Stock Market Crisis and Oligarchic Interests

by Ahilan Kadirgamar-August 25, 2012

The resignation last week of Securities and Exchange Commission (SEC) Chairperson Tilak Karunaratne, after he blamed "a mafia of high net worth investors and their crony stockbrokers" for mobilising political pressure, has further exposed the crisis in the stock market. Over the last year, there has been much discussion of two aspects of this crisis. First, the collapse of the Colombo Stock Exchange (CSE) from one of the best performing markets in the world two years ago - when the market value of the CSE quadrupled from the end of the war to its peak within two years - to one of the worst performing markets this year. Second, reports of increasing political interference, market manipulation with the resignations of SEC Chairperson Indrani Sugathadasa late last year and now Karunaratne. The first aspect of the crisis relates to the returns from financial investments and the second to the regulations that are in place to ensure the so-called smooth functioning of the stock market.

A crisis reveals contradictions. A crisis also invites for good or bad interventions by various actors attempting to consolidate their interests, including those claiming to resolve the crisis. The difficult question is how such crisis relate to the unravelling and consolidation of regimes.

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