Economy / Sri Lanka
Stocks And Rupee Facing Downside Risks On War
March 2007 | Market StrategySri Lanka's stock market and rupee currently face serious downside risks, as investors take profit amid an escalation of fighting between government forces and the Liberation Tigers of Tamil Eelam (LTTE, or Tamil Tigers). Until now, the Colombo Stock Exchange (CSE) index has largely ignored the return to de facto civil war in 2006, rising by 52.1% last year. However, with President Mahinda Rajapakse apparently committed to a military solution rather than negotiations, economic growth will inevitably suffer this year. Yet there is one potential new anchor for Sri Lanka: China.
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