ECONOMYNEXT – Sri Lanka stockholders were 1.4 trillion rupees richer by the end of 2024, with the dollar value of listed stocks up by 6.3 billion US dollars, an analysis if year-end data show.
According to Colombo Stock Exchange data the market value of listed stocks was 5,695 billion at the end of 2024, up 1,446 billion from lasts year.
The value includes new shares issued to raise capital in 2024.
During the year inflation was largely absent allowing consumer spending to recover and companies to cut costs and retail prices, in sharp contrast to the age-of-inflation doctrine of Anglophone macro-economists that falling prices (deflation) is somehow bad.
Backed by falling interest rates, stocks roared in 2024 with margin backed trading also coming into play, analysts said.
In 2021, when the central bank printed record volumes of money and with excess liquidity coming from 2020, stocks inflated rapidly with the Colombo All Share Index rising 80 percent 12,226 points as a balance of payments crisis also speeded up.
In 2022 as stabilization policies were deployed the Colombo All Share Index plunged 30 percent.
By the end of 2022, stock values were down to 3,847 billion from 5,489 billion as the stabilization crisis bit hard.
The US dollar value of stocks was down to 10.6 billon from 27.4 the previous year. Kerb market rates however were higher than the official rate.
Stocks, which represents ongoing businesses represents a hedge against inflation from aggressive central banking or monetary policy.
In 2024 the rupee was allowed to appreciate by the central bank amid deflationary policy, helping recover some of the losses, bringing down commodity and energy prices, which in turn restored some of the purchasing power lost to inflationism in 2022. (Colombo/Jan02/2024)
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