The closure of the Colombo Stock Exchange (CSE) for a period of five business days commencing from April 18 was temporary move and was initiated to fix several issues and allow investors to study grasp the economic changes that were implemented by the Central Bank last Tuesday (12) after new governor Dr. Nandalal Weerasinghe took office and also allowing investors to read the present situation in the country.
“Many other stakeholders of the securities market including the Colombo Stock Brokers Association have also sought the temporary closure of the market on the same grounds,” said CSE Chairman Dumith Fernando. He said that this is not the first time that the market was closed and it happened earlier during lockdowns and other instances. “The Russian Stock Market was closed for one month and opened last week due to the Ukraine war and even the New York Stock Market was shut down on many occasions in the history and recently it happened after the 9-11 attacks.”
He said that the market saw ‘force selling’ due to investors not knowing what was happening in the economic front and this closure will also help as a ‘cooling period’ and allow investors specially the lager ‘middle income investors’ (which increased from 15,000 two years ago to 62,000 last year) to grasp the current economic situation. The SEC has carefully considered the grounds that have been adduced by them and has evaluated the impact the present situation in the country could have on the stock market, in particular the ability to conduct an orderly and fair market for trading in securities. “We also wanted to bring back long term stability to the market and stop ‘panic’ set in to it as investors now have time to get better information of changes that are happening in the economic side. We also take this time to introduce some new regulations to bring about more stability to the markets.” He also said that there was no political influence made towards initiating this temporary market closure. Rajeeva Bandaranaike. Chief Executive Officer at Colombo Stock Exchange said the SEC is of the view that it would be in the best interests of investors as well as other market participants if they are afforded an opportunity to have more clarity and understanding of the economic conditions presently prevalent, in order for them to make informed investment decisions.
Director at CSE Dilshan Wirasekara said that there was an intense debate before this closure among them and they all agreed that this was the best cause of action towards the market improvement.”