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Wednesday June 29th, 2022

Sri Lanka shares end at six-week close on concerns over fuel-shortage led closure

The main index fell for the 4th consecutive session

ECONOMYNEXT – Sri Lanka stocks plunged over 3% on Friday (17) to close at their lowest in six weeks as fuel shortage, which compelled the government to restrict the public services for two weeks, weighed on the sentiment, dealers said.

After the market closed, the Ministry of Public Administration issued a circular with limits on calling public sector employees to work for the next two weeks. The limit of public services is likely to slow down the business activities of most of the private sector companies, market analysts said.

The main All Share Price Index (ASPI) closed 3.02% or 232.88 points lower at 7,472.39, its lowest close since April 27. The market for a fourth straight session.

“The market was dragged down on fears that the country will go under a lockdown due to the current fuel crisis,” a top market analyst said.

“Investors are feeling the crisis at home. We are expecting the negativity to continue in the market.”

Though a new prime minister and a new cabinet have been appointed, analysts see little progress on both the economical and political fronts. The country is struggling to ensure a continuous supply of fuel due to a shortage of US dollars. The government on Thursday declared a holiday for schools and the public sector for Friday due to fuel-shortage led transport concerns.

The more liquid S&P SL20 index fell 3.83% or 94.44 points to 2,368.65.

The day’s turnover was 1.2 million rupees, a third of this year’s daily average of 3.6 billion rupees.

Foreign investors sold a net of 17 million rupees worth of shares on Friday. The market has witnessed a total foreign outflow of 996 million rupees so far this year.

The market has so far lost 7.7% in June after gaining 6% in May. It lost 23% in April followed by 14.5% fall in March.

The market has lost 38.8% so far this year after being one of the world’s best stock markets with an 80% return last year when large volumes of money were printed.

Sri Lanka’s sovereign debt default has already led the country to be rated with restricted/selective default rating by rating agencies, which has weighed on investor sentiment.

Investors are also concerned over the steep fall of the rupee from 203 to 370 levels so far in 2022.

All Share Price Index was mainly dragged down by Expolanka, which lost 7.7% to 160.50 rupees a share.

LOLC Holdings fell 8% to 418.50 rupees a share, while Browns Investment slipped 8% to 7.90 rupees a share. (Colombo/June17/2022)

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