The current government has a mandate to run for another two years and it is putting the economy on the right track with the right policies in place, market analysts said while stressing the need that people need to be patient.
The vote against the government at the recent election is a clear message to it to get back to the drawing board and bounce back to govern the country better. What people need, especially the farmers, is not the sun and the moon but basic needs, analysts said.
Market experts are of the view that restoring stability in the country is critical at this juncture when the economy urgently needs major foreign direct investments to accelerate development in the country. Senior banker and market analyst Mangala Boyagoda said building business confidence with assurance of certainty is crucial to draw investors to the country through the stock market.
“Political uncertainty is in no way helpful to the ecoomy as investors will shy away and as a result development activities will suffer. We need major investments to come in to the country. The stock market will react negatively if uncertainty persists,” Boyagoda said. Market analysts were upbeat on Thursday that the market will pick up following the two ruling parties agreeing to work together for the remainder of the tenure. The all share price index moved up by 18.39 points while the S and P SL 20 was down 3.4 points.
The all share price index moved up by 18.39 points while the S and P SL 20 was down 3.4 points.
The Past President of Colombo Stock Brokers Association Ravi Abeysuriya said the market will likely see stability restored as soon as possible as it does no go well for any stock market in the world to remain unstable for a long time.
Global markets reacted badly last week due to the sell off across the world. Japan’s Nikkei 225 index slid 2.3%, while China’s Shanghai Composite slumped by 4.1%. Earlier, the Dow Jones Industrial Average fell by more than 1,000 points for the second time this week.
The impact the sell off across the world on the stock market in Sri Lanka was minimal according to stock market analysts.
“The sell off on Sri Lanka, at this point, has been minimal, where we are still in a positive returns position in terms of both the Indices when compared to how we started 2018,” Abeysuriya said.
He said the Sri Lanka stock market has a negative correlation with developed markets such as US, UK, Japan and low correlation with regional markets such as China, Singapore, South Korea and Hong Kong. Hence when sell-offs happen in those markets, frontier markets such as Sri Lanka, Romania, Kenya and Bangladesh do well or at least remain flat.