Sri Lanka’s stock market recorded its steepest weekly decline since 2022, as Cyclone Ditwah’s devastation compounded investor anxiety about the island’s already fragile economy.
The Colombo Stock Exchange (CSE) closed on Friday with the All-Share Index down 1.5 percent, cementing a weekly loss of 5.35 percent.
It marked the worst market performance since mid-November 2022, when Sri Lanka’s economy was engulfed in a severe financial crisis driven by an acute shortage of foreign currency. The latest shock comes as the country grapples with widespread destruction caused by Cyclone Ditwah, which triggered deadly floods and landslides last week, killing close to 500 people and affecting nearly ten per cent of the island’s population.
Relief efforts are underway across the island, yet analysts warn that the economic fallout is likely to grow in the coming weeks. Near-term inflation data is expected to be closely monitored, as disruptions to agriculture, transport networks and supply chains could push prices higher and deepen household hardship.
Industrial shares led Friday’s declines, falling 3 percent. Colombo Dockyard suffered a dramatic 70 percent drop, becoming the largest percentage loser on the All-Share Index. Trading volume fell to 132.1 million shares, down from 171.3 million in the previous session. Despite lower trading activity, market turnover rose slightly to 3.97 billion rupees (12.9 million US dollars), compared to 3.78 billion rupees the day before.
Earlier this week, Prabath Chandrakeerthi, the Commissioner-General of Essential Services, described the devastation as “probably 10 times” greater than the destruction caused by the 2004 Indian Ocean tsunami, estimating the economic cost of the disaster to be “USD 6-7 billion".
