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Wednesday May 18th, 2022
Markets

Sri Lanka stocks down for 3rd session; economic woes weigh

ECONOMYNEXT – Sri Lanka’s stock market fell for the third straight session on Thursday (27) to remain at its lowest in more than three weeks as worries over the economy amid uncertain foreign debt repayment dented sentiment, brokers 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.

The main All Share Price Index (ASPI) closed 1.38 percent or 180.05 points lower on Thursday to close at 12,885.70 points, its lowest since January 4.

“A lot of panic selling was seen in the market especially in the big counters as global markets slip coupled with local economic sentiments,” an analyst said.

However, he said some of the reasons for the fall are speculations, the analyst said adding that “earnings of publicly traded companies are pretty strong.”

Another analyst said the market was witnessing an overdue correction.

“Last year’s sharp gain in the index was due to investors had no options the park their money when the central bank keeping the interest rates at record low by printing unlimited amount of money,” a Colombo-based stockbroker company analyst said.

S&P SL20 of the more liquid index fell 1.75 percent or 78.16 points to 4,400.18.

The day’s turnover was 7.5 billion rupees, little lower than this year’s daily average of 7.9 billion rupees.

Foreign investors, who are highly worried about possible sharp depreciation or devaluation in the currency, bought a net of 118.5 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.

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.

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.

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.

LOLC Holdings, Expolanka and Browns Investment dragged to the index down on Thursday.

LOLC Holdings fell 5.07 percent to close at 1,204.00 rupees a share.

Expolanka, the market heavyweight which has export and freight businesses, lost 4.77 percent to close at 359.00 rupees a share,while Browns Investment was down 3.07 percent to close at 15.80 rupees.(Colombo/Jan27/2022)

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  1. Sarath k Gunawardana says:

    Srilanka Stocks go down further more . Recently it went up because of bank fixed deposits rate went down & USD exchange rate has been kept by force. Further more impossible to control both and rupees definitely depreciate and no encouraging to fixed deposit.
    Further more production sector discourage at many circumventers. Economic indicators not healthy for foreign investors.
    In 2022 Srilanka Economi goes down to unpredictable way. But in few months later .
    Srilanka will start recovery it Economi. after huge bleeding

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Comments (1)

Your email address will not be published.

Your email address will not be published. Required fields are marked *

  1. Sarath k Gunawardana says:

    Srilanka Stocks go down further more . Recently it went up because of bank fixed deposits rate went down & USD exchange rate has been kept by force. Further more impossible to control both and rupees definitely depreciate and no encouraging to fixed deposit.
    Further more production sector discourage at many circumventers. Economic indicators not healthy for foreign investors.
    In 2022 Srilanka Economi goes down to unpredictable way. But in few months later .
    Srilanka will start recovery it Economi. after huge bleeding