News & market updates

Lanka Realty Investments (ASCO.N0000) acquired a 51% stake in Lee Hedges (SHAW.N0000), buying 13,057,595 shares at Rs216 each. Lanka Realty closed down Rs1 at 46.10 and Lee Hedges closed up Rs23 at 254.

Colombo Stock Exchange closed up, with the ASPI rising 0.97% to 23,520, led by Wealth Trust's strong debut and gains in bank stocks. Top contributors included HNB, Sampath, Commercial Bank, DFCC and Central Finance, with turnover at LKR 12.32 billion.

Central Bank of Sri Lanka forecasts 4-5% economic growth in 2026, citing private credit expansion, a surplus external current account and gross official reserves above US$6.8bn, while warning of risks from Cyclone Ditwah. Inflation is expected to reach the 5% target by H2 2026 and the CBSL prioritises data-driven monetary policy and resilience measures.

US$1.2bn of Port City projects have been approved and are expected to start construction in 2025, with a further US$732mn of investments awaiting approval. Parliament cut Port City tax holidays to between 4–15 years, and officials said most prior investors indicated they will proceed.

President Anura Kumara Dissanayake said compensation for fully damaged houses and construction of new homes will begin on 9 January in Anuradhapura and Kurunegala. The meeting also addressed crop-damage compensation, a loan scheme for affected SMEs requiring bank engagement, and instructions to expedite agricultural payments and business registration.

President Anura Kumara Dissanayake ordered officials to develop mechanisms to register unregistered SMEs and to accelerate access to a 3% interest credit scheme for Ditwah-hit businesses. He also instructed housing reconstruction to begin from 9 January and expedited crop compensation payments.

Access Engineering PLC completed piling work for Home Lands’ Bayfonte Marina in Negombo one month ahead of schedule, deploying five piling machines to finish the high-quality work; piling completion allows the project construction to proceed in full swing.

Parliament approved amendments to the Colombo Port City law capping tax holidays at 15 years for billion-dollar investments and imposing shorter, rule-based terms for smaller projects. The law defines investment bands (A $1bn; B $500m; C $100m; D $25m) and offers reduced rates for secondary projects, while officials note currency instability and broader fiscal/IMF policies could still affect investment appetite.

Merchant Bank of Sri Lanka & Finance PLC (MBSL) recalibrated the MBSL Midcap Index effective 1 January 2026, setting the midcap market-cap range at Rs. 8.45 billion–Rs. 84.5 billion and selecting 25 constituents. New inclusions include Sierra Cables, Aitken Spence, Vallibel Finance, Lanka IOC, JAT Holdings and Prime Lands; Citizens Development, CIC, Ceylon Grain Elevators, John Keells, Hayleys Fabric, Teejay Lanka and Watawala Plantations were excluded.

The Cabinet approved awarding a Rs. 699.58 million (without tax) contract to NEM Construction Ltd to build an underground concrete way beneath the Mahaiyawa railway line on the Kandy–Jaffna (A-009) road. Three bids were received and NEM was selected as the most responsive and lowest bidder by the High-Level Standing Procurement Committee.

Cabinet approved calling for EOIs to lease 24 former ministerial bungalows on 30-year PPP leases. An officers' committee recommends repurposing them for embassies, diplomatic missions, high-end hotels, restaurants and other investment projects to ensure productive use.

Government bond yields in Sri Lanka fell overall through 2025 on fiscal consolidation, deflation and renewed demand, but episodic shocks—US reciprocal tariffs, the Iran–Israel conflict—and Cyclone Ditwah (Rs.500bn supplementary estimate) caused intermittent yield spikes and increased uncertainty for 2026.

Sri Lanka will spend more than US$350m to rebuild railway tracks damaged by Cyclone Ditwah, with the Nanu Oya–Badulla line estimated at about US$127m and other sections (Rambukkana–Kadugannawa $74m, Kotawella–Nanuoya $68m) contributing to the total.

A Rs699.58 million (tax excluded) contract to build a concrete underpass bridge at Mahaiyawa on the A09 in Kandy was awarded to NEM Construction; the cabinet approved the award after a standing procurement committee selected NEM from three bidders.

Sri Lanka's budget deficit will rise 1.4 percentage points to 6.5% of GDP in 2026 after an extra 500 billion rupees of Cyclone Ditwah relief and recovery spending. Capital expenditure is raised to 5.0% of GDP and authorities warned of rupee depreciation and exchange-rate policy concerns.

President Anura Kumara Dissanayake instructed Ministry Secretaries to fully and efficiently utilize 2026 budget allocations, including Rs. 1,400 billion for capital expenditure and Rs. 500 billion for cyclone reconstruction. He noted IMF EFF constraints (govt can spend about 13% of GDP, with at least 4% for capex) and urged timely project implementation.

President Anura Kumara Dissanayake said the 2026 Budget allocates Rs. 1.4 trillion for capital expenditure plus Rs. 500 billion for Cyclone Ditwah reconstruction, with overall expenditure kept within a 13% of GDP limit and at least 4% for capital spending. He instructed ministry secretaries to ensure optimal and timely utilisation of these funds.

Colombo market rose as the ASPI gained 0.66% (150.67 pts) to 23,014.75, with market value up Rs.58.89 billion and turnover ~Rs.5.8 billion. Top contributors included Commercial Bank, ACL Cables, Dipped Products, Carson Cumberbatch, LOLC and Sampath, and foreigners were net buyers (~Rs.87.8m).

Colombo Stock Exchange rose 0.66% as the ASPI closed 150.67 points higher at 23,014.75. Top contributors included Commercial Bank, Carson Cumberbatch, ACL Cables, LOLC and Sampath Bank; turnover rose to 5.7 billion rupees and net foreign outflow was 87 million rupees.

Bloombird Real Estate has launched Westbury Urbanside, a 28-unit residential apartment project in Kalubowila (three-bedroom + study units), with construction underway and the model apartment now open for inspection.

Sri Lanka's Colombo Stock Exchange rose on the first trading day of 2026, with the All Share Price Index up 1.26% to 22,910.46 and the S&P SL20 up 0.63% to 6,195.95 on turnover of 5.1 billion rupees. Top contributors included ACL Cables, Commercial Bank, Access Engineering and DFCC Bank, with construction and bank shares drawing investor interest as reconstruction followed Cyclone Ditwah.

Central Bank Governor Nandalal Weerasinghe said Sri Lanka's economy could exceed 5% growth in 2026 driven by reconstruction spending after Cyclone Ditwa, including an extra Rs 500 billion on top of about Rs 1.4 trillion in public investments. He warned the stimulus could raise inflation and strain foreign exchange reserves unless offset by higher exports, remittances, tourism and external financing.

John Keells Properties' TRI‑ZEN residential development (897 units) has launched an on-site Tea Avenue Daily Brew café exclusive to residents, enhancing on-site amenities and living experience.

Port City Colombo has commissioned public utility connections to Colombo’s main grid and attracted over $1bn in land development investments as it moves into full commercial operations. Browns Investments PLC (part of the LOLC group) has broken ground on a $120m Luxury Marina with berthing for 200 vessels.

Sri Lanka's construction PMI rose to 66.2 in November from 64.3 in October. New orders eased to 64.7 while employment strengthened to 57.4 and firms cited increased private and government projects and post-cyclone reconstruction supporting the near-term outlook.

Sri Lanka's PMI for Construction (Total Activity Index) rose to 66.2 in November 2025, indicating stronger construction activity. New orders, employment and purchases expanded, while suppliers' delivery times lengthened amid weather disruptions.