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Wednesday October 20th, 2021

Sri Lanka shares edge down in thin trade; possible rate hike concerns weigh

ECONOMYNEXT – Sri Lanka stocks edged down 0.09 percent on Tuesday (12) for the second session in thin volume as a possible policy rate hike at the central bank’s monetary board meeting later this week weighed on the sentiment, brokers said.

The Colombo benchmark All Share Price Index fell 8.90 points to close at 9,640.36.

The S&P SL20 index of more liquid stocks, however, gained 0.13 percent or 4.76 points to close at 3,574.84.

ASPI opened the day on a positive note but remained volatile, slipping throughout midday hitting
the intra-day’s lowest of 9,633 before picking up slightly.

The central bank will announce the policy rates on Thursday under the new governor Ajith Nivard
Cabraal and many analysts see at least a 50 basis point hike in the key policy rates as the central bank
has allowed the treasury bill rates to rise, signalling such an increase.

Sri Lanka’s withdrawal of price controls has resulted in many essentials including LP gas to raise the
prices in line with global market prices to minimize the losses. Brokers said the move along with the possibility of the government allowing further fuel price hikes also helped to boost energy-related shares.

Sri Lanka’s debt office sold 80 billion rupees out of a 100 billion bond auction on Tuesday and the
bond yields have risen over 100 basis points across all maturities.

“When the market is volatile after a strong gain, it is because the market lacks participants,” a stock
broker said.

“But overall, the market was not very active”

The sectors that generated the highest turnovers were are – Capital Goods 404 million rupees, Materials 334
million, Transportations 300 and Food and Beverage 291 million.

Sri Lanka decided to abandon price controls which were creating shortages of essential goods amid
rising global prices and a weakening of the rupee against the dollar.

Foreign investors continued to sell and on Tuesday they sold a net 28 million rupees worth of shares
continuing the trend of net foreign selling since early last year. The market has suffered a net foreign
outflow of over 44.5 billion rupees so far this year.

The day’s turnover was 2 billion rupees, nearly half of this year’s average daily turnover of over 4 billion rupees.

The fall was led by Browns Investment, LOLC Holdings and Ceylon Tobacco Company.

Browns Investment PLC closed 0.93 percent down at 10.60 rupees a share while LOLC Holdings down
0.45 percent to 605.00 rupees a share.

Ceylon Tobacco Company fell 0.61 percent to close at 931.75 rupees a share.

Expolanka Holdings, the market heavyweight which has a significant export component in its
business, bucking the trend gained 0.66 percent to close at 191.50 rupees a share.

With price controls being lifted Laugfs Gas Plc fell 4.84 percent to close at 27.50 rupees a share.
Lanka IOC, however, fell 0.50 percent to close at 26.20 rupees a share.(Colombo/Oct 12/2021)


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