Markets

Sri Lanka stock touches fresh high in seven weeks

Thursday December 8, 2022 7:01 pm

ECONOMYNEXT – Sri Lanka stocks continued to gain for the ninth consecutive time on Thursday ending its highest in more than seven weeks, brokers said.

The market breached the 9000 psychological mark during the first hour into trade.

“With the President talking about interest rates coming down which drove some positive sentiments in the morning. With ASPI crossing the 9,000 mark, investors were looking to take some profit and there was some aggressive profit taking,” an analyst said.

“The momentum of the market was slowed down with SJ Holdings was not buying back shares from Expolanka and that drove concerns among the investors and led to the market coming down.”

The main All Share Price Index (ASPI) closed 0.12 percent or 10.40 points higher at 8,891.74, its highest since October 17.

The market witnessed a turnover of 2.4 billion rupees, lower than this year’s daily average turnover of 3 billion rupees.

The market saw a net foreign inflow of 130 million rupees. The total net foreign inflow stood at 22 billion rupees so far for this year.

Analysts said, with the global fuel prices coming down and the stability in fuel prices in the country, Lanka IOC shares were reactivated.

An analyst said, the food related, agriculture counters have also been getting activated, because there has been a spike in investor interest in the plantation segment.

The Paris Club group of creditor nations has proposed a 10-year debt moratorium on Sri Lankan debt and 15 years of debt restructuring as a formula to resolve the island nation’s prevailing currency crisis.

Former Central Bank Governor Indrajit Coomaraswamy said in a forum last week that the government is in discussions with Asian Development Bank (ADB) and World Bank to get loans of 1.9 billion US dollars after a reform program with the International Monetary Fund is approved.

A policy loan now being discussed with the World Bank may bring around 700 million US dollars, Coomaraswamy told a business forum organized by CT CLSA Securities, a Colombo-based brokerage.

The Asian Development Bank may also give around 1.2 billion US dollars most of which will be budget support, he said.

In the last few sessions, market gained after the Central bank governor said interest rates should eventually ease despite the fears of a domestic debt restructuring as inflation falls, increased liquidity in dollar markets, and the inter-bank liquidity improves.

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

The more liquid index S&P SL20 closed 0.31 percent or 8.82 points higher at 2,844.48.

So far in December ASPI gained 2.7 percent.

The ASPI gained 0.5 percent in November after losing 13.4 percent in October.

It has lost 27.2 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.

Richard Pieris and Company pushed the index up to close at 10 percent higher at 24.2 rupees.

John Keells Holdings gained 1.7 percent to close at 149.3 rupees and Lanka IOC closed 2.9 percent up at 214.6 rupees a share. (Colombo/Dec 07/2022)

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Business

Sri Lanka to address SME tax problems at first opportunity: State Minister

Sunday February 5, 2023 8:48 pm

ECONOMYNEXT – Problems faced by Sri Lanka’s small and medium enterprises from recent tax changes will be addressed at the first opportunity, State Minister for Finance Ranjith Siyambalapitiya said.

Business chambers had raised questions about hikes in Value Added Tax, Corporate Income Tax and the Social Security Contribution Levy (SSCL) that’s been imposed.

It should be explored on how to amend the Inland Revenue Act, Siyamabalapitiya said, adding that the future months should be considered as a period where the country is being stabilized.

Both the VAT and SSCL are effectively paid by customers, but the SSCL is a cascading tax that makes running businesses difficult.

In Sri Lanka SMEs make up a large part of the economy, accounting for 80 per cent of all businesses according to according to the island’s National Human Resources and Employment Policy.

(Colombo/ Feb 05/2023)

Economy

Sri Lanka revenues Rs158.7bn in Jan 2023 up 51-pct

Sunday February 5, 2023 5:55 pm

ECONOMYNEXT – Sri Lanka’s government revenues were 158.7 billion rupees in January 2023 but expenditure and debt service remained high, Cabinet spokesman Minister Bandula Gunawardana said.

In January 2022 total revenues were Rs104.5 billion according to central bank data.

Sri Lanka’s tax revenues have risen sharply amid an inflationary blow off which had boosted nominal GDP while President Ranil Wickremesinghe has also raised taxes.

Departing from a previous strategy advocated by the IMF expanding the state and not cutting expenses, called revenue based fiscal consolidation, he is attempting to do classical fiscal consolidation with spending restraint.

President Ranil Wickremesinghe has presented a note to cabinet requesting state expenditure to be controlled, Gunawardana told reporters.

State Salaries cost 87.4 billion rupees.

Pensions and income supplements (Samurdhi program) were29.5 billion rupees.

Other expenses were 10.8 billion rupees.

Capital spending was 21 billion rupees.

Debt service was 377.6 billion rupees for January which has to be done with borrowings from Treasury bills, bonds and a central bank provisional advance of 100 billion rupees, Gunawardana said.

Interest costs were not separately given. (Colombo/Feb05/2023)

Agriculture

Sri Lanka’s Ceylon Tea prices down for second week

Sunday February 5, 2023 5:24 pm

ECONOMYNEXT – Sri Lanka’s Ceylon Tea prices fell for the second week at an auction on January 31, with teas from all elevations seeing a decline, data showed.

“In retrospect, the decline in prices would be a price correction owing to the overall product quality and less interest from some key importers due to the arrival of cargo at destinations ahead of schedule,” Forbes and Walker tea brokers said.

The weekly sale average fell from 1475.79 rupees to 1465.40 rupees from a week ago, according to data from Ceylon Tea Brokers.

The tea prices are down for two weeks in a row.

High Growns

The High Grown sale average was down by 20.90 rupees to 1380.23 rupees, Ceylon Tea Brokers said.

High grown BOP and BOPF was down about 100 rupees.

“Ex-Estate offerings which totalled 0.75 M/Kg saw a slight decline in quality over the previous week” Forbes and Walker said.

OP/OPA’s in general were steady to marginally down.

Low Growns

In Low Grown Teas, FBOP 1 was down by 100 rupees and FBOP was down by 50 rupees while PEK was up by 150 rupees.

The Low Growns sale average was down by 8.55 rupees to 1547.93 rupees.

A few select Best BOP1s along with Below Best varieties maintained.

OP1 Select Best OP1’s were steady, whilst improved/clean Below Best varieties maintained. Others and poorer sorts were easier.

PEKOE Well- made PEK/PEK1s in general were steady, whilst others and poorer sorts were down.

Leafy and Semi Leafy catalogues met with fair demand,” Forbes and Walker brokers said.

“However, the Small Leaf and Premium catalogues continued to decline.

“Shippers to Iran were very selective, whilst shippers to Türkiye and Russia were fairly active.”

This week 2.2 million Kilograms of Low Growns were sold.

Medium Growns

Medium Grown BOP and BOPF fell by around 100 rupees

The Medium Growns sale average was down by 33.40 rupees to 1199.4 rupees.

“Medium CTC teas in the higher price bracket witnessed a similar trend, whilst teas at the lower end were somewhat maintained subject to quality,” Forbes and Walker brokers said.

“Improved activity from the local trade and perhaps South Africa helped to stabilize prices to some extent.”

OP/OPA grades were steady while PEKOE/PEKOE1 were firm, while some gained 50-100 rupees at times.

Well-made FBOP/FBOPF1’s were down by 50-100 rupees per kg and more at times.

(Colombo/Feb 5/2023)