CSE turns red from Cyclone Ditwah

• Current market movement a ‘weather-related disaster-induced pullback’
• Ditwah-related economic fallout to contract GDP growth next year by approximately 0.5–1%
• ASPI on downward trend since reaching all-time high on 13 Nov.

The Colombo Stock Exchange (CSE) turned red last week as selling pressure mounted amid uncertainty over the extent of the economic fallout from Cyclone Ditwah.

Speaking to The Sunday Morning Business, First Capital Holdings Manager Research Ranjan Ranatunga described the current market movement as a weather-related disaster-induced pullback. 

He further noted that the fallout from Cyclone Ditwah had triggered panic selling in the equity market due to concerns over its expected impact on the economy.

Commenting on the market outlook going forward, Ranatunga opined that the CSE would continue to be volatile until the market received a clear signal as to the extent of the economic fallout resulting from the cyclone. 

“Right now, not even the Government has quantified the exact extent of the damage caused. So until a proper assessment is done and the investors receive some clarity on the impact to the GDP, we will see some selling pressure and a volatile market,” he said.

Ranatunga further revealed that the original GDP growth forecast for 2026 was 3.7%. However, due to the economic fallout from Cyclone Ditwah, they now expect GDP growth to contract by approximately 0.5–1% next year.

He added that despite the current market volatility, construction counters were performing well, as rebuilding efforts after any disaster naturally involved construction activity. Consequently, the construction sector is attracting increased interest. 

Ranatunga also noted that consumer goods counters were also doing well due to disaster-induced panic buying.

The benchmark All-Share Price Index (ASPI) has been on a downward trend since reaching its all-time high of 23,659.70 basis points on 13 November, during which the market declined by approximately 1,800 basis points to around 21,800 basis points. 

Prior to this correction, the ASPI experienced a historic bull run, surpassing key milestones of 20,000, 21,000, 22,000, 23,000, and 23,500 basis points for the first time in its history.

Source: The Morning