ECONOMYNEXT – Sri Lanka stocks closed up on a 16 month high on Thursday after domestic bond restructuring assurances and fears on investing in the banking sector diminished, an analyst said.
The All Share Price Index (ASPI) edged up 0.91 percent or 99.54 points to 11,026.83, this is the highest the market has been since March 07, while the most liquid index S&P SL20 was up 0.65 percent or 20.62 points to 3,205.16, according to exchange provisional data.
The market has continuously being seeing gains on domestic debt optimization (DDO) since July 04 and due to the prior fears on DDO, investors held back on investing in the banking sector which resulted in the market to moving down.
Due to constant gains, there has been profit taking and selling interest in the banking sector over constant gains in the past 12 sessions.
Sri Lanka’s announced domestic debt restructuring plan has avoided adding to the “fragility” of the banking system, World bank Country Director Faris Hadad-Zervos said.
“The trick is to do it in a way that does not impact the financial sector and does not cause fragility in the financial sector,” Hadad-Zervos told a forum organized by Sri Lanka’s Press Club.
Sri Lanka kept banks, which have already been hit by bad loans and mark-to-market losses out of re-structuring plan.
Hadad-Zervos said initial analysis seems to indicate that the debt restricting is done in a sustainable way but without further impacting the banking sector.
Sri Lanka’s cabinet of ministers had approved changes to the country’s income tax law applicable to superannuation funds facilitate domestic debt restructuring, Minister Bandula Gunawardana said.
Sri Lanka authorities have said pension and provident funds that do not agree to extend maturities of their Treasury bonds will be taxed at 30 percent instead of the current 14 percent.
The overall market is moving up on domestic debt optimization assurances, picking up several stock counters in the market such as the capital sector.
Top gainers were Ceylinco Insurance, Expolanka and Aitken Spence.
Expolanka has recommended an interim dividend of Rs. 3.48 per share for the year ending 31st March 2024, which carried the market, an analyst said. (Colombo/July19/2023)