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The Sri Lankan crisis renders stock as world’s worst performer

The Sri Lankan crisis rendered the Sri Lankans stock the world’s worst performer by sliding to 33%. 

The Sri Lanka Colombo Stock Exchange All Share Index declined rapidly in wake of the nationwide protests. 

In 2021 the market that rallied 80% – making it the world’s best performer after Mongolia is now severely damaged due to rising political unrest. 

However, the nationwide protest against power cuts and rising inflation has rendered the Sri Lankan stock as world’s worst performer after Russia. 

Additionally, the central bank chief resigned on Monday. 

What do market experts say about the Sri Lankan crisis?

As inflation soars, senior VP of research at Asia Securities PVT Naveed Majeed said, “investors have taken a risk-off approach to investments amidst heightened uncertainty, where capital preservation has become priority.”

“We expect corporate earnings to moderate from March onwards.”

As per data compiled by Bloomberg, the rupee is by far the world’s worst-performing currency this year. 

Furthermore, foreign funds withdrew a net $11 million from local stocks. 

However, the Sri Lankan government seeks a bailout from the International Monetary Fund as aid for living costs and the foreign-exchange crisis. 

Since the Sri Lankan stock rallied in 2021, the gap widened in Asia’s frontier-market equities due to the crisis. 

Ruchir Desai, fund manager at Asia Frontier Capital Ltd, said at the Central Bank of Sri Lanka’s next meeting, “I would not be surprised by a steep hike in interest rates above 100 basis points.”

Additionally, the MSCI Frontier Asia Index capped the worst quarter in two years. 

The pressure due to rising prices and political commotion weighed on relatively illiquid markets, including Pakistan. 

Furthermore, the political unrest in Pakistan pressurizes the KSE-100 Index as PM Imran Khan called for fresh elections on Sunday. 

Lastly,

As the Sri Lankan crisis raises nationwide protests, the economic and political turmoil remains stagnant. 

However, aid from various countries, including India, is a step forward for the recovery of Sri Lanka. 

Also Read – India offers $1 billion credit line to Sri Lanka

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