ECONOMYNEXT – Sri Lanka’s stock market fell for the second straight day on Wednesday (26) to hit its lowest in more than three weeks as woes over uncertain macroeconomic conditions dragged the bourse, brokers said,
Investor sentiment has turned to negative amid record-high inflation, depreciation pressure on the rupee, and the government’s failure to take sustainable action to deal with the debt crisis.
The main All Share Price Index (ASPI) closed 1.09 percent or 144.42 points lower on Wednesday to close at 13,065.75 points, its lowest since January 4.
S&P SL20 of the more liquid index fell 1.06 percent or 47.94 points to 4,487.00.
The day’s turnover was 5.3 billion rupees, lower than this year’s daily average of 7.9 billion rupees.
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.
December inflation hit a record 14 percent year-on-year on a nation-wide index, increasing the negative return on fixed deposit. The central bank raised the key policy rates by 50 basis points last week, but market analysts say the hike was not enough to curb inflation which has jumped due to the central bank’s money printing.
Foreign investors, who are highly worried about possible sharp depreciation or devaluation in the currency, sold a net of 67.4 million rupees, extending the foreign selling of 2.5 billion rupees so far this year. In 2021, the Sri Lanka stock market suffered a net foreign outflow of 50 billion rupees.
The government and central bank have said they will not seek an IMF assistance to address the current debt crisis where Sri Lanka has to pay 6.9 billion US dollar external loans in this year though it only had 3.1 billion US dollar of official reserves.
On Wednesday LOLC Holdings, Sampath Bank and Ceylinco Insurance dragged to the index down.
LOLC Holdings fell 2.37 percent to close at 1,268.25 rupees a share, Sampath Bank was down 2.15 percent to close at 54.70 rupees while Ceylinco Insurance slipped 2.84 percent to close at 2,137.50 rupees a share.
Expolanka, the market heavyweight which has export and freight businesses, lost 1.37 percent to close at 377.00 rupees a share.