Trading on Sri Lanka’s Colombo Stock Exchange has been temporarily halted by regulators for five days, starting April 18th.
The Sri Lankan Securities and Exchange Commission announced the decision in a statement, saying that it 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”.
“Therefore, acting in terms of the provisions contained in Section 30 of the Securities and Exchange Commission Act No. 19 of 2021, the SEC has decided to direct the CSE to temporarily close the stock market for a period of five business days commencing from 18th April 2022,” the statement continued.
Sri Lanka is suffering its worst financial crisis since declaring independence in 1948, with the Covid-19 pandemic leading to a collapse of the country’s tourism sector and adding to existing problems. Sri Lankan President Gotabaya Rajapaksa has been accused of mismanaging the country’s finances even prior to the pandemic, leaving the nation struggling to deal with the additional impact of Covid-19.
The economic crisis has had a major impact on the nation, with shortages of essential supplies such us basic foods and medical supplies commonplace. Blackouts for over 10 hours at a time have also become a daily recurrence as the country struggles to meet its energy demands.
Sri Lanka has been engulfed in protests in recent weeks, with tens of thousands taking to the streets to demand Rajapaksa’s immediate resignation. The president has up to now ignored the demands to step down.
The SEC said that it 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”, adding that many stakeholders had requested they make the move.
It is unclear at present whether the closure is limited to a single week or if the SEC may look at extending the temporary closure.