ECONOMYNEXT – Sri Lanka’s shares ended at an over four-month low on Tuesday due to poor earnings performance by companies in the first quarter of 2023 and domestic debt restructuring fears, an analyst said.
The main All Share Price Index (ASPI) plunged 3.03 percent, or 271.75, to 8,711.46, the lowest since February 15, 2023.
“The market is moving in the red due to several factors; domestic debt restructuring fears, poor earnings performance, and comments by the President on the potential closure of the stock market,” an analyst said.
The index dropped to 8,900 on Friday after comments made by the President regarding debt restructuring, according to an analyst.
“All the International Monetary Fund reforms established are gradually beginning to show their impact, which has dragged down business activity, and this is now showing in the market,” the analyst added.
Analysts say that President Wickremesinghe’s comments on the potential closure of the stock market triggered selling pressure across the board, and investors are adopting a wait-and-see approach.
The most liquid index, S&P SL20, dropped 3.95 percent or 103.42 to 2,514.37.
Top losers during the trade were Vallibel One, Expolanka, and Sampath Bank.
Expolanka’s earnings have proved disappointing for investors, as the conglomerate has recorded a loss of 1.2 billion rupees.
Sri Lanka’s banks have sought clarity on a proposed domestic debt restructure, questioning whether there is a non-voluntary element in the plan, and have also called for transparent discussions with all banks.
Sri Lanka’s Central Bank and Treasury officials have said that there will be voluntary debt ‘optimization’ for domestic debt holders.
Banks said they are seeking clarity on what is meant by voluntary debt optimization, and whether there is a non-voluntary element that applies to state banks and pension funds.
The market generated a turnover of 983 million rupees, below the daily average of 1.5 billion rupees. The market also generated a net foreign outflow of 783 million rupees, the lowest since February 15. (Colombo/May02/2023)