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Monday October 25th, 2021
Markets

Sri Lanka’s stock index retreats after hitting record on technical glitch amid high turnover

ECONOMYNEXT – Sri Lanka’s main stock index slipped 0.41 percent on Monday (30) after touching a fresh record high due to technical issues amid analysts expect a correction in an overheated market, brokers said.

Colombo Stock Exchange, which clocked record high throughout last week with the main index breaching 9,000 benchmark.

The index touched 9,112.66 points on Monday, its new record intraday high, but closed at 8,894.44 with 36.89 points lower for the day.

The S&P SL20 index of more liquid stocks gained a marginal 0.84 percent or 28.01 points to close at 3,355.09.

“CSE’s momentum was killed today due to technical issues but the turnover was still high. We should see the real momentum tomorrow,” brokers said.

Stocks have been on the rise partly due to record low-interest rates, excess liquidity in money markets, and some businesses being disrupted due to import controls triggered by money printing.

The trend of net foreign selling has been continuing since early last year.

Analysts expect a market correction before December when the central bank’s tightening measures start to bite. The central bank raised its key policy rates by 50 basis points last week. It also has raised commercial banks’ Statutory Reserve Ratio (SRR) by 2 percent with effect from Sept. 1

The day’s turnover was 12.8 billion rupees, more than four times of this year’s average daily turnover of 3.9 billion rupees.

Stockbrokers have said the market is on the rise in the past week with heavy turnover mainly because investors hardly had other options during a 10-day lockdown which was originally imposed through August 30. The lockdown is now extended until Sept. 6.

Sri Lanka’s pandemic situation has been worsening with COVID-19 daily death toll has been recording a fresh record high in most of the days in the last week. The island has already crossed it’s 200 deaths per day mark last week and in the on Sunday it recorded 192 deaths.

On Monday (30) reports said over 6,000 health workers are infected in the country and over 250 in Sri Lanka’s central district Kandy alone.

The index fall was led by Expolanka, NIFL and Hayleys Plc.

Expolanka fell 8.25 rupees or 5.53 percent to close at 141.00 rupees a share. Expolanka on Friday announced the two of its subsidiaries – EFL Global Logistics (Pte.) Ltd (Singapore) and EFL Global LLC (USA) – has acquired 100% equity interest of IDEA Logistics LLC and its Group of Companies on August 10 at 9.7 million US dollars.

Share price in Expolanka doubled to around 150 rupees due to the speculation that it was going to acquire the US firm.

LOLC Development Finance, a subsidiary of LOLC holdings fell 9.75 rupees or 2.12 per cent to close at 450.00 rupees a share.

Hayleys gained 5.75 rupees or 5.05 percent to close at 108.00 rupees a share.

Bucking the trend, LOLC Holdings jumped 5 percent to 601 rupees after the group in a disclosure to the bourse said it had bought a 75 percent of stake in a gold-loan and micro-finance company in Tajikistan as part of efforts to expand its overseas micro-lending operations.

Foreign investors sold a net 127.9 million worth of shares on Monday, and the market has suffered a net foreign outflow of over 37.06 billion rupees so far this year.

The bourse saw 58 stocks gaining against 148 falling on Wednesday. (Colombo/August30/2021)

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