized, research-led strategies.
Repricing, Recovery, and Renewed Momentum
The economic crisis of 2022 was a watershed moment for Sri Lanka’s capital markets. As the rupee sharply depreciated and sovereign default became a reality, asset values across the board were swiftly repriced. Equities bore the brunt of this reset, with local and foreign investor participation shrinking significantly and listed share prices experiencing steep corrections.
By early 2023, signs of stabilization began to emerge, but investor confidence remained fragile. Political uncertainty, the absence of a clear fiscal path, and questions about debt restructuring kept many participants on the sidelines. It was only after policy changes and visible progress on sovereign debt negotiations that the market regained direction.
Local investors, particularly those who understood the disconnect between fundamental value and depressed prices, were the first to respond. Traditional valuation metrics like price-to-earnings (P/E) and price-to-book (P/B) pointed to significant undervaluation. Many stocks were trading at multi-year lows—offering a rare entry point for patient capital.
Momentum picked up as sector-specific catalysts began to materialize. The banking sector led the charge, with International Sovereign Bond (ISB) restructuring positively impacting balance sheets and valuations. This sectoral uplift created a ripple effect across the market, boosting confidence and liquidity.
By the end of 2024, the All Share Price Index (ASPI) had surged nearly 50%, making it one of the Colombo Stock Exchange’s best-performing years. Several individual stocks doubled in value, yet even after the rally, market-wide valuations remained compelling. At a P/E ratio of 8.5, the CSE traded well below its five-year average of 11.5 (excluding anomalies). On a regional scale, Sri Lanka was the second-best performing market in Asia in 2024, behind only Pakistan.
What 2025 Is Signaling So Far
January 2025 saw the rally continue before the market entered a natural cooling phase. With earnings across the index growing by over 50%, institutional investors began profit-taking—a healthy consolidation that opened the door for new entrants.
Trading volumes remain robust, with rising participation from foreign and institutional investors. Liquidity has improved markedly, and the market shows signs of deeper resilience. Bartholomeuz states, “The current pause provides a timely opportunity for investors who missed the initial rebound to position themselves before the next wave of growth.”
Falling interest rates are another critical driver. Lower borrowing costs are expected to spur credit growth and corporate activity, particularly in financials and construction. With fixed-income returns remaining muted, equities remain compelling for investors seeking yield and capital growth.
Building Portfolios with Precision
LOLC Securities has been active in Sri Lanka’s equity markets since 2011. With over a decade of experience navigating market cycles, the firm has built a reputation for disciplined risk management and client-focused advisory.
“Our clients range from institutional investors and corporates to high-net-worth individuals and retail investors,” says Bartholomeuz. “Each segment has unique needs, and we tailor our advisory accordingly.”
LOLC Securities distinguishes itself by its emphasis on personalized investment strategies. The firm’s team of experienced advisors takes the time to understand each client’s return objectives, time horizons, and risk tolerance. Every recommendation, from asset allocation to stock selection, is calibrated to fit the investor’s profile.
This approach is strengthened by an in-house research team that delivers sector insights and company-level analyses. “We don’t just chase returns,” says Bartholomeuz. “We assess the risks behind every opportunity. Our research integrates macro trends, company fundamentals, and market sentiment into a balanced view.”
Real-Time Insights, Multi-Platform Access
In an age of rapid news cycles and shifting sentiment, timely information is critical. LOLC Securities has invested in making its research function responsive and accessible. The firm delivers updates via WhatsApp, video briefings, and social media platforms like LinkedIn, Instagram, and YouTube.
Time-sensitive events—such as earnings releases, regulatory changes, or macroeconomic developments—are captured in concise formats that allow investors to act quickly. More detailed reports, covering valuation scenarios, business strategy, and potential risks, are available for those taking a longer view.
This dual-track model ensures that investors with different decision-making styles—from momentum traders to long-term planners—receive the insights they need and when and how they need them.
Equities in Wealth Planning
Beyond short-term gains, equities serve a vital role in long-term wealth generation. Over the past five years, despite economic volatility, investors who entered during moments of market dislocation have frequently seen annualized returns above 20%.
LOLC Securities helps clients understand how to incorporate equities into their financial strategies. Capital gains from equities remain tax-exempt in Sri Lanka, adding another layer of appeal. The firm identifies high-dividend stocks for income-oriented investors, particularly in banking and manufacturing.
“Equity investing is not just about timing the market,” says Bartholomeuz. “It’s about owning resilient, well-run businesses over time. Our role is to help clients make those choices confidently and clearly.”