Trading on the Sri Lankan stock exchange has been halted after the share market crashed amid an economic crisis in the country.
Authorities on Monday halted trading on Sri Lanka's stock exchange after the share market plunged 5.9 per cent, according to a report by AFP.
Trading was halted on Sri Lanka's stock exchange seconds after it opened Monday when the blue chip index dropped 5.92 percent following a mass cabinet resignation in the face of an economic crisis.
The S&P index fell more than the five percent needed to trigger a circuit breaker that halts trading for half an hour, the Colombo Stock Exchange said.
The debt-laden country is struggling to pay for imports of fuel and other essentials due to a severe shortage of foreign currency, leading to hours-long power cuts and widespread demonstrations that continued despite a weekend curfew
Traffic was back on the streets of the country's main city Colombo on Monday, but there were reports of sporadic and peaceful protests from across the country.
Youth and Sports Minister Namal Rajapaksa, nephew of Gotabaya and the son of Prime Minister Mahinda Rajapaksa, said on Twitter on Monday he had told the president's secretary about his resignation with immediate effect.
The Sri Lanka Colombo Stock Exchange All Share Index is tumbling as protests mount nationwide against soaring inflation and power cuts. A growing political crisis has torpedoed a market that rallied 80% in 2021 -- the world’s best performance after Mongolia -- with the central bank chief’s resignation on Monday further complicating the picture.
The slide in Sri Lankan shares is leading the reversal in a broader gauge of Asia’s frontier-market equities after it rallied in 2021. The MSCI Frontier Asia Index has just capped its worst quarter in two years as quickening price pressures and political tumult weigh on sentiment toward these relatively illiquid markets, including Pakistan.
Sri Lanka’s equities have been hit particularly hard, with losses also having triggered trading suspensions in recent days.
As inflation soars, “investors have taken a risk-off approach to investments amidst heightened uncertainty, where capital preservation has become priority,” said Naveed Majeed, senior vice president of research at Asia Securities Pvt. “We expect corporate earnings to moderate from March onwards.”
