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Wednesday May 18th, 2022
Markets

Sri Lanka slips for the fourth day

ECONOMYNEXT – Sri Lanka’s stock market fell for the fourth straight session on Friday (28) to at its lowest in near four weeks as worries over the economy and uncertain foreign debt repayment dented investor appetite for risky assets, brokers said.

The main All Share Price Index (ASPI) closed 0.18 percent or 22.56 points lower on Friday to close at 12,863.14 points, its lowest since January 4. It lost 3.8 percent in the week.

“Investors are expecting some sustainable policies to handle the debt. The government’s ad hoc measures with swap and other borrowing arrangements will not help the country,” one analyst said.

Investors shrugged off an international media report that quoted Finance Minister Basil Rajapaksa saying Sri Lanka negotiating debt relief with international bondholders and weighing an approach to seek IMF assistance to face the debt issue.

The island nation repaid a 500 million US dollar loan on January 18 to avoid a sovereign debt default, but persisting forex shortage has weighed on country’s oil imports and led to power cuts. The government is struggling to avoid continuous power cut amid announced and unannounced power cuts across the country.

Analysts also have said the market was witnessing an overdue correction.

S&P SL20 of the more liquid index fell 0.46 percent or 20.36 points to 4,380.55.

The day’s turnover was 6.3 billion rupees, lower than this year’s daily average of 7.8 billion rupees.

Foreign investors, who are highly worried about possible sharp depreciation or devaluation in the currency, bucked the trend and bought a net of 45.4 million rupees. But the foreign selling fo this year has been 2.5 billion rupees . In 2021, the Sri Lanka stock market suffered a net foreign outflow of 50 billion rupees.

Investor sentiment has turned to negative amid record-high inflation, depreciation pressure on the rupee, central bank’s money excess printing and the government’s failure to take sustainable action to deal with the debt crisis.

Analysts said investors are worried about possible currency depreciation, the government’s ability to avert a sovereign debt default, and fuel shortages hitting factory manufacturing and thus hitting future earnings.

LOLC Holdings, Senkadagala Holdings and Melstacorp dragged to the index down on Friday.

LOLC Holdings fell 2.33 percent to close at 1,176.00 rupees a share, Senkadagala Holdings was down 8.71 percent to close at 600.00 rupees while Melstacorp slipped 3.08 percent to close at 59.80 rupees a share.

Expolanka, the market heavyweight which has export and freight businesses, bucked the trend and gained 1.95 percent to close at 366.00 rupees a share after it reported staggering earnings of 23 billion rupees in the December 2021 quarter pushed by higher freight rates and recovery of sales to North American and European markets.

(Colombo/Jan28/2022)

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