TNS Corner
Sri Lanka's Shares Skids

Jul 1, 2008, 00:12

Colombo - Sri Lankan shares fell 0.51 percent on Monday as investors worried about the slowing down of the economic growth and country?s inflation skyrocketing to 28.2 percent. 

The Colombo All-Share index .CSE fell 12.59 points to 2,457.84, making its fourth straight session of losses and its lowest close since June 19, which was itself a five-month low.

"High inflationary expectations stopped investors buying shares," said Geeth Balasuriya, assistant research manager at HNB stockbrokers in Colombo.

"So investors were thinking of moving to fixed deposits as interest rates are expected to go up, with high inflation."

The inflation of the country reached to 28.2 percent in June, value of the rupee depreciated significantly against all major world currencies, and the looming bigger and bloodier war threats all are causing great worries to the common man. High inflation is not good for Sri Lanka and its share market in total shambles very bad news for Sri Lankan economy, another observer said.

"If there is a military buildup and sharp increase in weapons imports and a deterioration of the rupee, it will have a spiraling effect on inflation," said an analyst in Colombo.

There is gloomy prospects for the Sri Lankan economy. Sri Lanka?s  high inflation rate, depreciating rupee, share prices falling down, repeatedly rising fuel prices, the high interest rates, wide range of corruptions in the government, mismanagement of the public funds, heavy tax increases on goods, the escalation of the violence and more importantly threat of looming war are all causing great impacts on the economy of the war ravaged nation of Sri Lanka, a analyst in Colombo said.