ECONOMYNEXT – Sri Lanka’s shares edged down as selling pressure kicked in on Thursday as import restrictions relaxed, an analyst said.
“Majority of the selling pressures were borne by the tile counters and tile holdings companies and the easing of import restrictions,” an analyst said
The main All Share Price Index was down 0.59 percent or 51.79 points to 8,703.38, while the most liquid index S&P SL20 was down 0.29 percent or 7.18 points to 2,489.37.
Sri Lanka’s central bank has terminated a cash margin requirement on import letters of credit imposed over the previous 12 months to limit imports, as liquidity injection triggered forex shortages and a currency collapse.
In an order issued under the monetary law, the central bank imposed a 100 percent cash deposit margin on 843 imports in May 19, 2022 and February 16, 2023 to discourage imports.
Sri Lanka plans to lift import controls on 100 items which were banned during forex shortages in the past two years, which was hurting small and medium industries, State Minister for Finance Shehan Semasinghe said.
Sri Lanka had controlled imports of 3,000 denoted by HS codes out of a total of 8,000 during the past two years. The controls were then brought down to 1,000 as they hurt a small and medium industries which depended on inputs.
“By the beginning of next month will be able to lift controls on another 100 items,” Minister Semasinghe told parliament.
The main reason the market is on a negative sentiment is due to loosing the monopoly when import restrictions ease, an analyst said. Top losers during mid day trade were Vallibel One, Hatton National Bank and Commercial Bank.
The market generated a poor turnover of 188 million rupees as at 1200 hours. (Colombo/May25/2023)