Intensifying tensions in the Middle East region prompt margin calls

• 19 Mar 2026
• 0

The Colombo Bourse extended its downturn, as escalating tensions in the Middle East led to price declines triggered by margin calls.

Elevated risk premiums, driven by rising oil prices, weighed on sentiment, with the ASPI declining by 377 points to a seven-month low of 20,264.

The S&P SL20 Index also declined by 114 points to close at 5,651. JKH, AEL, COMB, MELS, and HAYL emerged as the top negative contributors to the index.

Meanwhile, foreign selling amounting to LKR 174.8Mn in JKH further pressured the market. Retail participation remained subdued, while HNW investor activity was moderate.

Market activity was primarily concentrated in Banking sector counters and blue-chip stocks. Daily turnover stood at LKR 3.9Bn, marking a decrease of 23.0% over the monthly average of LKR 5.1Bn.

Capital Goods sector led the daily turnover with a share of 31%, followed by the Banking, and Diversified Financials sectors collectively contributing 37%. Foreign investors remained net sellers, posting a net outflow of LKR 229.2Mn.

BOND MARKET

Yield curve moves higher amid intensified selling pressure

Secondary market activity picked up, with higher volumes reflecting intensified selling pressure as geopolitical uncertainty continued to dampen sentiment, driving a broad-based upward shift in the yield curve.

Trading was observed across multiple tenors, starting at the short end, where the 01.05.2027 and 15.09.2027 maturities traded between 8.40% and 8.60%. In the 2028 segment, the 01.05.2028 and 15.12.2028 maturities traded between 9.40% and 9.60%, while in 2029, the 15.06.2029, 15.09.2029, and 15.12.2029 maturities traded between 9.70% and 10.00%.

Further along the curve, the 01.03.2030 and 01.07.2030 maturities traded between 9.80% and 10.10%, while the 15.03.2031 maturity traded between 10.00% and 10.10%. At the belly end, the 01.06.2033 and 01.11.2033 maturities traded between 10.70% and 11.05%. Moving into 2034, the 15.06.2034 and 15.09.2034 maturities transacted between 10.95% and 11.10%, while the 15.06.2035 maturity changed hands between 11.00% and 11.05%.

On the external front, the LKR remained broadly flat against the USD, closing at LKR 311.3/USD. Liquidity in the banking system expanded marginally to LKR 351.0Bn from LKR 341.2Bn recorded previously.

-First Capital Research-

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