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Saturday April 20th, 2024

Sri Lanka stocks down 20-pct in 2020 as S&P Index hits time low on Coronavirus fears

ECONOMYNEXT – Sri Lanka’s stocks closed 2.89 percent lower on Friday, extending losses in line with Coronavirus hit markets elsewhere with the S & P SL20 Index falling to an all time low, Colombo Stock Exchange provisional data showed.

The benchmark Colombo All Share Price Index fell 144.8 points to 4,874 points, dipping below the psychological 5,000 points hitting a new 8-year low.

The index last hit 4874.36 points on July 24, 2012, Colombo Stock Exchange data showed.

The Colombo Stock Exchange placed the third trading halt in the week on Friday as the S &P SL 20 Index of liquid share fell over 5 percent in intra-day trade hitting an all time low, but the index closed 3.82 percent lower recovering some losses.

The S&P SL 20 Index is down 25 percent in 2020.

Many global markets have also been roiled with investor fears over Coronavirus but some foreign investors have been cutting long-held positions in blue chip Sri Lanka stocks before the pandemic began.

“Many stocks are at attractive valuations, but investors are still uncertain,” a broker said. “Foreign selling is also a drain on liquidity, which has dented sentiment. Bu there are opportunities for bottom fishers.”

Some listed companies are facing supply chain pressures, though they are expected to be temporary.

Panic buying has already boosted sales of supermarkets.

Sri Lanka is also going through a cyclical recovery, from a collapse of the soft-peg with the US dollar in 2019.

But a steep cut in value added tax had also spooked rating agencies and foreign investors.

Foreign investors have also been selling out of Sri Lanka rupee bonds, partly due to the steady loss of credibility of Sri Lanka’s rupee soft-peg with the US dollar in recent years, analysts say.

The central bank is narrowly targeting an overnight rate, which some analysts have identified as a key risk to monetary stability.

Up to 2020 the central bank also operated a one sided disorderly market conditions rule (DCM), where the rupee was undefended when liquidity injections pressured the peg, but heavy interventions were made to stop the currency appreciating, when credit was weak, especially in 2017.

A pegged currency generally falls when credit demand is strong and liquidity injections are made to keep rates down.

Sri Lanka’s private credit is still low but in February a 24 billion rupee profit transfer was made to the Treasury which can generate some demand, analyst say. In January private credit was flat.

On Friday liquidity shot up with banks dumping 74 billion rupees in the excess liquidity window and the central banks Treasury bill stock which represents money printing jumping 50 billion rupees to 128 billion.

On Friday index-heavy John Keells Holdings, where foreign investors have positions, closed down 5.60 rupees at 125.70 rupees a share.

Asian Hotels and Properties gained 50 cents to 29.00 rupees.

Galadari Hotel Lanka gained 40 cents to 6.40 rupees a share while John Keells Hotels fell 30 cents to 7.20 rupees a share.

Sampath Bank closed 5.20 rupees down at 134.80 rupees.

Hatton National Bank finished 5.80 rupees down at 120.20 rupees.

Dialog Axiata, where foreigners have positions was down 70 cents to 9.50 rupees.

Sri Lanka Telecom stocks fell 20 cents to 23.90 rupees a share. (Colombo/ Mar 13/ 2020)

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Sri Lanka discussing giving extra land, water for Chinese oil refinery

ECONOMYNEXT – Sri Lanka is in discussions with China’s Sinopec to give extra land and assure water supplies after the company decided to expand the capacity of a planned oil refinery in Hambantota, Energy Minister Kanchana Wijesekera said.

“There are concerns on how the water supply is going to be provided for the refinery,” Minister Wijesekera told reporters Friday.

The refinery will need more land and also revise conditions in a Board of Investment agreement, he said.

Read more
Sinopec to double capacity of new refinery in Sri Lanka’s Hambantota

Recommendations and decisions from Sri Lanka’s side had already been sent and Sinopec is expected to revert back in May.

“We are hoping to sign the agreement once everyone has agreed,” Wijesekara said.

The principle agreements are expected to be signed by June, he said.

The refinery could sell up to 10 percent of its output in the domestic market.

“There is no commitment by the government to purchase anything,” Minister Wijesekera said. (Colombo/Apr19/2024)

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Sri Lanka rupee closes weaker at 302.00/50 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 302.00/50 to the US dollar in the spot forex market on Friday, down from 301.50/302.00 a day earlier, dealers said.

There was increased demand for dollars after the central bank bought 715 million dollars from forex markets. In the previous two months it was buying on average about 200 million US dollars, leaving market participants and bank in a ‘oversold’ position.

There were some official dollars sales Friday dealers said.

READ Sri Lanka rupee quoted wide to US dollar as peg inconsistencies flare up

Bond yields were broadly steady.

A bond maturing on 15.12.2026 closed at 11.30/40 percent down from 11.35/40 percent.

A bond maturing on 15.09.2027 closed at 11.95/12.05 percent up from 11.90/12.05 percent.

A bond maturing on 15.12.2028 closed stable at 12.15/25 percent.

A bond maturing on 15.09.2029 closed stable at 12.30/40 percent.

A bond maturing on 01.10.2032 closed stable at 12.40/50 percent. (Colombo/Apr19/2024)

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Sri Lanka stocks close down, banks trade down

ECONOMYNEXT – The Colombo Stock Exchange closed down on Friday, data on its site showed.

The broader All Share Index closed down 0.38 percent, or 44.80 points, at 11,753; while the S&P SL20 Index closed down 0.53 percent, or 18.46 points, at 3,456.

Turnover was at 1.4 billion. The diversified financials (Rs366mn) and banks (Rs266mn) sectors continued to see selling pressure.

“This was possibly due to uncertainty around the bond discussions,” market participants said.

With the exception of Sampath Bank Plc (up at 77.50) all other banks traded down in the day. Commercial Bank of Ceylon Plc was down at 104.50, Hatton National Bank Plc was down at 188.50, and DFCC Bank Plc was down at 77.00.

LOLC Finance Plc saw the most trades and closed up at 6.40. Another LOLC company, Browns Investments Plc, also saw high traded volumes and closed up at 5.60.

Softlogic Capital Plc was up at 7.00, and Softlogic Holdings Plc was up at 11.20. A trading suspension imposed on SHL.N0000 was lifted effective today as the company submitted the annual report for the year ended 31st March 2023.

However, shares of the Company will remain in the Watch List “due to Qualified Audit Opinion and Emphasis of matter on going concern in the Independent Auditor’s Report in the Audited Financial Statements for the year ended 31st March 2022.”

Dialog Axiata Plc, which announced its merger with Bharti Airtel Thursday, saw its share price close up at 11.90.

“There was some traction on index heavyweights,” market participants pointed out.

Top contributors to the APSI included Aitken Spence Plc (up at 134.50), Ceylon Tobacco Company Plc (up at 1,245.25, and Lion Brewery (Ceylon) Plc (up at 1,048.50).

There was a net foreign inflow of 5 million. (Colombo/Apr19/2024)

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