Sri Lankan market hits record high, stocks soar as officials woo UAE investors

Sri Lanka is stepping up its pitch to UAE investors, highlighting strong bilateral ties and a stock market that has risen among Asia’s best performers, officials said at the Invest Sri Lanka Investor Forum in Dubai on Thursday.

Arusha Cooray, Sri Lankan Ambassador to the UAE, said the Gulf nation is Sri Lanka’s largest trading partner in the Middle East and a key investor across sectors including logistics, energy, ports, IT, agriculture and hospitality.

“There is growing potential for portfolio investment as well,” she said, highlighting the deepening cooperation, particularly the UAE’s support after Cyclone Ditwah, which reportedly caused over $4 billion in damage to the country.

Alexi Gunasekera, Consul General of Sri Lanka to Dubai and the Northern Emirates, stressed that the island nation is ready to partner with UAE investors for mutual growth.
“This forum marks the beginning of a long-standing partnership between the UAE and Sri Lanka. Our island is once again open not only for leisure but also for investment opportunities and economic cooperation.”

Ray Abeywardena, Director of the Colombo Stock Exchange (CSE), said Sri Lanka’s benchmark All Share Price Index (ASPI) have been delivering strong returns to investors.

“An investor who would have made an equity investment just over a year ago would have more than doubled in value.”

On Friday, the ASPI – for the first time – briefly breached the 24,000-mark before closing at 23,956.51.
“The Colombo Stock Exchange was the third best-performing market in the region, with full-year growth of 42 per cent on the ASPI and 26 per cent on the S&P SL20,” Abeywardena noted at the forum.

He said the market remains highly undervalued compared to regional peers, with a price-to-earnings ratio of 10.7 times, making it the second cheapest in the region. The country’s zero capital gains tax regime further boosts its appeal.
The bourse is expanding sustainable finance offerings, including green bonds, social funds, high-yield funds and Sukuk.

DBPH Dissabandara, Chairman of the Securities and Exchange Commission of Sri Lanka, said domestic investors are driving the market’s resurgence.

“Domestic participation accounted for 93 per cent of total turnover in 2025, while foreign participation stood at 7 per cent. Local investors have recognised and acted on the opportunities available in Sri Lanka’s securities market,” he said.

P Nandalal Weerasinghe, Governor of the Central Bank of Sri Lanka, said the economy is picking up momentum, with growth potential of 5 to 7 per cent.

Sri Lanka’s Minister of Labour, Anil Jayantha Fernando, noted that exports reached $17 billion, tourism earnings hit $3.2 billion, and worker remittances exceeded $8 billion – the highest in history.

Officials said improving credit ratings, rising corporate profitability, and fiscal discipline are expected to further strengthen investor sentiment in the coming months.