ECONOMYNEXT – Sri Lanka stocks continued to gain for the 11th consecutive time on Friday August 12 ending its highest in more than four months passing the 9,000 psychological mark, pushed up by mainly by energy, capital goods and plantation sectors, dealers said.
The turnover exceeded 6.3 billion rupees, twice this year’s average daily turnover of 3.07 billion rupees.
The main All Share Price Index (ASPI) rose 3.69% or 321.31 points to 9,027.48, its highest since March 31. The index has risen 17.5% in the last 11 sessions.
“With the usual Lanka IOC movement there was very high movement in the plantation industry with the prices of both tea and rubber increasing in the local market as well as in the global market,” a top market analyst said.
The analyst said they saw a renewed buying interest in the sectors due to the profits shown in the quarterly reports.
“However, we must wait and see how long this upward trending will last.
“Especially with the interim budget, investors expects lots of changes in the taxes. So it is still unclear how the market will react in the coming two weeks.”
On Tuesday, Sri Lanka announced a 75 percent electricity tariff hike.
Investors previously feared the move would drag the market down due to possible higher costs for manufacturing firms.
The government tabled an interim budget on Tuesday, revising the budget presented last year as the country is going through an unprecedented economic crisis amid plans plans on a four-year IMF loan programme, debt restructuring, fiscal reforms, and dealing with loss-making state-owned enterprises.
Sri Lanka already declared sovereign debt default on April 12 this year and failed to pay its first sovereign debt in May amid a deepening economic crisis which later turned into a political crisis and led to a change in the president, cabinet, and government.
The more liquid S&P SL20 index moved up, closing at 4.88% or 143.05 points stronger at 3,072.01.
Sri Lanka is facing its worst fuel and economic crisis in its post-independence era and the economy is expected to contract 7 percent this year.
The main ASPI gained 12.6 percent in August so far after gaining 5.3 percent in July. It lost 9.3 percent in June, 23 percent in April, and 14.5 percent in March.
The market index has lost 28.7 percent so far this year after being one of the world’s best stock markets with an 80 percent return last year when large volumes of money were printed.
Sri Lanka’s sovereign debt default on April 12 has already led the country to be rated with restricted/selective default rating by rating agencies, which has weighed on investor sentiment.
Net foreign outflow was 155 million rupees on Friday while the total net foreign outflow so far this year is 1.2 billion rupees.
Investors are also concerned over the steep fall of the rupee from 203 to 370 levels so far in 2022.
Lanka IOC which pushed the ASPI, closed 12.9 percent up at 172.5 rupees a share, Hayleys closed 11.06 percent up at 119.8 rupees a share, and Richard Pieris gained 17.9 to 23.7 rupees. (Colombo/Aug12/2022)