ECONOMYNEXT – Sri Lanka shares closed up on Wednesday after two consecutive sessions of closing down, as investors have renewed and sense economic stabilization, an analyst said.
The main All Share Price Index was up 0.80 percent or 90.57 points to 11,438.82, while S&P SL20 was up 0.91 percent or 29.16 points to 3,237.29.
A team from the International Monetary Fund will be in Sri Lanka from September 14 to 27 to conduct the first review of an Extended Fund Facility arrangement, a spokesperson said.
The review will be conducted on June data.
Officials have said Sri Lanka has over-achieved key IMF quantitative performance criteria though tax revenues, which is an indicative target has fallen short.
Sri Lanka also has met several structural benchmarks, some of which are under World Bank and Asian Development Bank prior actions.
Losers during trade were Melstacorp, Ceylinco Insurance and Commercial Bank.
“There is strong investor sentiment, in the local front particularly in the consumer, food and beverage counters, which is pushing a pulse in the index,” an analyst said.
The market generated a turnover of 1.7 billion rupees and the yearly average stands at 2 billion rupees. Majority of the revenue came in from the food, beverage and tobacco counters as investor sentiment is renewed with factors signaling economic stabilization with paved distances of disinflation and rising consumer demand.
Sri Lanka’s 12-month consumer price inflation dropped to 4.0 percent with prices falling 0.1 percent within the month, data from the state statistics office showed.
Sri Lanka’s central bank has conducted deflationary open market operations to build reserves and also allowed the exchange rate to appreciate from March 2023.
The CCPI grew only 0.42 percent from September 2022 when the central bank registered a balance of payments surplus.
The banking sector is possessing a wait and see approach as a team from the International Monetary Fund will be in Sri Lanka from September 14 to 27 to conduct the first review of an Extended Fund Facility arrangement, a spokesperson said.
Sri Lanka has been seeing interest in the tourism and consumers services as the island nation has welcomed 22,896 tourists in the first week of September and had welcomed 136,405 tourists in August 2023, sharply up from last year’s 37,760 during a currency crisis, but was lower than July, data from the state tourism promotion office shows.
In the eight months to August, tourist arrivals went up 25 percent to 904,318.
Investors pace around the uncertainties in the financial sector due to debt restructuring and the upcoming IMF review causing a semi evenly split turnover, but sees gains in the consumer sector as demand and overall economic stabilization builds, an analyst said.
The market saw a net foreign outflow of 97 million rupees, while the yearly net foreign inflow was 1.2 billion rupees.
Sri Lanka’s economy has stabilized faster than some other countries that went into crisis recently, State Minister for Finance Shehan Semasinghe said.
“Our economy is on a progressive trajectory,” Semasinghe told parliament last week in a debate to pass a tax linked to domestic debt restructuring.
“Compared to other countries’ whose economies collapsed we have been able to in the shortest time stabilize the economy.
“Other countries are commending our progress.” (Colombo/Sep11/2023)