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Saturday June 3rd, 2023

Sri Lanka shares down on profit taking; new CB chief’s directions waited

ECONOMYNEXT – Sri Lanka stock index fell 0.93 percent on Thursday (16) on profit taking as the market waited for directions from the newly appointed central bank chief, brokers said.

Former State Minister for Money and Capital Markets Ajith Nivard Cabraal assumed duty as the 16th central bank governor on Wednesday. During his previous term from 2006-2015, analysts say there was an overall policy direction despite some hiccups.

“The market wants to see the new directions,” said a stockbroker.

Soon after assuming duty, Cabraal said he wanted fiscal discipline and to give directions to the market. Analysts expect him to deal with the forex concerns that had become a key risk in the market.

Importers have complained that they are compelled to pay nearly 15 percent more than the central bank’s official rate as state banks do not have adequate dollars.

Lower dollar inflows due to lower revenue from pandemic-hit tourism and declining remittances amid depleted foreign exchange reserves have put pressure on the exchange rate, brokers say.

The index closed 83.17 points down at 8,848.04 points. After opening at 8,991, it immediately slid to 8,883 and remained volatile throughout the day.

The S& P SL20 index of more liquid stocks fell 0.67 percent or 22.27 points to close at 3,309.99.

The market turnover for the day was 3.95 billion rupees, below this year’s average daily turnover of over 4 billion rupees.

Brokers expect some positive sentiment on the possible easing of nearly four-week lockdown.

Sri Lanka’s State Health Minister, Sudharshani Fernadopulle on Tuesday said the country is likely to gradually reopen from Tuesday (21), though health experts warn that the country is not fully ready to be opened.

Foreign investors sold a net 6.3 million rupee worth of shares on Wednesday. The market has suffered a net foreign outflow of over 41.8 billion rupees so far this year.

The fall was led by Exoplanka Holdings, LOLC holdings and Commercial Leasing and Finance.

Expolanka Holdings, the market heavyweight which has a significant export component in its business, slipped 2.93 percent to close at 165.50 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.

LOLC Holdings down 2.02 percent to close at 522.50 rupees a share.

Commercial Leasing and Finance down 3.43 percent to close at 19.70 rupees.

The bourse saw 65 stocks gaining against 123 falling on Thursday

Brokers say the market could fall significantly if a market correction starts. (Colombo/September16/2021)


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Sri Lanka to ramp up weekend fuel deliveries after petrol price cut

More deaths reported at Sri Lanka fuel queues

ECONOMYNEXT – Sri Lanka’s state-run Ceylon Petroleum Corporation will be operating on the weekend to complete all fuel deliveries to end vehicle queues forming outside fuel stations after the price revision earlier in the week, Energy Minister Kanchana Wijesekera said.

“Instructions have been given to CPC and Ceylon Petroleum Storage Terminals to continue fuel deliveries on Saturday and Sunday this week to supply sufficient stocks to all fuel stations,” Minister Wijesekera said in a TWITTER.COM MESSAGE

“To reduce expenses on overtime, CPC and CPSTL have not been operating on Sundays and public holidays in the last 4 months,” Wijesekera said.

“Non-placement of orders by fuel stations from last Saturday, anticipating a price reduction, not maintaining minimum stocks, immediate increase in demand by consumers after the price revision, and quota increase have created shortages in the fuel stations.”

The Minister in April 2023 said all fuel stations would be required to maintain a minimum of 50 percent of stock tank capacity.

“I have asked CPC to review and suspend the license of fuel stations that had not maintained minimum stocks.” (Colombo/ June 02/ 2023)

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Sri Lanka bonds yield up at close, rupee at 291.75/292.50 against the US dollar

ECONOMYNEXT – Sri Lanka’s bonds closed steady on Friday, dealers said, following the central bank’s decision to cut its main policy rate by 250 basis points.

The Spot US dollar closed at 291.75/292.50 rupees, dealers said.

The rupee opened at 290.25/75 to the US dollar Thursday and closed at 292.50/295.50 to the US dollar.

A bond maturing on 15.09.2027 closed at 24.70/90 percent up from 24.50/90 percent a day earlier, dealers said.

A bond maturing on 15.05.2026 closed at 25.75/26.25 percent up from 25.00/26.00 percent a day earlier.

A bond maturing on 01.05.2025 closed at 27.00/30 percent, up from 26.30/27.00 per cent at last close.

A bond maturing on 01.07.2032 closed at 20.25/21.00 percent, up from 20.00/40 per cent at last close.
(Colombo/ June 02/2023)

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Sri Lanka’s shares edge up on positive macroeconomic sentiments

ECONOMYNEXT – Sri Lanka’s shares closed higher in trade on Friday, over positive macro-sentiments encouraging investors to redeem their interest towards buying, an analyst said.

The main All Share Price Index was up 0.72 percent or 62.19 points to 8,753.80,  while the most liquid index S&P SL20 was up 0.68 percent or 16.87 points to 2,487.29.

Sri Lanka’s inflation in the 12-months to May 2023 has eased to 25.2 percent from 35.3 percent a month earlier according to a revised Colombo Consumer Price Index calculated by the state statistics office.

Prior to the Monetary Policy investors were quite optimistic that inflation is to lower and interest rates will decrease and since exp, an analyst said.

Sri Lanka Central Bank is waiting for the government proposal on the domestic debt restructuring (DDR), the central bank governor Nandalal Weerasinghe said amid uncertainty over DDR and speculations over instability in the banking sector.

“On debt restructuring, the borrower is the ministry of finance’s treasury. Certainly we will announce what the strategy will be. We are waiting for a government proposal,” Weerasinghe said.

Sri Lanka’s investors are waiting on assurances to be made on debt restructuring and optimization, Central Bank Governor Nandalal Weerasinghe said, “It is up to the government to clear the uncertainty, because from our side we have done that part.”

The central bank cut the key policy rates by 250 basis points to spur a faltering economic growth as inflation was decelerating faster than it projected.

The speculation of DDR has hit the market and the risk premium has kept the market lending rates well above the central bank’s policy rates. The government has yet to present its plans on DDR.

Weerasinghe said the central bank has done its best to reduce the risk premium through bringing down the market lending rates while keeping the policy rates unchanged.

Sri Lanka’s President Ranil Wickremesinghe has discussed progress of International Monetary Fund program and debt restructuring during a visit of Deputy Managing Director Kenji Okamura, statement said.

“The discussion primarily focused on the progress of the IMF program between Sri Lanka and the IMF,” a statement from President’s office said.

“Attention was also paid to the on-going debt restructuring negotiations.”

However Officials from IMF have said Sri Lanka has to focus on expanding taxes.

“We discussed the importance of fiscal measures, in particular revenue measures, for a return to macroeconomic stability,” Deputy Managing Director Kenji Okamura said in a statement.

The finance ministry this week issued rules requiring everyone above 18 year of age to register to pay income tax.

“I was encouraged by the authorities’ commitment to negotiate a debt strategy in a timely and transparent manner.

The market generated a revenue of 738 million rupees, while the daily average was 1 billion rupees.

Top gainers in trade were Vallibel One, LOLC Finance and Browns Investment. (Colombo/June02/2023)

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