ECONOMYNEXT – Sri Lanka stocks plunged 3.70 percent on Monday (13) as import restrictions and an increasing difference between dollar buying and selling weighed on the sentiment amid foreigners also exit from the island nation’s risky assets, brokers said.
The Monday’s percentage fall was the worst performance since February 22 this year. The market has been on the fall most of the days last year.
Foreign investors sold a net 697 million worth of shares on the market. The market has suffered a net foreign outflow of over 41.8 billion rupees so far this year.
“The market was mainly dragged by Expolanka shares after some high net worth investors started to sell the shares,” said a stockbroker asking not to be named.
“Then retailers also started to sell the shares at a lower price fearing the price would fall further. There was panic selling and no margin call came in.”
Expolanka Holdings, the market heavyweight which has a significant export component in its business,
dropped 14.68 percent to close at 145.25 rupees a share.
The company in a disclosure to the bourse on Friday said it had bought a 100 percent stake in US-based Complete Transport System LLC through one of its overseas units 6.1 million US dollars. The stockbroker said the acquisition failed to boost the shares.
The index closed 328.42 points down at 8,536.88 points after opening 8,865 psychology benchmark level but it tumbled throughout the day.
The S& P SL20 index of more liquid stocks fell 3.64 percent or 121.39 points to close at 3,214.12.
The country’s risky assets have unusually gained since last year partly due to record low interest rates, excess liquidity in money markets, and some businesses being disrupted due to import controls triggered by money printing. The trend of net foreign selling has been continuing since early last year.
Sri Lanka extended its COVID-lockdown till September 21 citing that with numbers slowly declining and the government is confident that the country will be able to reopen without risk.
The day’s turnover was 6.76 billion rupees, just over this year’s average daily turnover of over 4 billion rupees.
The fall was also contributed by LOLC holdings and Brown Investments.
LOLC Holdings slipped 6.61 percent to close at 498.00 rupees a share.
Browns Investment, a subsidiary of the LOLC, is down 7.53 percent to close at 8.60 rupees.
The bourse saw 26 stocks gaining against 161 falling on Monday.
Brokers say the market could fall significantly if a market correction starts. (Colombo/September13/2021)