News & market updates

India pledged a $450m reconstruction package for Sri Lanka—$350m in concessional lines of credit and $100m in grants—to support recovery from Cyclone Ditwah. Assistance will target roads, bridges, housing, health and education, agriculture and disaster-response, with India also encouraging tourism and FDI.

China pledged comprehensive assistance and to share expertise for Sri Lanka's "Rebuilding Sri Lanka" program, offering support for ongoing and new projects and key initiatives including the Clean Sri Lanka and anti-corruption programs.

Access Engineering PLC was awarded a contract by the Cabinet to build 615 housing units at Colombage Mawatha, Kirulapone. The award follows the procurement process and a High Level Standing Procurement Committee recommendation after four bids were received.

Fitch assigned a 'neutral' sector outlook for APAC corporates for 2026, forecasting mild improvement in credit metrics and aggregate EBITDA margins rising to just over 15% from ~14.5% in 2025. It flagged risks from geopolitics, US–China tensions and tariffs, China property weakness weighing on construction, and deteriorating outlooks for tech, automotive, chemicals and shipping.

Sri Lanka has yet to fully assess Cyclone Ditwah's economic fallout; the World Bank's rapid estimate puts direct physical damage at $4.1bn (about 4% of GDP), while the government says a comprehensive damage-and-needs assessment will take at least four weeks and likely show higher total costs.

Cabinet approved inviting fresh investment proposals for a UDA-owned 2 roods 14.7 perches parcel on Chatham Street, Fort Colombo, to be offered on a 99-year lease for a mixed-use development. The UDA will re-launch after 2024 attempts drew no interest.

Cabinet approved resumption of eight stalled hospital projects at a revised total State cost of Rs.16.223 billion. Most projects are now targeted for completion by end-2028, with revisions adding Rs.9.508 billion to public finances versus original estimates.

Opposition MP Dr. Harsha de Silva rejected calls to suspend Sri Lanka's external sovereign debt repayments after Cyclone Ditwah, warning such a move would jeopardise market access and credit ratings needed for climate adaptation and reconstruction. He also accused senior government figures of reversing their earlier opposition to the IMF-backed restructuring.

China offered to extend all necessary assistance and share experience with Sri Lanka under the "Rebuilding Sri Lanka" programme, Chinese official Wang Junzheng told President Anura Kumara Dissanayake. China said it will support ongoing and new projects, including the Clean Sri Lanka programme and rural poverty eradication efforts.

Colombo Stock Exchange closed 0.15% higher as the ASPI rose 32.05 points to 21,959.05, led by gains in selected banking, construction and retail stocks. Top contributors included Senkadagala Finance, Sampath Bank, Bukit Darah, Royal Ceramics and Tokyo Cement; turnover rose to Rs 4.1bn with a Rs 331mn net foreign outflow.

India will provide a comprehensive assistance package to Sri Lanka for relief and rehabilitation after Cyclone Ditwah, with External Affairs Minister S. Jaishankar sent as Special Envoy to coordinate implementation. The support follows 'Operation Sagar Bandhu' which delivered immediate relief and emergency services.

CSE ended mixed with the ASPI up 0.13% to 21,927.00 and the S&P SL20 down 0.05% to 6,011.31, on turnover of about Rs.2.56bn and foreign net selling of ~Rs.68.6m. Top positive contributors included DOCK, RICH, SAMP, JKH and CARG, while SFCL, SUN, RCL, LOLC and HHL were among decliners.

Colombo Dockyard led gains as the ASPI rose 0.13% to 21,927.00, with Dockyard up to Rs127.00. Other contributors included Sampath Bank, John Keells, Tokyo Cement and Sierra Cables; turnover fell to Rs2.5bn and the CSE recorded a net foreign outflow of Rs68.58m.

India committed US$450 million to Sri Lanka for Cyclone Ditwah recovery, comprising US$350m in concessional lines of credit and US$100m in grants to rebuild roads, railways, bridges, houses, health services and rehabilitate agriculture.

India will provide USD 450 million (a USD 350 million concessionary line of credit and USD 100 million in grants) to support reconstruction of areas in Sri Lanka hit by Cyclone Ditvah.

IMF warns Cyclone Ditwah could destroy 2.5–5% of GDP, widen the balance-of-payments gap by about $700m and push average inflation to 5.4% in 2026, above the CBSL 5% limit. Agriculture and tourism are hardest hit while reconstruction may support construction but raises external and debt risks.

IMF warns Sri Lanka's debt risks remain elevated and says capacity to repay the Fund has weakened after Cyclone Ditwah, with IMF credit outstanding projected to peak at 3.1% of GDP in 2027. The Fund urges strict adherence to the Public Financial Management Act, fiscal discipline, and safeguards for emergency and reconstruction spending.

The CSE announced S&P SL20 rebalancing effective 22 December: four stocks were added (Access Engineering, People’s Leasing, Singer Sri Lanka, Sunshine Holdings) and five were removed (Ceylon Cold Stores, Chevron Lubricants Lanka, Commercial Bank Non-Voting, LOLC Finance, Royal Ceramics).

Macktiles Lanka executed its first export shipment of tiles to Australia. The company said the tiles use Sri Lankan raw materials and Italian technology, marking a milestone entry into a highly developed market.

A Sri Lankan trade delegation visited Phnom Penh to explore investment and trade opportunities and agreed with Cambodia’s Investment Board to organise a virtual investment roadshow. Discussions highlighted opportunities in premium rice, cashews, agrifood processing, microfinance, logistics, digital innovation and Cambodia’s tax incentives (3–9 year tax holidays, VAT exemptions, up to 150% R&D deductions).

Mahindra India donated Rs. 100 million to the 'Rebuilding Sri Lanka' Fund to support recovery and reconstruction after recent natural disasters; the contribution was handed over at the Labour Ministry.

World Bank estimates Cyclone Ditwah caused US$4.1 billion in direct physical damage in Sri Lanka, about 4% of GDP. Infrastructure losses were US$1.735bn (42% of damages), residential US$985m, and agriculture US$814m, with Kandy hardest hit (US$689m).

World Bank's GRADE estimates Cyclone Ditwah caused US$4.1 billion in direct physical damage in Sri Lanka (about 4% of GDP). Infrastructure accounted for US$1.735bn, agriculture US$814m and residential US$985m; the World Bank has mobilized up to US$120m for recovery.

Access Engineering (AEL.N0000), Singer Sri Lanka (SINS.N0000) and Sunshine Holdings (SUN.N0000) were added to the S&P Sri Lanka 20 index effective 22 Dec 2025 (after the market close of 19 Dec 2025). The changes are from the S&P Dow Jones Indices 2025 year-end rebalance.

New owners have committed over Rs. 600 million for safety, operational and aesthetic upgrades at the Altair Colombo apartment and retail complex after Blackstone India's acquisition of its parent, with TWC providing strategic oversight. Blue-chip firms including John Keells and Hayleys are using Altair to showcase products.

Donor agencies have committed $350 million to Sri Lanka for cyclone recovery. The IMF approved $206 million via its Rapid Financing Instrument and the World Bank activated $120 million, and officials say about $500 million more is expected for 2026.

A group of 120 economists, including Joseph Stiglitz, urged suspension of Sri Lanka's external sovereign debt payments and a new restructuring after Cyclone Ditwah, saying last year's $9bn debt deal and limited fiscal space are overwhelmed by reconstruction needs. Sri Lanka has requested a $200m IMF emergency loan.