ECONOMYNEXT – Sri Lanka’s rupee opened unchanged at 176.50/60 against the US dollar on Friday while stocks fell 0.21 percent and bonds yields dipped, brokers and dealers said.
At the Colombo Stock Exchange, the benchmark All Share Price Index (ASPI) was down 12.30 points to 5,884.90 in the first half hour of trading.
The more liquid S&P SL20 Index was down 1.25 percent or 36.51 points to 2,891.39.
Market turnover was 53.9 million rupees, with 21 stocks gaining and 45 falling.
Commercial Bank was trading 2.50 rupees lower at 25 rupees a share, contributing most to the ASPI fall.
Dialog Axiata was trading 20 cents lower at 10.90 rupees a share, while Hatton National Bank was 4 rupees down at 175 rupees a share and Sampath Bank was 2 rupees down at 165 rupees a share, also pushing the ASPI down.
The banking stock index was trading 2.18 percent lower.
Sri Lanka’s banks are experiencing high non-performing loans, which were 4.8 percent of total loans at end-June, compared to 3.3 percent a year earlier, and 4.2 percent at end-March.
Banking sector profits had fallen in the March quarter from a year earlier despite a growth in interest margins.
With below-target credit growth, the central bank is pushing for banks to lower lending rates.
The central bank had cut deposit rates for banks in order to reduce their cost of funds, hoping that this would lead to a 200 basis point fall in lending rates.
Banks had been increasing lending rates prior to the price controls, despite a fall in other benchmark rates.
In bonds, yields dipped on buying in an active market, continuing the trend for the second consecutive day following the US Fed decision, dealers said.
The US Fed on July 31 cut policy rates for the first time since 2008.
Prime Minister Ranil Wickremesinghe’s attempt to form an alliance for upcoming elections with an undemocratic party constitution backfired.
However, the political power plays are not having an impact on bond market, dealers said.
A bond maturing on 15.10.2021 was quoted at 8.65/67 percent on Friday, stable from 8.65/70 percent at Thursday’s close.
A bond maturing on 15.03.2023 was quoted at 9.25/35 percent, down from 9.28/32 percent.
A bond maturing on 05.06.2024 was quoted at 9.68/72 percent, falling from 9.73/76 percent.
A bond maturing on 01.08.2026 was quoted at 9.80/85 percent, down from 9.85/90 percent.
A bond maturing on 15.01.2027 was quoted at 9.85/90 percent, down from 9.90/95 percent.
A bond maturing on 01.05.2029 was quoted at 9.90/00 percent, down from 9.98/10.03 percent. (Colombo/Aug02/2019)