The Colombo bourse is unlikely to be negatively impacted, at least in the short term, on Sri Lanka's loss in the US-backed resolution in Geneva, according to analysts.
Some say that foreign investment in the stock market will not be hampered immediately while others believe that it's too early to make predictions. "It may be too early to comment on the expectations of the foreign investors," Thakshila Hulangamuwa Vice President, Asha Phillips Securities said. He added that what will be mostly counted on is if the country provides an investor friendly environment in all aspects along with transparency and proper policies adopted by the government on a long-term basis.
While also acknowledging that the US-led resolution was angled at certain governance issues which is also a sensitive area for investors, Mr. Hulangamuwa noted that the issue will be focused mostly on how effective the expected implementation of the LLRC (Commission) recommendations would take place on a reasonable time frame.
Analysts pointed out that the Geneva resolution is unlikely to affect foreign direct investment (FDI) to the country. "Most of the recent past and expected foreign investment into the country is from either Chinese origin or links to Chinese firms," Chamikara Gunawardane, Director Invstoreye Ltd, a private research company said.
"We have hardly got any major Western originated foreign investment to the country, except for the ones we got after privatization of strategically important state entities such as Colombo Gas, Lanka Lubricants, Ceylon Oxygen few decades back. If you look at any mega foreign investment to Sri Lanka especially since 1990's, they have been from Asian and the Middle Eastern countries, be it telcos, energy, food & beverage or tourism," he pointed out.
He noted that the resolution passed on Thursday will not have any immediate impact on Sri Lanka's economy. "I am more worried about our main export markets (majority to the US & EU) being affected."