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Tuesday September 28th, 2021
Markets

Sri Lanka stocks rise for second day on hopes over Cabraal fixing forex woes

ECONOMYNEXT – Sri Lanka stock index rose at 2.74 percent on Wednesday (15), gaining for a second straight session, as the market expects the newly appointed central bank governor to fix foreign exchange concerns, brokers said.

Former State Minister for Money and Capital Markets Ajith Nivard Cabraal assumed duty as the 16th central bank governor on Wednesday. During his previous term from 2006-2015, analysts say there was an overall policy direction despite some hiccups.

“The market hopes Cabraal can fix the forex and exchange rate issue. That is one of the key risks the economy is facing now,” a Colombo-based stockbroker said, asking not to be named.

Importers have complained that they are compelled to pay nearly 15 percent more than the central bank’s official rate as state banks do not have adequate dollars.

Lower dollar inflows due to lower revenue from pandemic-hit tourism and declining remittances amid depleted foreign exchange reserves have put pressure on the exchange rate, brokers say.

The index closed 238.61 points up at 8,931.21 points after opening 8,692.60 and continued to gain throughout the day. But it slipped after noon to settle around 8,900 levels before the close.

The S& P SL20 index of more liquid stocks rose 2.42 percent or 78.85 points to close at 3,335.17.

The market turnover for the day was 5.4 billion rupees, above this year’s average daily turnover of over 4 billion rupees.

Brokers also said hopes of COVID-19 lockdown being systemically eased also helped boost sentiment.

Sri Lanka’s State Health Minister, Sudharshani Fernadopulle on Tuesday said the country is likely to gradually reopen from Tuesday (21), though health experts warn that the country is not fully ready to be opened.

Foreign investors sold a net 11.9 million rupee worth of shares on Wednesday. The market has suffered a net foreign outflow of over 41.8 billion rupees so far this year.

The gain was led by Exoplanka Holdings,LOLC holdings and Brown Investments.

Expolanka Holdings, the market heavyweight which has a significant export component in its business, gained 11.44 percent to close at 170.50 rupees a share.

The company in a disclosure to the bourse on Friday said it had bought a 100 percent stake in US-based Complete Transport System LLC through one of its overseas units 6.1 million US dollars.

LOLC Holdings gained 4.51 percent to close at 533.25 rupees a share.

Browns Investment, a subsidiary of the LOLC, is up 10 percent to close at 9.90 rupees.

The bourse saw 155 stocks gaining against 51 falling on Wednesday.

Brokers say the market could fall significantly if a market correction starts. (Colombo/September15/2021)

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