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Wednesday February 1st, 2023

Sri Lanka shares recover from near 4-month low on bargain hunting ahead of budget vote

ECONOMYNEXT – Sri Lanka shares gained for the first time in seven straight session and recovered from a near four-month low on Tuesday (22) on a bargain hunting in beaten down shares ahead of the 2023 budget vote, brokers said.

Budget, after the market closed, was based with a 37 majority vote in the 225-member parliament.

The main All Share Price Index (ASPI) closed 2.8 percent or 223.42 points higher at 8,000.44, recovering from its near four-month low hit on the previous session.

In the last six-session through Monday, the index fell 7.6 percent.

“Index started on a solid footing and maintained its steep upward trajectory as buying infused with the speculations on policy easing from the upcoming policy meeting which scheduled to be held on 24th Nov.,” First Capital Market Research said in its daily market note.

Analysts said with the inflation easing for the first time in the last month, the central bank might consider some action to ease its tight monetary policies.

In the past sessions, the index continued to fall on the speculation of a local debt restructuring although no proper decision has been taken.

State Minister for Finance Shehan Semasinghe told parliament during the budget debate on Tuesday that Sri Lanka still believed its economic plan required no domestic debt re-structure  as interest rates remained elevated over fear of a rupee debt default.

The budget saw policies that will increase the cost of doing business across the board, but relieving the government from depending on excess money printing, analysts say.

The market witnessed a turnover of 1.5 billion rupees, half of this year’s daily average turnover of 3 billion rupees.

The market saw a foreign inflow of 116 million rupees, extending the total net foreign inflow to 18.3 billion rupees so far for this year.

Analysts said a bearish sentiment can be expected in the banking and financial sector until a clear direction is given by the government on local debt restructuring.

The more liquid index S&P SL20 closed 3.7 percent or 88.4 points higher at 2,454.96.

The ASPI has fallen 6.9 percent so far in November after losing 13.4 percent in October.

It has lost 34.5 percent year-to-date after being one of the world’s best stock markets with an 80 percent return last year when large volumes of money were printed.

Expolanka led the market gain and jumped 11 percent to close at 138.7 rupees a share.

Lanka IOC rose 13 percent to close at 178 rupees, while Ceylinco insurance gained 7.5  percent at 2,100 rupees.

The listed companies have shown reasonable profits in their third quarter of the year, however, analysts say the disposable income of the general public due to proposed tax hikes is the main reason for the negative expectations over the December earnings. (Colombo/Nov22/2022)

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Sri Lanka bond yields down at close

ECONOMYNEXT – Sri Lanka’s bond yields were down at close following a bond auction on Wednesday, dealers said while a guidance peg for interbank transactions remained unchanged.

“The rates were steady at the auction,” a dealer said.

“This can be a signal to the market saying the rates will go down in the future.”

A bond maturing on 01.07.2025 closed at 32.40/60 percent, down from yesterday’s 32.60/85 percent.

A bond maturing on 01.05.2027 closed at 29.10/35 marginally down from yesterday’s 29.20/75 percent.

The Central Bank’s guidance peg for interbank US dollar transactions remained unchanged at 362.14 rupees against the US dollar.

Commercial banks offered dollars for telegraphic transfers at 371.38 rupees on Friday, data showed. (Colombo/Feb 01/2022)

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Sri Lanka bill auction hits pothole after 2025 bond spike

ECONOMYNEXT – Sri Lanka sold only 45 billion rupees in Treasury bills at Wednesday’s auction after offering 120 billion rupees, data from the state debt office showed, amid market confusion over a spike in a two year bond at an earlier action.

30.1 billion rupees of 3-month bills were sold at 29.91 percent, unchanged from a week earlier after offering 60 billion rupees for auction.

5.1 billion rupees of 6-month bills were sold at 28.72 percent, flat after offering 30 billion.

10.3 billion rupees of 12-month bills were sold at 27.72 percent after offering 30 billion.

Phase II subscriptions have been opened.

The market was foxed after the 2025 bonds were accepted at sharply higher yield than market on January 30, dealer said.

There was further confusion as the there was an outright purchase of 2025 at around 29 percent earlier in January.

Some investors speculated that the authorities were trying to drive more buyers towards short end bonds as bill volumes were getting larger. (Colombo/Feb01/2023)

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Sri Lanka services exports down 5.9-pct in 2022

ECONOMYNEXT – Sri Lanka’s services exports were estimated to have fallen 5.9 percent to 1,876.3 million US dollars, the island’s Export Development Board said.

Services exports estimated is made up of ICT/BPM, construction, financial services, transport and logistics.

There are more than 500 ICT companies, the EDB said.

Sri Lanka’s merchandise exports were up 4.6 percent to US dollars 13.1 billion dollars in 2022 from 2021.

Sri Lanka’s goods exports are slowing amid lower growth in Western markets. (Colombo/ Feb 01/2023)

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