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Friday January 21st, 2022

Sri Lanka stock index hits new peak in strong turnover

ECONOMYNEXT – Sri Lanka’s stock market crossed 13,000 points on Wednesday (05) to close at a fresh record high for the fifth consecutive session in strong turnover as negative returns from fixed deposits and double digit inflation have increased demand for risky assets, brokers said.

The main All Share Price Index rose 2.16 percent or 276.37 points on Wednesday to close at 13,076.91 points.

ASPI reached intraday highests of 13,251.94, but retreated to settle slightly above 13,075.

The day’s turnover was 15.5 billion rupees, more than thrice the last year’s daily average of around 4 billion rupees.

Sri Lanka’s fixed income yields are below 8.4 percent, but the inflation has hit double digits in December due to excess money printing by the central bank.

“Many investors are now coming into stocks because of negative returns and we see high turnovers these days,” a senior analyst told EconomyNext.

The daily average turnover in the first three days was 12 billion rupees, three times of last year’s daily average turnover of around 4 billion rupees, the bourse data showed.

Foreign investors marginally reversed back to buying sentiment, purchasing a net of 21 million rupees compared to the previous day’s foreign outflow of 596.1 million rupees worth of shares. The bourse suffered over 50 billion rupees foreign outflow last year.

A Colombo-based analyst previously said foreign investors had been leaving due to speculation of sharp depreciation in the local rupee currency as the central bank has been holding it at around 200 level against the US dollar while local importers say they are compelled to buy dollars above 250 rupees in the gray market amid tough import curbs.

Sri Lanka is facing a risk of sovereign debt default after a series of credit downgrading by all three global rating agencies, but the government has said it will repay all the loans despite the reserves plummeting to its lowest in more than a decade in November last year. However, the central bank said the reserves have jumped to around 3.1 billion US dollars by end 2021 without disclosing the source of inflow.

Stock market has been the key investment tool for local investors amid excess money printing by the central bank in a lower interest rate regime. Many companies also listed themselves last year to use a tax concession for listing.

Last year CSE had 13 equity issues, raising nearly Rs. 12 billion.

ASPI rose 80.5 percent in 2021 from the previous year’s end of 6774.22 points.

S&P SL20 of the more liquid index rose 1.75 percent or 76.62 points to 4,453.68.

On Wednesday, LOLC Holdings, Expolanka and Browns Investment pushed ASPI to its record gain.

LOLC gained 12.07 percent to close at 1,427.25 rupees a share, Expolanka, the market heavy weight, which has export and freight businesses, rose 3.73 percent to 396.00 rupees a share

Browns Investment gained 8.14 percent to close at 18.60 rupees per share.


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