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UNHRC resolution impact on capital market short-lived: Analysts

23 September 2015 02:52 am - 0     - {{hitsCtrl.values.hits}}

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By Shabiya Ali Ahlam
Developments regarding Sri Lanka’s position at the on-going United Nations Human Rights Council (UNHRC) sessions in Geneva is expected to have negatively impacted the local capital market, but analysts observe the situation is not grave and will be short-lived.

“The added complexity of the latest resolution may get Sri Lanka’s already troubled capital markets concerned. From a markets’ perspective, it is likely that the investors may in the shwort term adopt a ‘wait and see’ approach, but this may also present the patient, value hunter with better long term buying opportunities,” Bartleet Religare Securities Head of Research Nikita Tissera told Mirror Business.

Pointing out that despite the Colombo Stock Exchange (CSE) having suffered with currency woes, interest rates concerns and policy inconsistencies, showing its resilience in the long term will be an opportunity for the long term investor, added Tissera.

While the hard talk from the UNHRC was well expected, Softlogic Securities COO and Head of Research Danushka Samarasinghe opined the negative impact should not have been felt at all. “It was nothing new but despite them knowing and expecting it, once report was out there were concerns. The impact was that there was over optimism with regard to the UNHRC report thinking it will not take a hard stance on Sri Lanka with the new government in power. But calling for hybrid court and others was not something they saw coming, leading to some concerns,” he said.

However, Samarasinghe assured that over the next few weeks the issue would resolve as there is no real issue, although initially it seem to be so.

Meanwhile, sharing a different view point, Asia Securities Manager Research and Banking Sector Analyst Srimal Liyanage stated no such impact is noted as the government is observed to be handling the UNHRC situation in a democratic manner. While there were doubts in the nation facing issues such as economic sanctions as an outcome of the sessions, tackling the scenario in a methodical and balanced approach prevented such from taking place, he said.
“Looking at the Asian region and the economic slowdown of the EU, those are elements that are impacting the market greatly. As a single factor, the UN issue does not affect the capital market landscape as much as expected,” stated Liyanage.
 
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