All Share Price Index to reach 17,500 mark by year end: FCR

By Nishel Fernando

The All Share Price Index (ASPI) of the Colombo Stock Exchange (CSE) is expected to reach 17,500 points by the end of this year driven by stronger earrings and lower interest rate regime, according to First Capital Research (FCR).

“2025 Stock Market returns may continue to remain positive amidst the extreme bullishness in 1Q2025, and slowdown during 2H2025,” FCR stated in its Equity Strategy Report for the year.

For this year, FCR upgraded its fair value target for ASPI, and it has been upgraded to 17,000 points with a stronger earnings outlook of 22 percent YoY for 2025.

“Continuity of the IMF programme and lower interest rate regime are key supporting factors for the market,” it noted.

In case if ASPI reaches beyond 17,500 points and moves towards18,000 and beyond, FCR is recommending the investors to consider taking profit and reducing exposure towards equity and move to alternative asset classes.
“If ASPI reaches 18,000 with the PER likely to be closer to 12.0x, we believe investors should consider to book profits and increase cash allocation or gradually shift to alternative asset classes,” it added.

FCR originally set the ASPI target of 13,000 – 14,000 for 2024 and 14,500-15,500 for 2025.

However, the Index reached the upper end of its forecast, hitting 14,000 on 12th Dec 2024 and the upper end of 2025 target on 23rd Dec 2024.
“Despite a temporary setback between July and September, largely due to the political uncertainty surrounding the presidential election, the market saw a strong revival in the latter part of the year.

The recovery was driven by the alleviation of political concerns, decline in interest rates, and a rebound in key economic indicators, all of which contributed to a faster-than-expected recovery in market activities,” it elaborated.
Despite the bullish movement in the ASPI, FCR highlighted that CSE remains reasonably attractive compared to its peers including Pakistan, India, Vietnam and Thailand.

“CSE remains the cheapest amongst peers in terms of book value whilst PER trades in line (mainly due to depressed earnings seen during 1H2024) yet expected to re-rate following positive expectation of earnings in the next 12 months,” it stated.