Financial crisis unlikely to hit Asia
COLOMBO: The current financial crisis in the US, which has
affected several banks and other financial institutions around the
world, is unlikely to hit Sri Lanka's financial market badly, according
to economic experts and professionals.
Although the Colombo Stock Exchange during the past one week has
shown a downward trend due to the global financial crisis, stock brokers
say such changes in the share market were very common and expectable.
Senior stock broker of the First Guardian Equities Mohandas Thangarajah
said Sri Lanka's financial market would be affected only if the foreign
investors and fund managers pull out their shares from the stock market.
Though the number of foreign investors is small, it might still hit
the financial market here if they decide to pull out their investments.
At the moment, we do not see that happening, Thangarajah said.
He added that current US market crisis, unless recovered forthwith,
might inflict some negative impact on Sri Lanka's apparel and tea
industry exports in time to come.
R. Nadarajah, a retired bank executive, said the chances of Sri Lanka
getting affected badly due to US financial crisis are very remote,
because we do not depend largely on foreign investments to sustain our
economy.
There will be some hiccups here and there, but it would not cause
major ripples in the financial system here, Nadarajah told IANS,
recalling that Sri Lank's tiny economy successfully withstood the
Southeast Asian economic crisis of late 1990s.
Noting that the US crisis was causing ignorable negative impacts in
the stock market during the past one week, he said Sri Lanka's stock
exchange did not function based on fundamentals, but on daily
sentiments.
Therefore, the negative behaviour of the Colombo Stock Exchange at
the moment is not an unexpected one. It will soon return to normal if
the local companies maintain their financial stabilities, he said.
Nadarajah, however, cautioned that since the US crisis has hit
several banks, it might make the people all over the world lose faith in
banks, especially in the financially unstable private sector banks.
If those financially unstable private sector banks could maintain the
statutory requirements such as the liquid assets and capital adequacy
ratio, then they too can face successfully the global market ups and
downs, he said.
Retired economics professor of the Jaffna University, N. Balakrishnan,
said the financial market in Sri Lanka's economy is relatively small, so
is the impact.
Unless the global financial crisis further deepened in future, there
was no danger for Sri Lanka. I think we are benefited with being a small
country here, Balakrishnan said. |