ECONOMYNEXT – Sri Lanka shares gained over 2.7-percent on Friday, the highest in five weeks on overall positive following India’s assurance given on debt restructuring boosting overall market sentiment.
“ASPI recorded the biggest gain for 2023 and extended its run for the 4th consecutive day backed by the positive sentiment within investors as India formally notified the IMF its assurance and support to Sri Lanka’s external debt restructuring,” First Capital Market Research said in a daily note.
The main All Share Price Index (ASPI) closed at 2.75 percent or 233.23 points higher at 8,718.15. ASPI gained 5.5 percent this week.
India’s external affairs minister S Jaishankar, the Indian government informed the IMF that it strongly supports Sri Lanka’s debt restructuring efforts in the latter’s bid to secure a 2.9 billion dollar bailout package over a four-year period.
President Wickremesinghe told parliament on Tuesday that talks with creditors India and China are successful and soon he is expecting an answer.
Sri Lanka has raised taxes and tightened spending to bring a wide budget deficit and unsustainable debt under control. Formal assurances that creditors are willing to re-structure debt has to be given.
State Minister for Finance Shehan Semasinghe said Sri Lanka is expecting to get executive board approval for an International Monetary Fund program by March.
The most liquid index S&P SL20 closed higher at 3.36 percent or 88.45 points at 2,724.22.
First quarter of 2023 is expected to be negative with the taxations going in to effect from January 1st and there are talks of a hike in electricity tariffs, which has gained Cabinet approval and is waiting for recommendations by the Public Utilities Commission of Sri Lanka.
Whereas the second quarter was expected to be more positive with the anticipation of IMF getting through and with the interest rates expected to ease as the taxes starts to generate funds.
Sri Lanka is expecting a further contraction in the economy after a negative growth in 2022, Cabinet Spokesperson Bandula Gunawardena said at the Weekly Cabinet Press Briefing.
The market witnessed a turnover of 2.2 billion rupees, higher than this month’s daily average of 1.9. However, it is also comparatively lower than 2022’s daily average turnover of 2.9 billion rupees.
The market saw a net foreign inflow of 60 million rupees. The net foreign inflow for the first three weeks of January is 290 million rupees. The total foreign inflow of 2022 was 31 billion rupees.
Sampath Bank pushed the index up to close at 5.3 percent higher at 40 rupees.
Richard Piersis gained 9.55 percent to close at 24 rupees and Commercial Bank closed 4.4 percent higher at 52.5 rupees a share. (Colombo/Jan20/2023)