According to data from Bloomberg, this year's best-performing stock market, to which you could more easily gain some exposure, has been that of Sri Lanka, stated Britain's The Independent newspaper in a report published yesterday (28).

'Had you invested a pound in the Colombo market at the start of the year, your money would have turned into £2.07 at the close of last week. Investors in the local currency, the Sri Lankan rupee, saw their money increase by 92.3 per cent'.

'How has the island nation pulled it off? Well, an end to years of strife between the country's government and the independence-seeking Tamils in the north and east has helped', the newspaper said adding, 'A word to the wise: peace is good for business. Just look at Sri Lanka'.

In the aftermath of the war, the stock exchange in Colombo immediately benefited, rising 128 per cent in 2009 as investors poured in. And this year it put in a repeat performance. A booming IT sector – the London Stock Exchange (LSE) is a prominent investor, having bought the Sri Lankan technology company MilleniumIT in September last year – and its proximity to booming South-east Asian economies such as India and China.

"We have between 60 and 75 initial public offerings lined up for next year. That includes five state entities and 35 finance companies," said Malik Cader, Director-General of the Sri Lankan Securities and Exchange Commission. Xavier Rolet, the chief executive of the LSE, also talks enthusiastically about what he has bought.

Robert Quinn, the chief European equity strategist at S&P Equity Research, explains the attraction of the emerging markets, whose stock exchanges have done so well. He said: "We've seen a real acceleration of the global industrial cycle in the latter parts of this year. A lot of money has come out of equities in developed countries and towards emerging markets, which offer a better risk-return profile than other assets at the moment."

Full story at:

http://www.independent.co.uk/news/business/analysis-and-features/why-mongolia-and-sri-lanka-are-top-of-the-stock-markets-2170551.html#