Karu blames Rajapaksa regime for stock market mishaps

Despite the Government trumpeting high economic growth and sound macroeconomic fundamentals, the Colombo stock market is in the doldrums today, UNP Co-Deputy Leader Karu Jayasuriya said yesterday.

“What was once the world’s most consistent best performing market, the Colombo Stock Exchange (CSE), at present is languishing with a near 13% negative return year to date on the basis of All Share Index (ASI) and over 28% in terms of the Milanka Price Index (MPI).  Since October the market has fallen by nearly 15% and it is now at a 14-month low,” he noted, in a press release.

It went on to state: “The current crisis in the Colombo stock market must be put in context. The Government showcased the high-flying performance of the market in 2009 and 2010 as the proof of the success of President Mahinda Rajapaksa regime’s economic policies and investor and business confidence. If this was the case, doesn’t the market’s downfall confirm the opposite, especially since the Budget 2012 was presented?

“Everyone is aware that the President Rajapaksa and other Government Ministers and VVIPs intervened to remove the market regulator, Securities and Exchange Commission (SEC) Director General Malik Cader after he stepped up investigations against alleged manipulations. Several high net worth investors alleged that it was an over regulating SEC which caused the market’s downfall. They abstained from the market activities unless and until Cader was removed. Even after nearly a month since his removal the Colombo stock market remains precarious and its performance worse than how it was previously.

“Leave alone small time investors but even the so-called high net worth investors who promised to boost the CSE once Cader is removed haven’t returned to the market.  Foreign and local institutional investors are also not investing even after the sharp drop making Colombo stocks attractively priced as per analysts. This and the continued lack of confidence among the investor community despite the Government’s claims of a development-oriented, people and investor-friendly Budget 2012, is a testimony of the bunkum of the misgoverning Rajapaksa regime.

“Soon after the Budget 2012 was presented the Government was keen to boost the market but it has miserably failed. In fact it was ironical to see how the benchmark index, ASI, crashed below 6, 000 points for the first time in 2011, just a few days after the Budget 2012.

“Investor confidence was also severely put into test by the Government by vesting two publicly listed companies in the State via a hastily passed acquisition law. Until now nothing has been spoken about the fate of the small time investors who are shareholders of these two companies. It is no doubt that a foreigner will now think many times to set up a business in Sri Lanka, if he earlier used to think twice.

“Meanwhile, many thousands of innocent people from rural areas after believing lies of the Government invested their hard-earned and precious savings in the Colombo stock market. Today all have lost their money and become paupers with some sinking in debt.

“The crisis in the Colombo stock market is a clear case of all type of investors, local and foreign, increasingly being disappointed with the conduct and policies of Rajapaksa and Brothers Company. The Government’s failure to arrest the decline shows its disability and bankruptcy. The people and the country will see further worsening of the economy jeopardising the security of even their savings in banks which are only drawing a paltry interest rate. With inflation on the rise, savers are getting a negative return.

“The saddest development is whilst middle class and poor people are burdened with difficulties and loss of income, the Rajapaksas and their cronies are profiteering billions of rupees via commissions on Government contracts and approvals. Public debt has risen to over Rs. 5 trillion (Rs. 5,000 billion) from Rs. 4.4 trillion a year ago and the Government continues to borrow, further throttling the nation in the debt trap.”