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Lankan stocks fall as trading resumes after 2 weeks amid deepening crisis

Sri Lanka Stock Market Colombo All-Share Index fell as much as 6.7% while blue-chip index slumped 5.2% within seconds of resumption of trading

Topics
sri lanka | Economic Crisis | stock market rally

Nupur Acharya & Ashutosh Joshi | Bloomberg 

The Securities & Exchange Commission of Sri Lanka on April 16 abruptly ordered the stock exchange to be halted for a week, citing the need to give investors time to digest the country’s economic conditions
The Securities & Exchange Commission of Sri Lanka on April 16 abruptly ordered the stock exchange to be halted for a week, citing the need to give investors time to digest the country’s economic conditions

Stocks in plunged and were set for another day of trading halt as the market opened for the first time in two weeks, during which the deepened.

Stock Market Colombo All-Share Index fell as much as 6.7% while blue-chip index slumped 5.2% within seconds of resumption of trading. If the blue-chip index drops 7.5%, it will prompt a second circuit to be triggered. And if it further dips to 10%, the market will be shut for the day.

While trading in was halted for the previous two weeks, -- the first week due to a holiday and the second by the securities regulator -- the central bank hiked policy rates by a record, the government halted payments on foreign debt, while rating companies slashed the nation’s credit rating. Civil protests against the government over soaring food prices and fuel shortages intensified.

Prior to Monday’s fall, the Sri Lanka Colombo All Share Index had erased almost a third of its value this year, after a world-beating rally of 80% in 2021. Sentiment still remains jittery as the government seeks up to $4 billion this year from lenders to help ease shortages of food, fuel and medicines as its foreign reserves dry up.

Lankan stocks fall as trading resumes after 2 weeks amid deepening crisis

The Securities & Exchange Commission of Sri Lanka on April 16 abruptly ordered the to be halted for a week, citing the need to give investors time to digest the country’s economic conditions.

The order came after the exchange had been already been shut for a week for the traditional new year holidays, drawing sharp criticism from the financial industry.

“Closures of this nature can dilute the confidence on the Colombo Stock Exchange, especially from foreign investors who might find this to be unpredictable,” said Naveed Majeed, senior vice president for research at Asia Securities Ltd. in Colombo.

The prolonged shutdown, the longest since a seven-week halt during the peak of the pandemic in 2020, had left traders high and dry.

At a time when the country is “desperate” for dollars, the closure had sent a negative signal and may lead foreign investors to put off their investments on liquidity concerns, said Suramya Ameresekera, analyst at JB Securities.

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First Published: Mon, April 25 2022. 11:32 IST
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