Sri Lanka’s equity market saw a net foreign outflow of Rs. 6 billion in the quarter ended 31 March while the government securities market saw a net foreign inflow of over Rs. 10 billion. The latest data shows that in the first quarter of 2019, the Colombo Stock Exchange (CSE) witnessed a foreign outflow of Rs. 21.4 billion and an inflow of Rs. 15.4 billion. During this period, the highest number of foreign purchases and the highest foreign outflow were both recorded in February, with an inflow of Rs. 5.5 billion and foreign sales amounting to Rs. 8.1 billion. Meanwhile, the Central Bank of Sri Lanka (CBSL) data shows that the bond market has seen a net inflow with foreigners purchasing treasury bills and bonds. Government securities held by foreigners has increased from Rs. 157 billion in the first week of January to Rs. 167 billion in the last week of March. A volatile economic environment accentuated by political chaos during the last quarter of 2018 resulted in a net foreign outflow from the CSE of Rs. 23.2 billion and a net outflow from government securities of Rs. 157 billion last year. However, Sri Lanka was suffering outflows even before the crisis began, with investors moving to safe haven markets with the strengthening of the US economy. However, the rate of outflows substantially intensified with the political crisis in late October. According to market analysts, 2018 was littered with events that created an uncertain policy and political environment with the unexpected provincial council election results in February, the No-confidence Motion brought against the Prime Minister, the anti-Muslim riots in Kandy, while the state of emergency that followed has also supported these outflows in 2018. The CSE recorded a net foreign inflow of Rs. 384 million in 2016, a net foreign outflow of Rs. 5.37 billion in 2015 and a healthy net foreign inflow of Rs. 21.14 billion in 2014.