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Friday January 21st, 2022

Sri Lanka stocks up for 7th session despite worst foreign outflows in 4 months

ECONOMYNEXT – Sri Lanka’s stock market rose for the seventh straight session on Friday (07) to end the week with 7.9 percent gain, but foreign investors sold a net of 1 billion rupees worth of shares, the worst outflow in four months, bourse data showed.


Foreign investors sold a net of 1 billion rupees, the highest outflow since September 03, extending the net foreign outflow to 1.6 billion rupees in the first five days of the year. In 2021, Sri Lanka stock market suffered a net foreign outflow of 50 billion rupees.


“Bourse concluded in the green zone continuing a bull rally for a week straight driven by IPO openings and bustling activities in the market while recording an improved turnover of Rs. 11.6 billion,” FirstCapital Market Research said in a research note.


Analysts also said people are also expecting better earnings from all the companies in the December quarter. Corporate earnings are expected to be released from next week.


The main All Share Price Index (ASPI) rose 0.85 percent or 111.54 points on Friday to close at 13,280.94 points, its fresh all-time closing high.


The day’s turnover of 11.6 billion rupees was around three times of the last year’s daily average of around 4 billion rupees.


S&P SL20 of the more liquid index rose 1.19 percent or 53.55 points to 4,568.64.


Analysts say many investors are now coming into stocks because of negative returns and see high turnovers these days after the market return jumped to 80 percent last year.


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. As a result, many investors are shifting their funds to risky assets, analysts said.


The daily average turnover in the first five days is 11.4 billion rupees, close to three times of last year’s daily average turnover of around 4 billion rupees, the bourse data showed.

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.

On Friday, shares in Kapruka Holdings, an online delivery firm, which launched the trading closed 44.8 percent to 22.30 rupees compared to its IPO price of 15.40 rupees. The firm offered 32.8 million shares at 15.40 rupees and was oversubscribed 5.8 times at its IPO.

Last year CSE had 13 equity issues, raising nearly Rs. 12 billion.

On Friday Softlogic Holdings, Valliebel One pushed ASPI to its gain.

Valliebel One rose 15.29 percent to close at 92.00 rupees a share, Softlogic Holdings moved 18.24 percent up to close at 57.70 rupees a share, while Asiri Hospital gained 24.62 percent to close at 41.00 rupees a share.

Expolanka, the market heavyweight, which has export and freight businesses, however, slipped 1.07 percent to close lower at 394.25 rupees a share




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