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Sweden-based Tundra Fund says Colombo bourse at lowest levels since 2009
8 May 2019
Says its holdings getting marginally affected following attacks; shows market’s already low expectations
Opines Easter Sunday attacks significantly increase likelihood of former President Rajapaksa’s party coming back to power
The Sweden-based global asset management company, Tundra Fonder’s Tundra Sustainable Frontier Fund in its April update said the Colombo bourse has hit its lowest levels since the end of 2009, following the Easter Sunday attacks that killed over 250 people, among them 42 tourists.
“The stock market has been in a steady downward trend under the current government. Internal wear and tear has created paralysis of action, and both the business society and investors in the equity market have been requesting change.
The equity market is now at the lowest levels since the end of 2009, calculated in US$,” Tundra Sustainable Frontier Fund’s April update said.
The fund has 12 percent of its assets invested in Sri Lankan stocks, which they said were marginally affected by the terrifying attacks that occurred on April 21.
“…the fund’s holdings in Sri Lanka (12 percent of assets) were only marginally affected by the terrifying terrorist attacks that occurred in Colombo on April 21st, which says a lot about the market’s already low expectations.”
The fund said eventhough the attacks occurred after the peak seasons, there is a risk of significant fall in tourist arrivals.
“That being said, it should be added that this type of event should be seen as uncommon in Sri Lanka as it was in Paris, Marseille or Stockholm. There is no traditional breeding ground for religiously motivated terrorism in the country.
The civil war that ended in 2009 had a completely different background.
“Sri Lanka is often used as an example of a country with great tolerance for different religions, and although confrontations have arisen between mainly Buddhists and Muslims, one must conclude that the shock from the events is as significant as when it occurred in Sweden,” the fund said.
Meanwhile, the fund noted that the April 21 attacks significantly increased the likelihood of former President Mahinda Rajapaksa’s party coming back to power.
“What occurred on April 21st significantly increased the likelihood of former President Rajapaksa’s party coming back to power.
“Given the still very tough discussions between the Opposition and the incumbent government after the attacks, we would not be surprised if the elections are brought forward. We think this would be very positive for the equity market.”
Sri Lanka’s presidential election is scheduled somewhere between the end of 2019 until the beginning of 2020 and parliamentary elections in 2020.
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