record breaking colombo stock market took the yesterday's terrorist attack on foreign diplomats on its stride as usual (all share index falling by a mere 0.5% and milanka price index half of that). investors have a good idea about what matters in the fight against terrorism, and have long factored in possible ltte terrorist attacks and government's present course of action. they know that yesterday's incident does not change anything much as far as economy is concerned, except for some international publicity (bad), and another clear reminder to foreigners of ltte's brutality (good).
on the other hand yesterday's (27th) big falls in the big international markets could have some effect in sri lankan market. for those who do not know, first the chinese market and then the american market ( last night in sri lankan time) went through sell offs ( due to various reasons including falling chinese market, bad news on the u.s. economy, computer glitches due to high volumes. etc). dow fell about 3.5 %. today morning the east asian markets are falling because dow fell.
question is whether sri lankan one will fall? in spite of sri lanka's high integration with international trade, sri lankan stocks have not shown much correlation with world markets in the past, due probably to the fact that about 75 % of the market is driven by local investors. so it may be that there won’t be much effect. it may even rise if investors consider yesterdays small fall here as a buying opportunity as they have done in the past.
it wouldn't be a bad thing to have a moderate correction after all the record breaking imo.
anyway let us see what happens today.