Sri Lanka Foreign Roadshow Book

Invest in Sri Lanka
Be a Part of South Asias
Strongest Growth Story
Colombo Stock Exchange
An attractive opportunity to invest in growth
INCE the end of Sri Lankas three-decade civil war in 2009, the country has
been on a fast track to achieving growth unmatched by most economies. Sri
Lanka is poised to pull off average GDP growth of 8% per annum over the
next three years, buoyed by sound fiscal and monetary policies, unprecedented
growth in infrastructure development, evolution as a tourism and transshipment hub,
and a rapidly growing middle class. Sri Lankas medium-term GDP growth forecasts
rank it as South Asias fastest-growing economy.
The Colombo Stock Exchange (CSE) trades at a discount and offers attractive
returns, underlined by strong corporate earnings potential. The CSEs low correlation
to developed markets compared to most other emerging markets provides a
unique diversification opportunity to investors seeking emerging market exposure.
Furthermore, the CSE, together with the Securities and Exchange Commission
(SEC) of Sri Lanka, is taking concrete measures to increase free float and market
depth in order to improve investibility.
Given Sri Lankas robust growth and the CSEs attractive returns, the Sri Lankan
equity and debt markets offer a unique opportunity to investors in an investment era
impacted by economic growth worries.
Table of Contents
Sri Lanka South Asias fastest-growing economy
Sri Lankas growth story to continue with average GDP growth of 8% per annum over the next three years
Despite growth, inflation to be maintained at mid-single digits
Robust exchange rate policy has minimized currency risk
Government targets 3.8% budget deficit by 2016E without compromising economic growth
Increased foreign direct investments (FDIs) A sign of growing investor confidence
10
Improvements in socio-economic indicators create an environment conducive for investments
11
Sri Lanka targets USD100bn economy by 2016E, driven by growth in tourism, transportation, and
export-oriented industries
16
#1 Tourism remains the center of attraction in Sri Lankas growth story
16
#2 Port expansion plans aimed at promoting Sri Lanka as a leading transshipment hub
17
#3 Outsourcing industry to fuel growth in export earnings
18
#4 Increased consumer demand and foreign investments drive growth in real estate and financial services
19
Sri Lankas capital market on a higher growth trajectory supported by strong market fundamentals
24
CSE has had a bull run unmatched by most other markets since 2009
24
Market capitalization/GDP of 30% indicates further growth potential
25
Sri Lankan equity market trades at a discount despite strong fundamentals
25
The CSE provides a good diversification option for emerging market investors
26
Increased foreign investor confidence in the market witnessed through net foreign buying
27
Liquidity remains a concern, but corrective action is being taken to address this issue
29
S&P SL 20 Proxy to Sri Lankas growth story
29
The governments budget proposals stimulate capital market growth
31
Corporate debt market expands in 2013 and signals further growth potential
32
Unit trust investments Provides access to professional fund management services
33
How to invest in the Colombo Stock Exchange
40
How to open a CDS account
40
Trading on the CSE
41
Market indices
41
Trading details
42
Transaction costs
42
Settlement 43
Infrastructure and systems
43
Regulatory framework
45
CSE Governance structure
45
Other stock market-related information
45
Members 46
Trading members
48
Custodian banks
50
Unit Trust Management Companies
52
Colombo Stock Exchange Holidays for 2014
54
Sri Lanka is a land brimming with

great promise. We are ready for a
great leap forward through which
we will transform our nation to be a
smart nation, with smart people.
President Mahinda Rajapaksa
Sri Lanka South Asias fastest-growing economy

Sri Lankas economy has been on an upward trajectory since the end of the three-decade civil war in
May 2009. This significant growth has been a result of the peace dividend, along with subsequently
introduced well-executed development plans. Sri Lanka currently boasts South Asias highest GDP
growth, conducive fiscal and monetary policy, and favorable socio-economic conditions, which together
create an attractive investment destination.
Sri Lankas growth story to continue with average GDP growth of 8% per annum over
the next three years
Since the end of the war, the Sri Lankan economy has grown at an impressive 7.5% per annum (Exhibit 1) well
above that of the global economy and indicative of resilience in the wake of domestic and global challenges. The
Central Bank of Sri Lanka (CBSL) expects the economy to grow at an average 8% per annum over the next three
years, even amid the global slowdown; this growth rate is much higher than that expected in other emerging and
developing economies (Exhibit 2).
Exhibit 1:
Sri Lankas GDP growth to maintain

upward trajectory
Source: Central Bank of Sri Lanka, Department of Census and

Statistics
Exhibit 2:
Sri Lankas growth to continue outpacing

that of the global economy
Source: World Economic Outlook (WEO)
Per capita income to reach USD4,000 by 2016E

Sri Lankas per capita income jumped to USD3,282 by the end of 2013 from USD1,421 in 2006 on the back
of significant GDP growth. Sri Lankas per capita income is significantly higher than that of other South Asian
countries and compares well with more advanced economies such as Indonesia and Thailand (Exhibit 3). The
Sri Lankan government expects per capita income to rise to USD4,000 by 2016E; this would be indicative of a
strong middle-income economy and represents a per capita income CAGR of 7% for 2014E-2016E (Exhibit 4).
Next three years to see a 22% increase in

per capita income
Exhibit 4:
GDP per capita (2012) : Sri Lanka vs. peers

5,480
2,923
3,557
Thailand
Indonesia
Sri Lanka
Vietnam
1,755
1,257 1,489
India
752
Pakistan
USD
6,000
5,000
4,000
3,000
2,000
1,000
0
Sri Lankas per capita income is far ahead

of its South Asian peers
Bangladesh
Exhibit 3:
Source: The World Bank
Source: Central Bank of Sri Lanka
Despite growth, inflation to be maintained at mid-single digits

After the war, both headline and core inflation dropped to single digits from the double digits that prevailed during
the wartime (Exhibit 5). The country has reined in inflation to single digits for close to five years. (Exhibit 6).
Headline inflation came in at 4.7% during December 2013 (the lowest figure in the past 22 months), below
5.6% reported in November 2013. Inflation continued at mid-single digit levels despite a decline in the average
weighted prime lending rate (AWPR) over 2013, with interest rates ending the year at 9.96% (compared with
14.14% during end-2012). This decline in inflation during the year was due to the moderation of global commodity
prices, contraction of fiscal deficit, lagged effect of the effective monetary policy stance and lack of significant
domestic supply-side shocks. The government continues to target mid-single digit inflation over the next three
years and has focused on obtaining financing from non-inflationary sources, such as debt and equity markets,
and through direct financing from external sources.
2007
2008
2009
2010
2011
2012
2013
Source: Department of Census and Statistics, Central Bank of

Sri Lanka
Headline
Core
Dec-13
0.0
2006
2.1
Aug-13
4.5
5.0
Mar-13
5.8
6.9
4.7
Oct-12
6.9
May-12
7.0
Jan-12
7.0
Headline and core inflation movement

(Jan 2010- Dec 2013)
Aug-11
7.7
Mar-11
8.5
12.0
10.0
8.0
6.0
4.0
2.0
0.0
Oct-10
10.0
Core inflation annual average (2006-2013)

13.6
Headline inflation less than 10% for 59

consecutive months
Exhibit 6:
May-10
15.0
Post-war core inflation has averaged 6.2%
Jan-10
Exhibit 5:
Headline (annual avg.)
Source: Department of Census and Statistics, Central Bank of

Sri Lanka
7
Robust exchange rate policy has minimized currency risk

Over the past two years, the government has responded to a high import bill with a more flexible exchange
rate policy that better reflects market conditions. In February 2012, the government depreciated the Sri Lankan
rupee (LKR) against major foreign currencies; the rupee depreciated 12.1% against the US dollar (Exhibit 7)
throughout 2012. Furthermore, the rupee depreciated 4.3% to reach a high of LKR133.1/USD in September
2013 (from the start of the year). Subsequently, the rupee rebounded and appreciated 1.7% from September to
December 2013 (to reach LKR130.8/USD on December 31 2013). With the rupee now stable at LKR131/USD,
2013 witnessed an overall rupee depreciation of only 2.5% against the USD. The government maintains that the
depreciation is a corrective measure to curb the trade deficit and make exports competitive.
Recovery in balance of payments provides impetus for a stable currency

Sri Lankas balance of payment (BOP) has continued to strengthen, with a USD985m surplus, growing from a
USD151m surplus in 2012 (Exhibit 8). The CBSL expects the BOP to further improve to an estimated USD3.7bn
in 2016E due to a projected increase in capital inflows and improving trading conditions. The government is also
committed to reducing Sri Lankas dependency on imported crude oil which currently accounts for ~25% of
imports. With several coal and renewable energy projects underway, Sri Lanka is looking at a favorable energy
mix by 2015, with dependency on imported crude oil falling to 8% from 31% in 2010.
Exhibit 7:
LKR
250
Rupee to stabilize at LKR131 per US dollar

in the medium term
Exhibit 8:
Balance of payment to continue to

strengthen through 2016E
LKR movement against USD, EUR and GBP

(Jan 2007-Dec 2013)
200
100
Jan-07
May-07
Oct-07
Mar-08
Jul-08
Dec-08
May-09
Sep-09
Feb-10
Jul-10
Nov-10
Apr-11
Sep-11
Jan-12
Jun-12
Oct-12
Mar-13
Aug-13
Dec-13
150
LKR/USD
Source: Bloomberg
LKR/EUR
LKR/GBP
Government targets 3.8% budget deficit by 2016E without compromising economic growth
Sri Lankas fiscal deficit has steadily declined since 2009, and the government projects a further drop to 3.8% of
GDP in 2016E (Exhibit 9). The government expects to achieve greater fiscal consolidation through expenditure
rationalization policies, while maintaining public investment at levels that support economic growth (Exhibit 10).
Tax reform policies implemented since 2011 have also increased revenue mobilization.
Exhibit 9:
A 3.8% fiscal deficit target set for 2016E
Exhibit 10:
Disciplined recurrent expenditure

management should lower fiscal deficit
Prudent debt management strengthens countrys balance sheet

Sri Lanka has never been in sovereign debt default and has a good track record of managing debt. The debtto-GDP ratio steadily declined starting 2009, and stands at 78.3% in 2013 (declining from 79.1% in 2012). The
government targets a debt-to-GDP ratio of 65% by 2016E, mainly on the back of economic expansion (Exhibit
11).
Exhibit 11:
Debt-to-GDP to fall to 65% by 2016E
Sri Lankas credit ratings reflect strong economic trajectory

Sri Lankas sovereign credit ratings have improved since the end of the war, and this has helped it access
international capital. The country has maintained its ratings over the past three years (Exhibit 12) despite many
countries having their sovereign ratings downgraded.
Exhibit 12:
Sri Lankas sovereign credit ratings remained largely unchanged in 2013

Fitch
B+
negative
2009
B+
positive
2010
BBstable
2011
Standard & Poor's
BBstable
2012
BBstable
2013
B
negative
2009
B+
stable
2010
B+
positive
2011
Moody's
B+
stable
B+
stable
B1
stable
2012
2013
2010
B1
positive
B1
positive
2011
2012
B1
stable
2013
Source: Fitch, S&P and Moodys
Fitch Ratings maintained its rating and believes Sri Lankas resilient growth performance, healthy human
development and strong payment record should offset weakness in its fiscal and external balance sheet and
moderate domestic savings relative to investment needs.
S&P affirmed its rating due to the countrys robust growth prospects, progress in addressing a number of its
structural weaknesses through fiscal measures as well as success in maintaining inflation at single digits.
However, the rating agency cautioned against Sri Lankas weak external liquidity and a moderately high and
increasing net external liability position.
Moodys confirmed Sri Lankas stable rating, but revised its outlook to stable from positive. The rating agency
stated the revision was due mainly to the decline in the countrys strength of its external payment position over
the past two years and a slowdown in the pace of its fiscal consolidation.
Increased foreign direct investments (FDIs) A sign of growing investor confidence

Sri Lankas attractive investment climate has helped the country capture substantial FDI inflows. The government
is estimated to have achieved FDI inflows of approximately USD1.5bn in 2013 (from USD1.3bn in 2012) and
expects this positive momentum to continue. The governments infrastructure development strategy and tax
incentives, as well as the countrys favorable socio-economic indicators, have enhanced investor confidence;
this, together with the relaxation of exchange control regulations, should boost FDI inflows.
10
Exhibit 13:
FDI inflows to reach USD1.4bn in 2013
Source: Ministry of Finance and Planning, Board of Investment of Sri Lanka, Central Bank of Sri Lanka
Improvements in socio-economic indicators create an environment conducive

for investments
Doing Business Index Ranked #1 in South Asia
Sri Lanka is the highest-ranking country in South Asia on the International Finance Corps Doing Business
Index. Although the countrys position slipped four places to reach 85 in 2014, it continues to remain in the #1
position across South Asia (Exhibit 14).
Human Development Index Reached High Human Development status in 2012

In 2012, Sri Lanka improved its HDI status to High Human Development from Medium Human Development
and is ranked 92 out of 187 countries. In addition, Sri Lankas HDI value has been higher than the world
average since 2005 (Exhibit 15).
105
Bangladesh
130
129
122
India
134
132
132
Bhutan
141
148
142
Afghanistan
164
168
160
Source: Central Bank of Sri Lanka, World Bank
2012
107
107
2010
108
110
2008
105
Pakistan
2006
Nepal
2004
79
2002
95
2000
95
Sri Lanka's HDI status compared with the

region and world: 1980-2012
1998
Maldives
HDI Value
0.8
0.7
0.6
0.5
0.4
0.3
1996
89
1994
81
1992
85
1990
Sri Lanka
1988
2012
1986
2013
Sri Lanka moved into High Human

Development status in 2012
1984
2014
Exhibit 15:
1982
Sri Lanka #1 in Ease of Doing Business

in South Asia since 2013
1980
Exhibit 14:
Sri Lanka
High Human Development
Medium Human Development
South Asia
World
Source: Human Development Reports (1980-2012)
11
The Sri Lankan government has

identified the Tourism sector
as a key growth area in postconflict development with an
ambitious target of attracting
2.5m visitors by 2016.
Board of Investments in Sri Lanka
Sri Lanka targets USD100bn economy by 2016E, driven by

growth in tourism, transportation and export-oriented industries
The Sri Lankan government targets a continuation of the countrys growth trajectory in the medium
term, resulting in a USD100bn economy by 2016E (from an estimated USD67bn in 2013). Sri Lanka
continues to provide an attractive alternative, driven by a number of growth areas, against the current
global economic backdrop impacted by growth worries.
#1 Tourism remains the center of attraction in Sri Lankas growth story

Tourist arrivals have steadily increased each year since the end of the war due to improved security and have
doubled since 2009. The number of arrivals rose 27% year-over-year (YoY) in 2013, (Exhibit 16). Similarly,
foreign exchange earnings from tourism grew at a CAGR of 36% starting 2010 to reach USD1.5bn in 2013
(Exhibit 17). The Sri Lanka Tourism Development Authority (SLTDA) targets 2.5m tourist arrivals by 2016E (at
a 25% CAGR over 2014E-2016E), with foreign exchange earnings from tourism growing at a 29% CAGR over
2014E-2016E to reach USD3.1bn by 2016E (Exhibit 17).
1,500,000
1,274,593
1,005,605
855,975
654,476
Exhibit 17:
USDm
3,500
Tourism industry to contribute USD3.1bn in

foreign exchange by 2016E
Foreign exchange earnings from tourism: 20102016E
3,000
2,500
2,000
1,500
Source: SLTDA, Central Bank of Sri Lanka
2014E
2013
2012
2011
1,000
2010
2009
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
447,890
Total tourist arrivals: 2008-2016E
2,500,000
Tourist arrivals to more than double by

2016E
2016E
Exhibit 16:
500
0
2010
2011
2012
2013
2014E
2016E
Source: SLTDA, Central Bank of Sri Lanka
Sri Lanka was named as the #1 travel destination for 2013

Travel guide leader Lonely Planet named Sri Lanka as the top travel destination for 2013. British Airways too
named Sri Lanka as its top travel destination for 2013, highlighting the diversity offered in a relatively small
country. Earlier, National Geographic named Sri Lanka the top travel destination for 2012, pointing to the
countrys beaches, wildlife, heritage and historical sites.
16
Tourism industry continues to attract public and private investments

The government is promoting tourism through airport expansions, infrastructure development, tax incentives
and promotional campaigns. Local and foreign hotel developers are investing heavily in anticipation of increased
tourist arrivals. Some of these development projects are detailed below:
Several domestic-listed companies have drawn up plans to open hotels in several parts of the country, including
Trincomalee, Yala, Kalpitiya, Wilpattu and Galle; these hotels would contribute towards the SLTDAs 2015 target of 30,000
hotel rooms.
In addition, several international chains are set to launch hotels around Sri Lanka. Hyatt Hotels Corporation aims to launch
the Hyatt Regency Colombo in 2014. The Sheraton brand, owned by US-based Starwood Hotels & Resorts Worldwide
Inc., has signed an agreement to manage and operate the Sheraton Colombo hotel. This USD80m, 306-room luxury hotel
is expected to start operations in 2014. Shangri-La, a Hong Kong-based hotel chain, is investing USD350m in a 6-star,
500-room hotel on Galle Face Green, Colombo 01, expected to commence operations in a couple of years. The company
has also invested USD150m in a 300-room hotel in Hambantota, to be opened in 2014.
A number of integrated resort projects are in the pipeline, namely the Waterfront Development Project (by John
Keells Holdings PLC), Crown Sri Lanka, and the Queensbury (by Vallibel One PLC), with their estimated completion
dates scheduled within three to five years.
#2 Port expansion plans aimed at promoting Sri Lanka as a leading transshipment hub
Sri Lanka has the potential to become a transshipment hub in Asia owing to its strategic location on several
shipping routes, coupled with ongoing investment and expansions. The countrys container port traffic increased
to 4.3m twenty-foot equivalent units (TEUs) in 2013 from 3.1m TEUs in 2006 at a CAGR of 4.9% (Exhibit 18).
The announcements made in late-2013 regarding the free-port concept at the Colombo and Hambantota ports
should only serve to fuel this growth trajectory.
Exhibit 18:
Sri Lankas container port traffic increased at 4.9% CAGR over 2007-2013
Container port traffic (TEUm): 2006-2013
5.0
4.0
3.0
3.7
3.7
2007
2008
3.1
3.5
4.0
4.2
4.2
4.3
2011
2012
2013
2.0
1.0
0.0
2006
2009
2010
Source: World Bank data, Sri Lanka Ports Authority, Central Bank of Sri Lanka
Expansions underway to increase port capacity to 32.5m TEUs by 2015E

The Colombo ports current capacity is 7.5m TEUs; the completion of two additional terminals will increase
capacity to 12.5m TEUs by 2015E. With the Colombo port reaching full capacity, the completion of the
Hambantota port will ease container traffic and equip Sri Lanka to handle more ships. Upon completion in 2015,
the Hambantota port will be able to handle 20m TEUs per year and benefit from its proximity to international
shipping routes, which are utilised by ships from Asia and Europe. The Hambantota ports location makes the
17
port a convenient stop for ships from China that need to refuel, break bulk cargo and supply replenishment. The
port can also provide ships from China ample space to set up extensive warehouses for storage and break bulk
handling, which Singapore and Thailand have had difficulty providing in recent times. The new capacity additions
will place Sri Lanka on par with Singapore, one of the largest transshipment hubs in Asia.
#3 Outsourcing industry to fuel growth in export earnings

Knowledge services industry to generate USD1bn in foreign exchange earnings by 2016E
The knowledge services industry comprising information technology (IT), business process outsourcing (BPO)
and knowledge process outsourcing (KPO) generates earnings of about USD600m (4% of exports) in foreign
exchange and provides approximately 65,000 jobs. It grew at a CAGR of 25% over 2008-2012 (Exhibit 19).
Sri Lanka is ranked 21st in AT Kearneys (a global management consulting firm) Global Services Location Index
after entering the index only three years ago. In October 2013, the country was also awarded the Outsourcing
Destination of the Year, presented by the National Outsourcing Association, UK. Sri Lanka stands to gain further
from this sector, given the countrys high literacy rate of more than 90%, good standard of English and cost
advantages (as much as 30% lower than other countries involved in outsourcing). The Sri Lankan government
is promoting the industry through tax incentives and investments in training and development, with a target of
150,000 jobs and over USD1bn of foreign exchange earnings by 2016E.
Apparel industry continues to be largest contributor to exports, with earnings target of USD5bn by
2015E
The apparel industry contributed roughly 40% of Sri Lankas export revenues in 2013, thus making it the single
largest contributor. Apparel sector exports rebounded recording growth of 8% in 2013 after experiencing a 5%
decline in 2012. The Sri Lankan apparel industry currently provides services to top international brands, such as
Victorias Secret, Nike, Tommy Hilfiger, Next and Marks & Spencer. This industry directly employs approximately
300,000 and indirectly employs an additional 600,000.
In recent budgets, the government extended several incentives to the apparel industry, including depreciation
allowances and lower sea port and airport levies, to help it become more competitive with international peers.
The industry is targeting revenues of USD5bn in 2015E at an 8% CAGR (Exhibit 20).
Knowledge services industry to
Exhibit 19: contribute USD1bn in foreign exchange
earnings by 2016E
USDm
1,200
1,000
800
600
600
200
0
Apparel industry to contribute USD5bn in

foreign exchange earnings by 2015E
IT/BPO industry earnings: 2007-2016E
1,000
400
Exhibit 20:
193
2007
256
270
310
2008
2009
2010
400
2011
Source: SLASSCOM, Central Bank of Sri Lanka
2012
2016E
18
#4 Increased consumer demand and foreign investments drive growth in real estate
and financial services
Local and foreign investment appetite has driven a real estate boom
Real estate demand in urban areas has been buoyant over the past two years owing to an expanding middle
class and interest from the expatriate community. Urban land prices should see double digit growth after 2013 on
account of this high demand, as per the findings of the Research Intelligence Unit (a Sri Lanka-based research
and consultancy firm). Meanwhile, several development projects have been planned or are under construction in
Colombo, which should be supported by the 2014 budgets proposal of imposing only a 15% tax charge on lease
of land to foreigners. Some of the afore-mentioned development projects are listed below:
Altair, Sri Lankas tallest condominium, located near the Beira Lake and consisting of 400 units, is set for completion by
2017. The project is valued at USD250m.
The OnThree20 apartment project, developed by John Keells Holdings PLC, is a USD65m project expected to feature 475
apartment units. The company aims to complete this by December 2014.
Iconic is another luxury apartment complex being set up in Rajagiriya (a suburban city south of Colombo). With an
investment of USD30m, this project will house 188 apartments and is expected to be completed in mid-2014.
Financial services sector expands to keep pace with economic developments

The banking sectors total loan book grew at a 16% CAGR over 2009-2013 on the back of increased economic
activity (Exhibit 21). Over 2008-2013, the number of licensed commercial bank (LCB) branches and other outlets
increased at a CAGR of 4% and the number of ATMs grew at a CAGR of 9% (Exhibit 22).
Exhibit 21:
Banking sectors loan book has

expanded significantly since 2009
Exhibit 22:
Bank branches and ATM networks have

seen considerable growth since 2007
The Sri Lankan government has extended several incentives to the financial services sector in order to continue
supporting economic growth and personal consumption. One proposal allows LCBs to borrow up to USD50m
each year from 2013-2015, without obtaining approval from the Exchange Control Department. Another proposal
allows National Development Bank (NDB) and DFCC Bank (DFCC) to raise up to USD250m each from foreign
sources over a 10-year period in order to provide long-term financing to key growth sectors. The government will
underwrite the exchange risks of these borrowings. In line with this, DFCC issued USD100m in debt in October
2013.
19
Now we are ready to take off.

The opportunity is in the time to
come and we invite you to look
positively at Sri Lanka and do your
own research and understand the
country and see how best you can
make use of these opportunities
yet to come.
Chairman, Securities and Exchange
Commission of Sri Lanka
Sri Lankas capital market on a higher growth trajectory

supported by strong market fundamentals
The Sri Lankan equity market offers a rare and attractive alternative to investors in an investment era
impacted by economic growth worries. Backed by the countrys robust economic growth, the Sri Lankan
capital market is well set to offer attractive returns to investors who are keen to be a part of this emerging
market success story. There are several strong incentives for entering the Sri Lankan capital market.
CSE has had a bull run unmatched by most other markets since 2009
As on 31 December 2013, the CSE had listed on it 289 companies covering 20 sectors, with a market capitalization
of approximately USD19bn. The CSE witnessed remarkable growth after the end of the war, with the benchmark
All Share Index (CSEALL) peaking at 7,800 points in February 2011. Given the bourses unprecedented growth
levels, Bloomberg named it one of the best-performing stock markets in the world for the years 2009 and 2010.
The CSEALL, on average, performed better (over June 2009-December 2013) than global indices (Exhibit 23)
and some of the best-performing regional indices (Exhibit 24), although growth over the immediate post war
period eased after mid-2011 due to a market correction.
Positive market sentiment and conducive regulatory environment has driven market recovery
since mid-2012
However, market fundamentals remain strong, with corporates performing well in the wake of the booming
economy. The market grew 22% by end-2013 after it bottomed out in May 2012; improved market sentiments
and the easing of market liquidity drove this growth.
The CSEALL has significantly
Exhibit 23: outperformed global and developed
market indices
400
320
CSEALL performance against global indices:

(June 09 - Dec 13)
Exhibit 24:
400
200
160
100
0
Jun-09 Mar-10 Dec-10 Sep-11 Jun-12 Mar-13 Dec-13
CSEALL
Dow Jones
FTSE 100
MSCI World
DAX
Source: Bloomberg
CSEALL performance against regional indices:

(June 09 - Dec 13)
300
240
80
The CSEALL has also outperformed some of

the best-performing regional indices
0
Jun-09 Mar-10 Dec-10 Sep-11 Jun-12 Mar-13 Dec-13
CSEALL
Jakarta (JCI)
Thailand (SET)
MSCI Emerging Market Index
Bombay (BSE 500)

Philippines (PASHR)
Hanoi (VNINDEX)
Source: Bloomberg
24
Market capitalization/GDP of 30% indicates further growth potential

Market capitalization has more than doubled since 2009 and stood at LKR2,460bn (approximately USD19bn)
as at 31 December 2013 (Exhibit 25). Nevertheless, there is further growth potential since the CSEs market
capitalization/GDP is still low compared to that of most other emerging markets in the region (Exhibit 26). The
government expects the CSEs market capitalization to reach LKR6,500bn by 2016E.
6,500
53%
Philippines
Thailand
43%
India
30%
Sri Lanka
2,460
2013
29%
Bangladesh
2,168
2012
Source: Bloomberg, Central Bank of Sri Lanka
87%
77%
Vietnam
2,214
2011
Market cap/GDP ratio 2012
17%
2016E
2,211
2010
2009
489
2008
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
1,092
Market capitalization: 2008-2016E
LKRbn
Market capitalization/GDP is still low vs.

other emerging markets in the region
Exhibit 26:
Indonesia
The CSEs market capitalization has

doubled since 2009
Exhibit 25:
Source: Bloomberg
Sri Lankan equity market trades at a discount despite strong fundamentals

The CSEALL currently trades at a low P/E valuation compared with most of its regional peers, despite the
country being one of the fastest-growing economies in the world. The CSEALLs current valuation of 12.8x is at
a 22% discount to its regional peers. Similarly, the CSEALLs forward valuations also trade at discounts to peers
(Exhibit 27), despite expected growth in market EPS over the next 12 months (Exhibit 28).
The CSEALLs P/E valuation at a discount
to regional peers
Exhibit 27:
X
20
P/E valuation - Sri Lanka vs. regional peers
The CSEALLs EPS growth to continue

despite a modest dip in 2013
CSEALL Index forward 2009-2014E
700
600
15
500
10
376
400
Current
Source: Bloomberg
1 yr fwd
2 yr fwd
Thailand
Philippines
Indonesia
India
Vietnam
Sri Lanka
5
0
Exhibit 28:
449
492
466
2012
2013
525
300
200
100
0
116
2009
2010
2011
2014E
Source: Bloomberg
25
Most sectors in the CSEALL trading below market and historical valuations
The Hotels & Travel, Diversified and Beverage, Food & Tobacco sectors have consistently traded at higher
P/E multiples than the market over the past four years, thus reflecting their growth trajectory. However, most
other sectors with similar growth potential, such as Manufacturing, Power and Energy, Land & Property and
Construction & Engineering, still trade below the market (Exhibit 29). The P/B valuation shows a similar trend,
with most sectors trading below the four-year market average and historical sector valuations, thereby presenting
attractive investment opportunities (Exhibit 30).
Exhibit 29:
Most sector P/Es are below market

average and historical valuations
Exhibit 30:
Sector P/E ratio: 2010 - 2013
50
Trend is similar on P/B basis

Sector P/BV ratio: 2010 - 2013
6
5
40
30
2010
2012
Avg. market P/E 2010-2013
Source: Colombo Stock Exchange
2010
2011
2012
2013
Trading
Telecommunication
Services
Power & Energy
Plantations
Manufacturing
Land & Property
Investment Trusts
Hotels & travels
Diversified
Trading
Telecommunication
Services
Plantations
2011
2013
Power & Energy
Manufacturing
Land & Property
Investment Trusts
Diversified
Hotels & travels
Construction & Engineering
Chemicals & Pharmaceuticals
Beverage, Food & Tobacco
Banks, Finance & Insurance
Construction & Engineering
10
20
Avg. market P/BV 2010-2013
The CSE provides a good diversification option for emerging market investors
The CSEALL index has little or no correlation with major worldwide indices, thus making it a good diversification
option for investors (Exhibit 31).
The MSCI Emerging Market Index has strong correlation with some of the major indices, while the CSEALL has
weak correlation to the same indices (Exhibit 32). This provides a good diversification option for those looking
to invest in emerging markets.
26
Exhibit 31:
The CSEALL has very low correlation with

global markets
Exhibit 32:
The CSEALL is a better diversification option

vs. MSCI Emerging Market Index
CSEALL vs. global indices :

June 2009 - Dec 2013
400%
MSCI Emerging
Market Index
CSE All Share

Index
300%
DJI
0.634159
0.456548
200%
S&P 500
0.632342
0.383773
FTSE 100
0.774584
0.382894
HSI
0.935409
0.256034
STI
0.900236
0.401249
MSCI World
0.746769
0.162613
100%
0%
Jun-09
Jul-10
CSEALL
DJI
FTSE 100
Straits Times
Sep-11
Oct-12
Dec-13
MSCI emerging
S&P 500
Hang Seng
MSCI world
Source: Bloomberg
Source: Bloomberg
Increased foreign investor confidence in the market witnessed through net

foreignbuying
In 2012, the market witnessed a net positive flow of foreign investments of LKR39bn, epitomizing foreign investor
confidence in Sri Lankas economic prospects. This trend continued into 2013 with net foreign inflows reaching
LKR23bn from net foreign outflows of LKR32bn in 2010 and LKR19bn in 2011 (Exhibit 33).
Foreign turnover levels increased to LKR72bn during 2013, significantly higher than the levels seen over the
past two years. Foreign turnover came in at LKR59bn in 2011, while it reached LKR53bn in 2012 (Exhibit 34).
Exhibit 33:
LKRbn
150
The CSE witnessed a significant increase

in net foreign buying in 2012 and 2013
Foreign inflows: 2009 - 2013
Exhibit 34:
LKRbn
600
100
Foreign turnover increased in 2013 despite

lower overall market turnover
Market turnover split: 2009 - 2013
400
50
200
0
-50
2009
Purchases
2010
2011
Sales
2012
2013
Net foreign flow
2009
2010
Foreign
2011
2012
2013
Domestic
27
Banks, Finance & Insurance sector the top pick of foreign investors in 2013
During 2013, Banks, Finance & Insurance witnessed the most net foreign inflows, followed by the Beverage,
Food & Tobacco and Diversified sectors. The Motors sector also returned net inflows of close to LKR2.0bn over
the same period (Exhibit 35).
Exhibit 35:
Sectors that witnessed net positive inflows during 2013 (in LKRbn)
2009
2010
2011
2012
2013
(3.78)
(6.42)
(9.45)
2.89
10.71
0.60
2.81
(3.96)
4.02
5.63
Diversified
0.55
(17.13)
(4.45)
29.68
4.77
Motors
0.02
(0.72)
(0.69)
(0.68)
1.85
Telecommunication
(0.49)
(1.61)
(0.30)
(0.09)
0.95
Manufacturing
(0.34)
(0.65)
(1.16)
1.37
0.68
0.00
(0.14)
0.47
(0.15)
0.32
Land & Property
(0.04)
(0.90)
(1.53)
0.22
0.16
Footwear & Textiles
(0.16)
(0.30)
(0.04)
1.31
0.12
(0.42)
(0.24)
0.05
0.00
0.08
Plantation
(0.17)
(0.17)
(0.16)
(0.02)
0.07
0.01
(0.02)
(0.27)
(0.00)
0.00
(0.79)
(32.19)
(19.04)
38.67
22.78
Information Technology
Stores & Supplies

Net Inflows
28
Liquidity remains a concern, but corrective action is being taken to address this issue
Market liquidity contracted during the early part of 2012; however, volumes have picked up since then and
are now on par with the five-year historical average (Exhibit 36). Factors that contributed to this spike include
the CSEs decision to relax some of its rules relating to broker credit. Furthermore, a rebound in retail investor
sentiment has also contributed to the markets increased liquidity. One of the key concerns of investors has
been the lack of liquidity in the market, which constricts block trades and easy exits. Even though the CSEALL
currently has a free float of ~25%, most companies within the index have a free float of less than 5%. In a bid
to increase liquidity, the Securities and Exchange Commission (SEC) of Sri Lanka issued a directive stating
that Main Board-listed companies should have a minimum public free float of 20%. This continuous listing
requirement is effective from 1 January 2014.
Exhibit 36:
Volume Level
Oct-13
Dec-13
Aug-13
Apr-13
Jun-13
Feb-13
Oct-12
Dec-12
Aug-12
Apr-12
Jun-12
Feb-12
Oct-11
Dec-11
Aug-11
Apr-11
Jun-11
Feb-11
Oct-10
Dec-10
Aug-10
Apr-10
Jun-10
Feb-10
Oct-09
Dec-09
Aug-09
Apr-09
Jun-09
Feb-09
Oct-08
Dec-08
Jun-08
Aug-08
May-08
Jan-08
The CSEALL's average daily volume: 2008 to 2013
Mar-08
m
300
250
200
150
100
50
0
Market liquidity has improved following improvements in broker credit and market sentiment
Average
S&P SL 20 Proxy to Sri Lankas growth story

The S&P SL 20, which was introduced in 2012, consists of the 20 largest blue chip companies in Sri Lanka
based on total market capitalization, with the highest liquidity listed on the CSE. Based on calculated historical
prices, the S&P SL 20 has consistently mirrored the CSEALLs performance, providing a good proxy for overall
market performance (Exhibit 37).
29
S&P SL 20 includes some of the most liquid stocks in the CSE

Given the criteria to be included in the S&P SL 20, most companies in the index have much higher free floats
than those of the rest of the market; this factor increases the investibility of the index (Exhibit 38).
Exhibit 37:
S&P SL 20 has gained more than 272%

since 2009
Exhibit 38:
Most companies in S&P SL 20 have higher

free floats than the broader market
CSEALL vs. S&P SL 20: 2009- 2013
400%
S&P 20 Index
Dec-13
Jul-13
Jan-13
Aug-12
Mar-12
Sep-11
Apr-11
Oct-10
May-10
Nov-09
Jun-09
0%
Jan-09
200%
CSEALL Index

Note: S&P SL 20 index information prior to 2012 is compiled based
on index constituents
Source: Bloomberg, company reports
The S&P SL 20 has a good representation of Sri Lankas growth sectors

The S&P SL 20, based on market capitalization, mainly comprises companies in the Food, Beverage & Tobacco
(35%), Diversified (29%) and Banks, Finance & Insurance (21%) sectors (Exhibit 39).
The companies in the index have strong exposure to the economys key growth areas, thus providing a gateway
to investors looking to benefit from the Sri Lankan growth story (Exhibit 40). The S&P SL 20 has 50% exposure
to the Beverage, Food & Tobacco sector which should see strong growth in the medium term on the back of
per capita income growth and an expanding middle class. Given the governments budget incentives, increasing
demand in personal consumption and the robust business climate, the Banking, Finance & Insurance sector is
also positioned to perform well; the index has an exposure of 26% to this sector. The indexs 6% exposure to
the Telecom sector should benefit from increasing mobile and Internet penetration and from Sri Lankas move
towards becoming a commercial hub within the region. The index has only 4% exposure to the burgeoning
tourism sector, but this should increase rapidly as corporate revenues benefit from growth in tourist arrivals.
30
Exhibit 39:
S&P SL 20 weighted towards F&B and

Diversified companies
Exhibit 40:
S&P SL 20 highly exposed to sectors driven

by consumer demand
S&P SL 20 composition
2%
5%
2%
S&P SL 20 exposure to sectors

4% 10%
6%
21%
26%
29%
50%
6%
35%
Diversified
Hotels and Travels
Manufacturing
Oil Palms
Telecommunication
4%
Food and Beverage
Tourism
Telecom
Financial
Real estate
Transportation and Logistics
Other
Source: Company Annual Reports
The governments budget proposals stimulate capital market growth

The Sri Lankan government is committed to providing incentives for investors in order to stimulate market
activity and expansion. The governments 2013 and 2014 budget proposals introduced a number of measures
aimed at market participation at different stakeholder levels:
A three-year half-tax holiday for companies seeking a new listing, with at least a 20% float
Exemption of stamp duty for transferring shares to and from margin-trading accounts
A reduction of the tax rate on unit trust management companies to 10% from the current 28%
The full allowance of expenses incurred on the establishment of Broker Back Office systems to be compliant with CSE
requirements in relation to risk management systems
The allowance of direct investments in foreign currency in unit trusts without a Securities Investment Account (SIA)
The appointment of a Presidential Task Force to implement a Capital Market Development Master Plan to oversee the
development of the countrys capital market
31
Corporate debt market expands in 2013 and signals further growth potential
Corporate bonds worth LKR68.3bn issued in 2013
The CBSL targets growing the corporate bond market to USD10bn by 2016E from its current levels. The
government took the first step in this direction by removing withholding tax on interest earned on listed debt
(previously 10%) starting January 2013. As a result, debentures worth LKR68.3bn were issued in 2013 (from
LKR12.5bn in 2012), with approximately 84% of these issues coming from banks and other financial institutions.
Exhibit 41:
Over 80% of funding came from financial institutions

Funds raised through listed debentures in 2013
16%
32%
49%
3%
LCBs
LSBs
LFCs
Non-financial institutions
In a low interest rate environment, Sri Lankan corporate issuances present attractive investment
opportunities
Despite a recent spike in yields due to the impact of a global asset sell-off, yields on the governments sovereign
debt issuance have been on a downward trend since mid-2012. Meanwhile, corporate debenture issuances in
Sri Lanka carried rates of 13-15% (the effective annual interest rate), well above the government bond rate of
11%. With government interest rates on a decline and a low interest rate environment in most economies, local
corporate issuances present attractive investment opportunities, providing healthy returns with relatively low
risks. Furthermore, in 2013, two of Sri Lankas leading savings and development banks leveraged increasing
investor appetite by completing bond issuances state-owned National Savings Bank raised USD750m in
September and DFCC Bank raised USD100m in October.
Sri Lankan debt market still dominated by government securities

Government securities accounted for the majority of Sri Lankas LKR3tn debt market. Although the bulk of
government debt is denominated in rupees, the government has successfully issued several foreign currency
bonds. Thus far, the government has issued six sovereign bonds; the most recent issuance, a five-year USD1bn
sovereign bond with a 6.0% coupon, was oversubscribed 3.2 times. At the same time, foreign holdings of Sri
Lankan debt increased to about 23% in 2012 from 3% in 2004.
32
Unit trust investments Provides access to professional fund management services

As on 30 November 2013, Sri Lanka had 44 unit trusts, including income, growth, gilt-edged, money market,
balanced, Shariah, equity and IPO funds.
Participation in unit trusts doubled in 2013, with assets under management (AUM) coming in at LKR47bn or
USD360m (compared with AUM of LKR23bn in 2012), with a majority of exposure to fixed income and equity
investments. This phenomenal growth is largely due to recent budget proposals, which include tax incentives
for participating in unit trusts, and the removal of restrictions on foreign participation, thereby creating another
avenue for foreigners to take part in the market.
Sri Lankas 2013 budget proposed the taxation of unit trust management companies be brought down to 10%
from 28% in order to strengthen the unit trust industry. Unit trust management companies, along with the SEC,
are presently undertaking a major public awareness campaign about the industry, with the aim of strengthening
its retail investor base.
Exhibit 42
Unit trust industrys AUM has doubled in 2013

Assets under management : 2008 - November 2013
LKRm
60,000
47,155
40,000
20,000
0
6,798
9,408
2008
2009
Equity
22,191
22,671
23,076
2010
2011
2012
Fixed income
2013
Other
Source: Unit Trust Association of Sri Lanka
33
Over the past three years, most unit trusts have outperformed the overall market
Unit trusts have provided investors high returns since 2009 and over the past three years, most unit trusts have
outperformed the CSEALL (Exhibit 43).
Exhibit 43
Returns of top five unit trusts (by market cap) has been higher than market return for most periods
PERFORMANCE
YTD 12 MONTHS 24 MONTHS 36 MONTHS
31-Dec-12 30-Dec-12 30-Nov-11 30-Nov-10
Beginning NAV date in the performance calculation

BENCHMARK PERFORMANCE
CSE All Share Index
2.34%
7.92%
-5.13%
-10.25%
Unit NAV as at
FUND PERFORMANCE
Cey bank Unit Trust
OPEN-ENDED
BALANCED FUNDS
2.81%
4.14%
-9.13%
-17.75%
Eagle Income Fund
OPEN-ENDED
INCOME FUND
10.59
11.96%
13.30%
27.51%
38.45%
National Equity Fund
OPEN-ENDED
BALANCED FUNDS
28.12
15.27%
17.69%
15.75%
4.06%
Eagle Gilt Edged Fund
OPEN-ENDED
GILT-EDGED FUNDS
10.18
10.27%
11.30%
19.29%
27.01%
Cey bank Savings Plus Fund
OPEN-ENDED
MONEY-MARKET FUNDS
10.56
10.27%
11.19%
22.80%
29.85%
30-Nov-13
26.18
Source: Unit Trust Association of Sri Lanka

* Above table only includes unit trusts that have been in operation before 30 November 2010
Please note that past performance of unit trusts is not indicative of future performance
How to invest in unit trusts

In order to invest in a unit trust, an individual should obtain an application and an offer memorandum from a
sales agent or a fund management company, and then hand over the completed form, along with a cheque in
favor of the management company or the place from which the form was received. The minimum that can be
invested is LKR1,000, which will be inclusive of a 5% front-end fee. The number of units allotted to an individual
is calculated by dividing the initial investment by the offer price on the day on which the payment is made.
34
Unit trust investments can bring significant benefits to retail investors
Unit trusts manage a portfolio of asset classes and provide investors options to diversify investments
Funds are administered by professional fund managers at a reasonable cost
Unit trust investment is hassle-free since there is minimum administrative work, and even this is often handled by the fund
management company
Investments can be liquidated at any time, as fund managers are obliged to buy back investments at the daily-quoted rates
Investors can choose from a wide range of funds, including equity growth, fixed income and balanced portfolio funds,
depending on their risk appetite. Sri Lanka also offers Shariah-compliant funds
Dividends, capital gains and sales proceeds from unit trusts are tax free
The 2013 budget, in a bid to popularize Sri Lankan unit trusts among foreign nationals and non-resident Sri Lankans,
proposed that direct investments in unit trusts in foreign currency need not be channelled through an SIA
Investors are protected by independent trustees, who are legally appointed under a deed of trust, to safeguard the
interests of unit holders
Most unit trust management companies in Sri Lanka are backed by banks or financial institutions, thereby providing the
unit trusts the same stability as their parent institutions
35
We want to tell our investors all over

the world that Sri Lanka is open for
business, it is an attractive destination.
The time to invest is now because Sri
Lanka is still undervalued and you
will have good values as far as your
investments are concerned.
Governor, Central Bank of Sri Lanka
How to invest in the Colombo Stock Exchange

The CSE provides both local and foreign investors an opportunity to diversify their portfolios through investment in
equity shares, units of closed-end funds, corporate debt and Sri Lankan government securities. The information
set out below will provide potential investors with the information they require to begin investment in the CSE:
How to open a CDS account

If an investor wishes to conduct share transactions through the CSE, he/she should open a securities account
in the CDS through a participant organization (a Stockbroker or a custodian bank). The applicant has to submit
the duly completed Client Account Opening Forms, together with the relevant supporting documents, to the
participant.
After scrutinizing the account opening documents, inclusive of the supporting documents, the CDS will register
the applicant in the CDS system.
Once the registration process is completed, the CDS system will generate an acknowledgment slip (CDS Form
13) with the Client Account Number. This acknowledgment would be handed over to the participant confirming
the CDS account opening.
Documents required
Details regarding the required documents for different individuals/entities can be found at the links below:
Local companies, foreign companies and designated accounts (margin trading accounts, collateral accounts and
segregated accounts):
http://www.cds.lk/service/opening-client-accounts-companies.html#sectionA
Resident individuals, plantation employees (if the NIC is not available) and internally displaced persons (IDPs):
http://www.cds.lk/service/opening-client-accounts-resident-individuals.html#sectionA
Non-resident foreigners and non-resident Sri Lankans:

http://www.cds.lk/service/opening-client-accounts-non-resident-individuals.html
Funds:
http://www.cds.lk/service/opening-client-accounts-funds.html
40
Trading on the CSE

Equity shares
To trade in the secondary market, the investor must contact his/her stockbroker. This can be done through a
personal visit, by phone or fax or through brokers who provide online trading. As at 31 December 2013, 284
companies were listed on the CSE.
Debt
As at 31 December 2013, 142 corporate debt securities were listed on the CSE. All government debt and
corporate debt securities are tradable through the Automated Trading System (ATS).
Market indices
The CSE has two main price indices (the CSEALL and S&P SL 20) and 20 sector price indices. Index values are
calculated on an ongoing basis during trading sessions, with closing values published at the end of regular trading
sessions.
The All Share Price Index (CSEALL)
CSEALL is a market capitalization-weighted index wherein the weight of a company is taken as the number of
ordinary shares listed on the market. This weighting system allows the price movements of larger companies
to have a greater impact on the index. This kind of weighting system was adopted on the assumption that the
general economic situation has a greater influence on larger companies than on smaller ones.
The S&P Sri Lanka 20 (S&P SL 20)
The index consists of the largest blue chip companies based on total market capitalization, with the highest
liquidity listed on the Sri Lankan stock market. The S&P SL 20 follows the methodology of Standard & Poors
indices in order to provide consistency, transparency and liquidity. The index was designed to be a basis for
tradable products, acting as a cost-effective and relatively simple method of replicating trading instruments, with
possible use as index funds and exchange-traded funds (ETFs). To warrant inclusion in the S&P SL 20, stocks
have to meet the standards set for size, liquidity and financial viability.
Size: Stocks are included only if they have a float-adjusted market capitalization of more than LKR500m as of the rebalancing reference dates. Stocks listed on the index have a three-stock buffer to be listed, i.e. a stock has to rank within
the top 23 in order to remain listed. If a stock listed on the index experiences a fall in market capitalization to less than
LKR500m, but is still at more than LKR300m, the stock will remain listed, given that it still ranks within the top 23 and
meets all other required criteria.
Liquidity: In order to ensure the maintenance of liquidity, a minimum six-month average daily value traded (ADVT) of
LKR1m is required. At each reconstitution, which occurs annually, companies listed on the index must maintain their ADVT
at LKR0.7m-1m in order to remain eligible.
Financial viability: In order to maintain eligibility, stocks must continue to be profitable, which is determined by earning
positive net income over the 12-month period preceding the re-balancing reference rate.
Total Return Indices (TRIs)

The CSE also publishes TRIs, which reflect returns due on both share price movements and dividend income.
41
Trading details
Exhibit 44:
Trading Hours [Monday - Friday (Except CSE holidays)]
Market phase
Hours
Open auction call
9.00 am-9.30 am
Regular trading
9.30 am-2.30 pm
Market close
2.30 pm
Open Auction Call

During open auction call (9.00 am-9.30 am), the system accepts orders. These orders can be amended and
cancelled during this session. However, no trades take place during this stage. Orders during this period are
held in the ATS and will be forwarded to the execution engine. At 9.30 am, the system starts matching orders
according to an algorithm. It establishes the opening price and determines the orders to be executed according
to the rules of the open auction call session (Automated Trading Rule 4).
Regular Trading
During regular trading (9.30am- 2.30pm), new orders are continually matched to existing orders in the order
book. If an order cannot be executed, it is stored in the order book.
Market Halt
In the event that the S&P SL20 Index drops 5% within a day from the previous market days close, a Market
Halt is imposed on all equity securities for a period of 30 minutes. If the above scenario takes place at 2.00
pm or later, the market is halted and closed at 2.30 pm. Broker firms may cancel any pending orders during the
Market Halt. However, broker firms cannot enter new orders or amend pending orders during the Market Halt.
Transaction costs
Equity
Exhibit 45:
Transaction fees
Fee
Transactions up to LKR50m
Transactions over LKR50m
Brokerage fees
0.640%
Negotiable (floor 0.2%)
CSE fees
0.084%
0.0525%
CDS fees
0.024%
0.015%
SEC cess
0.072%
0.045%
Share transaction levy
0.300%
0.300%
Total
1.120%
0.6125% (minimum)
42
The CSE trading records indicate the brokerage as zero for transactions of more than LKR50m. Broker firms
are expected to insert 0.2000% or a higher percentage negotiated between the client and the brokerage before
printing bought/sold notes.
Corporate Debt
Brokerage - Negotiable
Fees (SEC, CSE & CDS) - 2bps (Divided equally among the three institutions)
Government Debt
Brokerage - Negotiable
Closed-End Funds
Exhibit 46:
Transaction fees
Fee
Percentage
Brokerage fees
Negotiable with a cap of 1%
CSE fees
0.02%
CDS fees
0.01%
SEC cess
0.02%
Share Transaction Levy will not be applicable for units of closed-end funds
Settlement
Exhibit 47:
Settlement details
Security type
Equity
T+3
Corporate debt
T+1 or T+2 on Delivery vs. Payment
Government debt
T+1 or T+2 on Delivery vs. Payment
Infrastructure and systems

The CSE offers advanced infrastructure and systems for secondary trading of equity and debt instruments using
fully integrated trading and clearing systems.
43
The Central Depository System (CDS)

The Central Depository Systems (Pvt.) Ltd. is the depository for all listed securities in Sri Lanka. It provides a
safekeeping facility and an electronic record of all listed securities that are dematerialized. The CDS offers a
range of depository services to member firms, custodian banks, account holders and listed companies, including:
Client account opening

Client account maintenance
Security certificate dematerialization (deposit)
Security certificate re-materialization (withdrawal)
Transfer of shares
Co-ordinate funds settlement
Rights issues and share splits
Share repurchases
Takeovers and mergers
Provision of entitlements
Monthly statement publication
Transmission nominations
The Automated Trading System (ATS)

This is a robust, event-driven push technology trading platform built on a rule-based, distributed, fault-tolerant
system, enabling it to be highly reliable, scalable and flexible to meet the CSEs business requirements. ATS is a
multi-asset class trading system where shares, corporate debt, government debt and units of closed end funds
are traded. This efficient and transparent system provides high-speed execution of transactions and has various
features, such as:
Information on price and volumes of securities traded

Online reporting of trades executed
Online reporting of price indices
Corporate information
Information on the status of pending orders
Order matching on a price-time priority
44
Regulatory framework
The CSE is licensed by the SEC to operate as a stock exchange. It is Sri Lankas only stock exchange.
The SEC has rules for securities de-listing, takeovers and mergers and insider dealing. Further details are
available at www.sec.gov.lk.
The CSE has in place stockbroker rules, listing rules for listed companies, as well as ATS and CDS rules. These
are available at www.cse.lk.
CSE Governance structure

Exhibit 48:
Governing body
Name
Mr. Krishan Balendra
Office
Chairman
Mr. Vajira Kulatilaka
Elected Director
Mr. Asanga Seneviratne
Elected Director
Mr. M. R. Prelis
Elected Director
Mr. Ray Abeywardena
Elected Director
Mr. Dakshitha T. W. Thalgodapitiya
Appointed Director
Mr. Hiran M C de Alwis
Appointed Director
Ms. M.A.D.S. Jeeva Shirajanie Niriella
Appointed Director
Other stock market-related information

The CSE publishes stock market activities on a daily, weekly, monthly and annual basis. These include:
Stock market daily and weekly reports

Monthly market reports and quarterly reports
Annual reports
Data libraries
Listing rules
Member regulations
CDS rules
45
Members
BARTLEET RELIGARE SECURITIES (PVT) LTD.
ASSETLINE SECURITIES (PVT) LTD.
Level G, Bartleet House, 65, Braybrooke Place,

Colombo 02.
Tel: +94 11 5220200
Fax: +94 11 2434985
E-mail: info@bartleetstock.com
Website: www.bartleetreligare.com
Mr. R. Muralidaran
Managing Director
120, 120A, Pannipitiya Road, Battaramulla.

Tel: +94 11 4700111, 2307366
Fax: +94 11 4700112, 2307365
E-mail: colombo.dpglobal@dpmcfs.com
Website: http://www.assetline.lk/stock_brokering.html
Mr. Deepta Ekanayake
Managing Director
ACUITY STOCKBROKERS (PVT) LTD.
SOMERVILLE STOCKBROKERS (PVT) LTD.
Level 6, Acuity House, No. 53,

Dharmapala Mawatha, Colombo 03.
Tel: +94 11 2206206
Fax: +94 11 2206298-9
E-mail: sales@acuitystockbrokers.com
Website: www.acuity.lk
Mr. P.P.S. Fernando
Director / CEO
137, Vauxhall Street, Colombo 02.

Tel: +94 11 2329201-5, 2332827, 2338292-3
Fax: +94 11 2338291
E-mail: ssb-web@sltnet.lk
Ms. Shalini Dias
Director
JOHN KEELLS STOCK BROKERS (PVT) LTD.
J B SECURITIES (PVT) LTD.
186, Vauxhall Street, Colombo 02.

Tel: +94 11 2306250, 2342066-7
Fax: +94 (0) 11 2342068
E-mail: jkstock@keells.com
Website: www.jksb.keells.lk
Mr. Tivanka Ratnayake
Chief Executive Officer
150, St. Joseph Street, Colombo 14.

Tel: +94 11 2490900, 77 2490900, 77 2490901
Fax: +94 11 2430070, 2446085, 2447875
E-mail: jbs@jb.lk
Website: www.jbs.lk
Mr. Murtaza Jafferjee
ASHA PHILLIP SECURITIES LTD.
LANKA SECURITIES (PVT) LTD.
2nd Floor, Lakshmans Building,

321, Galle Road, Colombo 03.
Tel: +94 11 2429100
Fax: +94 11 2429199
E-mail: apsl@ashaphillip.net
Website: www.ashaphillip.net
Mr. Dimuthu Abeysekera
Director / CEO
228/1, Galle Road, Colombo 04.

Tel: +94 11 4706757, 2554942
Fax: +94 11 4706767
E-mail: lankasec@sltnet.lk
Website: www.lsl.lk
Mr. Kosala Gamage
Managing Director / CEO
46
ASIA SECURITIES (PVT) LTD.
CT SMITH STOCKBROKERS (PVT) LTD.
Level 21, West Tower, World Trade Centre,

Echelon Square, Colombo 01.
Tel: +94 11 2423905, 5320000
Fax: +94 11 2336018
E-mail: enquiry@asiacapital.lk
Website: www.asiasecurities.net
Mr. Sabri Marikar
4-14,Majestic City, 10, Station Road, Colombo 04.

Tel. +94 11 2552290-4
Fax: +94 11 2552289
E-mail: ctssales@sltnet.lk
Website: www.ctsmith.lk
Mr. Rohan Fernando
Managing Director
NATION LANKA EQUITIES (PVT) LTD.
FIRST CAPITAL EQUITIES (PVT) LTD.
44, Guildford Crescent, Colombo 07.

Tel: +94 11 4889061-3, 2684483
Fax: +94 11 2688899
E-mail: info@nlequities.com
Website: www.nlequities.com
Mr. Janaka Palapathwala
Director / General Manager
No. 01, Level 02, Lake Crescent, Colombo 02.

Tel: +94 11 2145000
Fax: +94 11 5736264
E-mail: inquiries@firstcapital.lk
Website: www.firstcapital.lk
Mr. Seedantha Kulatilake
CAPITAL TRUST SECURITIES (PVT) LTD.
NDB SECURITIES (PVT) LTD.
42, Mohamed Macan Markar Mawatha, Colombo 03.

Tel: +94 11 2174174, +94 11 2174175
Fax: +94 11 2174173
E-mail: inquiries@capitaltrust.lk
Website: www.capitaltrust.lk
Mr. Tushan Wickramasinghe
Managing Director
5th Floor, NDB Building,

40, Navam Mawatha, Colombo 02.
Tel: +94 11 2314170 to 2314178
Fax: +94 11 2 314180
E-mail: mail@ndbs.lk
Website: www.ndbs.lk
Mrs. Prasansini Mendis
S C SECURITIES (PVT) LTD.

2nd Floor, 55, D.R. Wijewardena Mawatha,
Colombo 10.
Tel: +94 11 4711000, 11 4711001
Fax: +94 11 2394405
E-mail: ceo@sampathsecurities.lk
Website: www.sampathsecurities.lk
Mr. Harsha Fernando
Director / Chief Executive Officer
47
Trading members
CAPITAL ALLIANCE SECURITIES (PVT) LTD.
CANDOR EQUITIES LTD.
Level 5, Millennium House,

46/58 Navam Mawatha, Colombo 02.
Tel: +94 11 2317777
Fax: +94 11 2317788
E-mail: general@capitalalliance.lk
Website: www.capitalalliance.lk
Mr. Harinlal Aturupane
Level 8, South Wing, Millennium House,

46/58 Nawam Mawatha, Colombo 02.
Tel: +94 11 2359100
Fax: +94 11 2305522
E-mail: info.cel@candorh.com
Website: www.candorh.com
Mr. Ravi Abeysuriya
Director / CEO
SMB SECURITIES (PVT) LTD.
SERENDIB STOCK BROKERS (PVT) LTD.
47, Dharmapala Mawatha, Colombo 03.

Tel: +94 11 4388138
Fax: +94 11 2339292
E-mail: admin@smbsecurities.lk
Website: www.smbsecurities.lk
Mr. C.N. Priyankara
Acting Chief Executive Officer
156, 3rd floor, Walukarama Road, Colombo 03.

Tel: +94 11 2565635
Fax: +94 11 2565604
E-mail: info@serendibsb.com
Website: www.serendibsb.com
Mr. Naushervan Beg
FIRST GUARDIAN EQUITIES (PVT) LTD.
IIFL SECURITIES CEYLON (PVT) LTD.
32nd Floor, East Tower, World Trade Centre,

Tel: +94 11 5884400 (Hunting)
Fax: +94 11 5884401
E-mail: info@firstguardianequities.com
Website: www.firstguardianequities.com
Mr. Rohan Goonewardene
27th Floor, East Tower, World Trade Centre,

Tel: +94 11 2333000
Fax: +94 11 2333383
E-mail: info.ceylon@iiflcap.com
Mr. Dhushyanth Wijayasinghe
TAPROBANE SECURITIES (PVT) LTD.
TKS SECURITIES (PVT) LTD.
2nd Floor, 10, Gothami Road, Colombo 08.

Tel: +94 11 5328200
Fax: +94 11 5328277
E-mail: info@taprobane.lk
Website: www.taprobanestocks.com
Mr.Niranjan Niles
Acting Chief Executive Officer
19-01, East Tower, World Trade Centre,

Tel: +94 11 7857799
Fax: +94 11 7857857
E-mail: info@tks.lk
Website: www.tks.lk
Mr. Hussain Gani
48
RICHARD PIERIS SECURITIES (PVT) LTD.
SOFTLOGIC STOCKBROKERS (PVT) LTD.
55/20, Vauxhall Lane, Colombo 02.

Tel: +94 11 7448900, 5900800
Fax: +94 11 2330711
E-mail: jayantha@rpsecurities.com
Mr. Jayantha Perera
6, 37th Lane, Queens Road, Colombo 03.

Tel: +94 11 7277000-98
Fax: +94 11 7277099
Email: info@equity.softlogic.lk
Website: www.softlogicequity.lk
Mr. Dihan Dedigama
CLARIDGE STOCKBROKERS (PVT) LTD.
LOLC SECURITIES LTD.
10, Gnanartha Pradeepa Mawatha, Colombo 08.

Tel: +94 11 2697974
Fax: +94 11 2689250
E-mail: csb@mackwoods.com
Mr. P. N. A. Epa
Level 18, West Tower, World Trade Centre,

Tel: +94 11 7880880
Fax: +94 11 2434771
Mr. Sriyan Gurusinghe
CEO / Managing Director
NAVARA SECURITIES (PVT) LTD.
FIRST CAPITAL MARKETS LTD.
2nd Floor, 45/2, Braybrooke Street, Colombo 02.

Tel: +94 11 2358700 / 20
Fax: +94 11 2358701
Website: www.nws.lk
Mr. Nadun Jayathilake
(Trading Member - Debt)

75, Arnold Ratnayake Mawatha, Colombo 10.
Tel: +94 11 2639898, 11 2681888
Fax: +94 11 2639899, 11 2681460
E-Mail: info@firstcapital.lk
Web site: www.firstcapital.lk
Mr. A. J. Ismail
CAPITAL ALLIANCE LIMITED.

(Trading Member - Debt)
Level 5, Millenium House
46/58, Nawam Mawatha, Colombo 2.
Tel: +94 11 2317777
Fax: +94 11 2317788
Mr. Gihan Hemachandra
49
Custodian banks
Commercial banks have special participant status in the CDS and provide services to investors. These include:
Access to all stockbrokers

Fund remittance
Maintenance of portfolios for investors
The banks include:
BANK OF CEYLON
DEUTSCHE BANK
4, Bank of Ceylon Mawatha, Colombo 01.

Tel: +94 11 2448348, 2338742/55
Email: investment@boc.lk
Mr. W. Y. Bandula
Chief Manager Investments
P O Box 314, No.86, Galle Road, Colombo 03.

Tel: +94 11 4791115, 2447062, 2438057
Email: susan.lappen@db.com
Ms. Susan Lappen
Head of Operations Trust and Securities Services
BANQUE INDOSUEZ
C/o Hatton National Bank Limited,
Cinnamon Garden Branch, 251,
Dharmapala Mawatha, Colombo 07.
Tel: +94 11 2681720, 2686537, 2689176
Email: surenim@hnb.lk
Ms. Sureni Mapatuna
Manager Remittance
HATTON NATIONAL BANK LIMITED

HNB Towers, 479, T B Jayah Mawatha, Colombo 10.
Tel: +94 11 2661640, 2664664
Email: Ashok.Gunasekera@hnb.lk
Mr. Ashok Gunasekera
Chief Accountant
CITI BANK NA
65C, Dharmapala Mawatha, P O Box 888,
Colombo 07.
Tel: +94 11 4794700, 2447316/8, 2447318, 2449061,
2328526
Email: mihiri.krishnamoorthy@citi.com
Ms. Mihiri Krishnamoorthy
Vice President Securities & Fund Service
THE HONGKONG & SHANGHAI BANKING

CORPORATION LIMITED
24, Sir Baron Jayathilake Mawatha, Colombo 01.
Tel: +94 11 4793370 Ext. 7494
Email: shehanpatterson@hsbc.com.lk
Mr. Shehan Patterson
Senior Vice President HSBC Securities Services
COMMERCIAL BANK OF CEYLON LIMITED

Commercial House, 21, Bristol Street,
P O Box 853, Colombo 01.
Tel: +94 11 2533154, 2445010-15, 238193-5,
430420, 336700
Email: dumi_desilva@combank.net
Mr. Duminda De Silva
Senior Manager Capital Markets
PEOPLES BANK
Head office - Treasury, 5th Floor, 75,
Sir Chittampalam A Gardiner Mawatha, Colombo 02.
Tel: +94 11 2206782, 2781481, 2327841-9, 244631615, 2430561, 2324967
Email: clivef@peoplesbank.lk
Mr. Clieve Fonseka
Head of Treasury & Investment Banking
50
STANDARD CHARTERED BANK

37, York Street, P O Box 112, Colombo 01.
Tel: +94 11 2480450, 4794400, 2480000
Email: Maddegoda.krishan-S@sc.com
Mr. Krishan Maddegoda,
Head of Securities Services
UNION BANK OF COLOMBO LIMITED

64A, Galle Road, Colombo 03.
Tel: +94 11 234110, 2370870
Email: asangat@unionb.com
Mr. Asanga Tennakoon
Chief Manager Zone II
SAMPATH BANK LIMITED
NATIONS TRUST BANK LIMITED
110, Sir James Peiris Mawatha, Colombo 02.

Tel: +94 11 4730114, 2300260, 4730630
Email: hiranthi@sampath.lk
Mrs. Hiranthi De Silva
Acting DGM-Corporate Credit
256, Sri Ramanathan Mawatha, Colombo 15.

Tel: +94 11 2307850, 4313131
Email: chamath.munasinghe@nationstrust.com
Mr. Chamath Munasinghe
Chief Manager Credit Operations
STATE BANK OF INDIA

16, Sir Baron Jayathilake Mawatha, Colombo 01.
Tel: +94 11 2326133-5, 2439405-6, 2447166,
2472097
Email: vpcr.lk@statebank.com
Mr. D. Dorabadu
VP Credit
PAN ASIA BANKING CORPORATION PLC

Head Office, 450, Galle Road, Colombo 03.
Tel: +94 11 2565565
Email: Udaya.Thuduwewatta@pabc.com
Mr. Udaya Thuduwewatta
Head of Margin Trading & Custodian Division
SEYLAN BANK LIMITED
PUBLIC BANK BERHAD
Corporate Banking, Level 6, Ceylinco

Seylan Towers, 90, Galle Road, Colombo 03.
Tel: +94 11 2456812, 2456789, 4701812, 4701819,
4701829
Email: yasanthieu@seylan.lk
Mrs. Y Udurawana
AGM- Corporate Banking Margin Trading Unit
340, R. A. De Mel Mawatha, Colombo 03.

Tel: +94 11 2576289, 7290200-07
Email: angelofernando@publicbank.lk
Mr. Angelo Fernando
Country Head
51
Unit Trust Management Companies

NATIONAL ASSET MANAGEMENT LTD.
CEYBANK ASSET MANAGEMENT LTD.
Union Bank Building, 64, Galle Road, Colombo 03.

Tel: +94 11 2445911
Fax: +94 11 2445903
Mr. Avancka Herath
Executive Director
Email: info@namal.lk
Website: www.namalfunds.com
54/C1, Ward Place, Colombo 07

Tel: + 94 11 7602000
Fax: + 94 11 2693475
Mr. Chithral Sathkumara
Email: info@ceybank.com
Website: www.ceybank.com
CEYLON ASSET MANAGEMENT LTD.
NDB WEALTH MANAGEMENT LTD.
281, Union Place, Colombo 02.

Tel: + 94 71 7030000
Fax: + 94 11 7394007
Mr. Dulindra Fernando
Director
Email: info@ceylonassetmanagement.com
Website: www.ceylonassetmanagement.com
DHPL Building (Ground Floor),

42, Nawam Mawatha, Colombo 02.
Tel: +94 112303232
Fax: +94 11 2303237
Mr. Ruwan Perera
Assistant Vice President
Email: contact@ndbinvestors.com
Website: www.ndbwealth.com
FIRST CAPITAL ASSET MANAGEMENT LTD.

2, Deal Place, Colombo 03.
Tel: + 94 11 2639898
Fax: + 94 11 2681460
Mr. Dilshan Weerasekara
Deputy CEO
E-Mail: info@firstcapital.lk
Web site: www.firstcapital.lk
ORIENT WEALTH LTD.
COMTRUST ASSET MANAGEMENT (PVT) LTD.
CANDOR ASSET MANAGEMENT (PVT) LTD.
4 , Floor, Majestic City,

10, Station Road, Colombo 04.
Tel: +94 11 5759571
Fax: +94 11 2506347
Mr. P. Asokan
Director CEO
Email: info@comtrust.lk
Website: www.comtrust.lk
Level 8, South Wing Millennium House,

46/58, Nawam Mawatha, Colombo 02.
Tel: +94 11 2359100
Fax: +94 11 2314831
Mr. Ravi Amarasinghe
Fund Manager
Email: ravi.amarasinghe@candorh.com
Website: www.cam.cando-holdings.com
th
3, 4th Floor, Lakshmi Gardens, Colombo 08.

Tel: +94 11 7664444
Fax: +94 11 7664449
Mr. S. Jeyavarman
Email: sjeyavarman@orientwealth.lk
Website: www.orientwealth.lk
52
GUARDIAN ACUITY ASSET MANAGEMENT LTD.

61, Janadhipathi Mawatha, Colombo 01.
Tel: + 94 11 2449500
Fax: + 94 11 4739385
Ms. Niloo Jayathilake
Alternate Director
Email: nilooj@carcumb.com
Website: www.guardianacuity.com
ARPICO ATARAXIA ASSET MANAGEMENT

(PVT) LTD.
55/20, Vauxhall Lane, Colombo 02.
Tel: +94 11 7448900, +94 11 5900700
Fax: +94 11 2675064
Mr. Ashan Sebestian
Head of Structured Products
Email: info@arpicoataraxia.com
Website: www.arpicoataraxia.com
CAPITAL ALLIANCE INVESTMENTS LTD.
ASSET TRUST MANAGEMENT (PVT) LTD.
Level 5, Millennium House, 46/58,

Nawam Mawatha, Colombo 02.
Tel: +94 11 2317777
Fax: +94 11 2317788
Ms. Ashveeni Shanthikumar
Chief Investment Officer
Email: info@capitalalliance.lk
Website: www.capitalalliance.lk
32, Castle Street, Colombo 08.

Tel: +94 11 2675077
Fax: +94 11 2689605
Mr. Dilshan Hettiarachchi
CEO
Email: info@atml.lk
JB FINANCIAL (PVT) LTD.

150, St. Josephs Street, Colombo 14.
Tel: +94 11 2490900
Fax: +94 11 2430070
Ms. Christine Dias Bandaranaike
Consultant, Investment Management
Email: info@jbfinancial.lk
Website: www.jbfinancial.lk
53
Colombo Stock Exchange Holidays for 2014
January
February
April
1, Wednesday
CSE Special Holiday
14, Tuesday
Tamil Thai Pongal Day / Milad-Un-Nabi (Holy Prophets Birthday)
15, Wednesday
Duruthu Full Moon Poya Day
4, Tuesday
National Day
14, Friday
Nawam Full Moon Poya Day
27, Thursday
Mahasivarathri Day
14, Monday
Sinhala and Tamil New Year Day / Bak Full Moon Poya Day
15, Tuesday
Additional holiday in lieu of day prior to Sinhala & Tamil New Year Day
falling on a Sunday
18, Friday
Good Friday
1, Thursday
May day
14, Wednesday
Vesak Full Moon Poya Day
15, Thursday
Day following Vesak Full Moon Poya Day
June
12, Thursday
Poson Full Moon Poya Day
July
29, Tuesday
Id-Ul-Fitr (Ramazan Festival Day)
September
8, Monday
Binara Full Moon Poya Day
8, Wednesday
Vap Full Moon Poya Day
22, Wednesday
Deepavali Festival Day
November
6, Thursday
Ill Full Moon Poya Day
December
25, Thursday
Christmas Day
May
October
54
Disclaimer
This book is intended to provide some general information relating to the CSE. Whilst reasonable efforts have been
made to include accurate and up-to-date information in the booklet, the CSE does not make any warranties or
representations regarding the accuracy, adequacy, reliability and completeness of the information.
Therefore, the CSE and its employees disclaim all liability for any loss suffered (directly or indirectly) by any person
acting in reliance upon the information contained herein.
Colombo Stock Exchange

Level 4, West Block, World Trade Center, Echelon Square, Colombo 01, Sri Lanka.
Tel:+94 (11) 2446581, 2356456 | Fax:+94 (11) 2445279
E-mail: info@cse.lk | Website: www.cse.lk

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Invest in Sri Lanka

Be a Part of South Asias

Strongest Growth Story

Colombo Stock Exchange

An attractive opportunity to invest in growth

Despite growth, inflation to be maintained at mid-single digits

Robust exchange rate policy has minimized currency risk

Increased foreign direct investments (FDIs) A sign of growing investor confidence

Improvements in socio-economic indicators create an environment conducive for investments

#1 Tourism remains the center of attraction in Sri Lankas growth story

#3 Outsourcing industry to fuel growth in export earnings

Market capitalization/GDP of 30% indicates further growth potential

Sri Lankan equity market trades at a discount despite strong fundamentals

S&P SL 20 Proxy to Sri Lankas growth story

The governments budget proposals stimulate capital market growth

Unit trust investments Provides access to professional fund management services

How to invest in the Colombo Stock Exchange

How to open a CDS account

Trading on the CSE

CSE Governance structure

Other stock market-related information

Unit Trust Management Companies

Colombo Stock Exchange Holidays for 2014

Sri Lanka is a land brimming with

Sri Lanka South Asias fastest-growing economy

Sri Lankas GDP growth to maintain

Source: Central Bank of Sri Lanka, Department of Census and

Sri Lankas growth to continue outpacing

Source: World Economic Outlook (WEO)

Per capita income to reach USD4,000 by 2016E

Next three years to see a 22% increase in

GDP per capita (2012) : Sri Lanka vs. peers

Sri Lankas per capita income is far ahead

Source: The World Bank

Source: Central Bank of Sri Lanka

Despite growth, inflation to be maintained at mid-single digits

Source: Department of Census and Statistics, Central Bank of

Headline and core inflation movement

Core inflation annual average (2006-2013)

Headline inflation less than 10% for 59

Post-war core inflation has averaged 6.2%

Headline (annual avg.)

Source: Department of Census and Statistics, Central Bank of

Robust exchange rate policy has minimized currency risk

Recovery in balance of payments provides impetus for a stable currency

Rupee to stabilize at LKR131 per US dollar

Balance of payment to continue to

LKR movement against USD, EUR and GBP

Source: Central Bank of Sri Lanka

A 3.8% fiscal deficit target set for 2016E

Source: Central Bank of Sri Lanka

Disciplined recurrent expenditure

Source: Central Bank of Sri Lanka

Prudent debt management strengthens countrys balance sheet

Debt-to-GDP to fall to 65% by 2016E

Source: Central Bank of Sri Lanka

Sri Lankas credit ratings reflect strong economic trajectory

Sri Lankas sovereign credit ratings remained largely unchanged in 2013

Standard & Poor's

Source: Fitch, S&P and Moodys

Increased foreign direct investments (FDIs) A sign of growing investor confidence

FDI inflows to reach USD1.4bn in 2013

Improvements in socio-economic indicators create an environment conducive

Human Development Index Reached High Human Development status in 2012