ECONOMYNEXT – Sri Lanka’s shares closed at a two-month high on Thursday, with the banking and financial sectors driving the market up amid high crossings in Expolanka, an analyst said.
“The market is moving in the green because fears of debt restructuring and optimization have been eased to a certain extent,” said an analyst.
The main All Share Price Index was up 0.13 percent or 12.47 points at 9,307.87, while the most liquid index S&P SL20 was up 0.37 percent or 9.95 points at 2,667.06.
The market was buoyed by assurances of debt restructuring and optimization, with the central bank cutting the key policy rates by 250 basis points to stimulate faltering economic growth as inflation was decelerating faster than projected.
Sri Lanka’s broader National Consumer Price Index (NCPI) grew by 22.1 percent in the 12 months to May, down from 33.2 percent a month ago, according to data from the Department of Census and Statistics.
An International Monetary Fund mission stated that Sri Lanka needs more revenues and debt restructuring by September to achieve sustainable debt levels after their visit to the island.
Lowered policy rates and inflation encouraged investors to invest in capital, banking, and diversified financial counters, alleviating fears of domestic debt optimization and restructuring.
There will be more clarity on Sri Lanka’s debt restructuring efforts, particularly with regard to foreign debt, upon President Ranil Wickremesinghe’s return to the country after his ongoing visit to France, said State Minister of Finance Shehan Semasinghe.
Semasinghe stated that once a final decision has been made on domestic debt optimization, the government will inform both parliament and the public.
“This is an extremely sensitive matter that significantly influences the market situation. It is vital that we refrain from making statements that create doubts regarding this optimization, as it helps maintain stability in our financial market,” said the president’s media division in an official translation of the state minister’s remarks.
The market generated a net foreign inflow of 18 million rupees, bringing the total outflow for the year to 1 billion rupees.
Top gainers during trade were Sampath Bank, Cooperative Insurance Company, and Richard Pieris and Company. The market generated revenue of 1.9 billion rupees, with a daily turnover average of 1.4 billion rupees.
The transportation sector contributed about 50 percent to the total turnover. (Colombo, June 22, 2023)