ECONOMYNEXT – Sri Lanka stocks closed up Wednesday after domestic bond restructuring assurances, policy rates were cut and inflationary pressure is likely to reduce, driving investor sentiment, brokers said.
The All Share Price Index edged up 1.69 percent or 174.56 points to 10,489.98,this is the highest the market has been since March 23 2022, while the most liquid index S&P SL20 was down 1.90 percent or 57 points to 3,060.50, according to exchange provisional data.
The market generated a turnover of 3 billion rupees, majority of the revenue had come from the capital goods sector brining in 736 million rupees while the food, beverage and tobacco sector brought in 559 million rupees and diversified financials brought in 346 million rupees. The daily average turnover is 1.5 billion rupees.
The market generated a net foreign inflow of 24 million rupees.
Top gainers were Sampath Bank, LOLC and Commercial Bank.
In the last few sessions, the banking sector saw some selling interest and profit taking due to continuous gains.
Sri Lanka’s central bank said it had cut policy interest rates 200 basis points 12.00 percent and 11.00 percent, in July monetary policy meeting asking banks to lower lending rates.
Sri Lanka’s inflation in June 2023 slowed to 12 percent from 25.2 percent in May 2023 data from the state statistics office showed as the central bank operated deflationary monetary policy.
Nandalal Weerasinghe, Central Bank Governor said inflation would be lowered to a singular digit in the next month.Sri Lanka has made the offer to re-structure domestic as part of efforts to meet International Monetary Fund targets to make government debt sustainable after sovereign default.
Sri Lanka is offering to swap debt in provident funds for new instruments with a longer duration in line with an Extended Fund Facility (EFF) of the IMF.
There is no talk of a cut. It’s just a maturity extension,” Siyambalapitiya said.The state minister said the island nation is looking to restructure 17 billion of its total external debt. Sri Lanka’s total debt is estimated to be around 83.6 billion dollars, the domestic component of which is about 42.Out of this 42 billion dollars, Siyambalapitiya said, nine billion will be restructured. (Colombo/July10/2023)