We are all equals

Prime Minister Ranil Wickremesinghe

Since Prime Minister Ranil Wickremesinghe won office in December, the stock market has shot up more than 30%, after heavy falls following the Tamil attack on the capital's airport last year.

The vote of confidence by the financial markets comes as Mr Wickremesinghe arrived in the northern city of Jaffna, the first visit by a Sri Lankan leader since the outbreak of the civil war almost 20 years ago.

The free-market oriented ruling party is also expected to unveil a sweeping economic restructuring programme in its first budget on 22 March.

"It is being seen as a market friendly budget which will bring about more economic friendly policies, and with that expectation investors are getting ready to move in," Naren Godamune, vice-president of DFCC Stock Brokers in Colombo told the BBC's World Business Report.

Ceasefire holding

"We are all equals," Mr Wickremesinghe said in a message to the ethnic Tamil minority in Jaffna.

Government forces and Tamil Tiger guerrillas have been observing an open-ended ceasefire since 23 February.

Both sides have said they want to open talks aimed at ending decades of ethnic bloodshed.

Jaffna, 300 kilometres north of the capital Colombo, was Sri Lanka's second largest city before the start of the civil war.

Foreign investment

Meanwhile, the Asian Development Bank (ADB) approved $200m in loans to Sri Lanka, giving it a much need foreign investment boost.

ADB President Tadao Chino visited Sri Lanka last week to officially open the Manila-based lender's mission and to sign agreements on reducing poverty.

A government spokesman said $85m would be spent on the country's run down power sector, $60m on roads, $20m on fisheries and $35m on agriculture.

High expectations

Brokers said they expected the improving situation to lead to further stock market rises ahead of next week's budget and local government polls.

Sri Lanka votes in local elections on 20 March, the government's first electoral test since winning office.

The key Colombo all-share index, closed down 1.77 points, or 0.29%, at 613.18, a fraction below the year-high close recorded on Wednesday.