ECONOMYNEXT – Sri Lanka’s stock market gained on Thursday (06) for the sixth straight session on Thursday to finish a new record closing high 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 0.71 percent or 92.49 points on Thursday to close at 13,169.40 points.
ASPI reached intraday highest of 13,223.46, and immediately plunged to 13,048 levels but retreated to settle above 13,160.
The market was seen to be highly volatile.
The day’s turnover was 9.4 billion rupees, more than the last year’s daily average of around 4 billion rupees.
S&P SL20 of the more liquid index rose 0.78 percent or 34.94 points to 4,515.09.
Sri Lanka’s fixed income yields are below 8.4 percent, but inflation has hit double digits in December due to excess money printing by the central bank.
Analysts say many investors are now coming into stocks because of negative returns and we see high turnovers these days.
The bourse has gained 7.7 percent so far this year.
The daily average turnover in the first four days was 11 billion rupees, close to three times of last year’s daily average turnover of around 4 billion rupees, the bourse data showed.
Foreign investors sold a net of 111 million rupees compared to the previous day’s foreign inflow of 22 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.
On Thursday, SHL, LOLC VONE pushed ASPI to its gain.
Softlogic Holdings moved 24.81 percent to close higher at 48.80 rupees a share, LOLC gained 1.12 percent to close at 1,443.25 rupees a share, While Valliebel One rose 5.70 percent to close at 79.80 rupees a share.
Expolanka, the market heavy weight, which has export and freight businesses, was steady, moving up only 0.50 percent to 398.50 rupees a share
Kapurka, Holdings Plc, an e-commerce firm will start trading at CSE’s main board on Friday (07).
The firm is offered 32.826 million shares at 15.40 rupees and was oversubscribed 5.8 times at its IPO.