Stock index posts worst fall in over 7 years after Easter attacks

Reuters: The stock index dived 3.63% on Tuesday, its worst plunge in more than seven years, due to retail panic selling in its first trading day after Easter Sunday attacks killed more than 300 people. 

Islamic State has claimed responsibility for coordinated bombings which killed 321 people and injured about 500 others, the group’s AMAQ news agency said on Tuesday.

“Investors are worried and waiting until the cloudy conditions ease off,” said Softlogic Stockbrokers Deputy CEO Hussain Gani.

Bomb jitters continued on Tuesday with Police warning the public of explosives-laid vehicles. An explosion went off on Monday in a van near a church in Sri Lanka where scores were killed the previous day, when bomb squad officials were trying to defuse it, a Reuters witness said.

The benchmark stock index fell 3.63% on Tuesday to 5,402.58, its worst percentage fall since 14 February 2012. The exchange was closed on Monday following Sunday’s attack.

Turnover came in at Rs. 226.9 million ($1.30 million), more than this year’s daily average of Rs. 588.4 million. Last year’s daily average was Rs. 834 million. 

Foreign investors sold a net Rs. 39.6 million worth of shares on Tuesday, extending the year-to-date net foreign outflow to Rs. 6.03 billion worth of equities.

The latest instability comes after the island nation plunged into political turmoil in October last year when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved Parliament. A Court later ruled the move was unconstitutional, and Wickremesinghe was reinstalled as premier.

Investor sentiment took a big hit as a result of the 51-day political crisis, leading to credit rating downgrades and an outflow of foreign funds from Government securities.

The impact of the latest instability after the explosions is yet to be seen, analysts said. 

The Sri Lankan Rupee ended steady in dull trade. Investors kept away due to a night curfew declared since Sunday. It was lifted at 0400 hours on Tuesday, but the Government again declared curfew from 2100 hours.

The currency ended at 174.60/70 to a dollar, weaker than Thursday’s close of 173.95/174.25, market sources said. The markets were closed on Friday for a public holiday.

The island nation’s currency gained 0.3% last week, and 4.6% so far this year, as exporters converted dollars amid stabilising investor confidence after the country repaid a $1 billion sovereign bond in mid-January.

Analysts expect both stocks and rupee to plunge after the Easter Sunday attacks.

The rupee dropped 16% in 2018, and was one of the worst-performing currencies in Asia due to heavy foreign outflows. Foreign investors sold a net Rs. 6.6 billion worth of Government securities in the week ended 17 April, the third weekly fall in seven weeks, the latest Central Bank data showed.