Sri Lanka stocks end at 4-month high after gaining for 10th straight session
ECONOMYNEXT – Sri Lanka stocks gained for the tenth consecutive session on Wednesday (10), ending its its highest in more than four months, pushed up by retail shares amid hopes of political stability after a planned protest failed to create any political instability, dealers said.
The turnover was 4.5 billion rupees, more than this year’s average daily turnover of 3.07 billion rupees.
The main All Share Price Index (ASPI) rose 2.43% or 206.17 points to 8,706.17, its highest since April 5. The index has risen 13.3% in the last ten sessions.
“The market moved mainly by the Expolanka on speculation that there could be a share buy-back following its parent company bought its own shares,” a top market analyst said.
“Other than that as usual Lanka IOC continued to move.”
The analyst said they saw a renewed buying interest in construction and building materials shares after some positive results in the sector’s quarterly reports.
A call for an islandwide protest on Tuesday to force President Ranil Wickremesinghe to step down did not succeed as many protesters did not turnout for the planned agitation, signaling the public is ready to give some time space for the new president to prove his performance.
On Tuesday, Sri Lanka announced a 75 percent electricity tariff hike.
Investors previously feared the move to drag the market down due to possible higher cost of manufacturing firms.
The government tabled an interim budget on Tuesday, revising the budget presented last year as the country is going through an unprecedented economic crisis amid plans plans on a 4-year IMF loan programme, debt restructuring, fiscal reforms, and dealing with loss-making state-owned enterprises.
Sri Lanka has already declared sovereign debt default on April 12 this year and failed to pay its first sovereign debt in May amid a deepening economic crisis which later turned into a political crisis and led to the change in the president, cabinet, and government.
The more liquid S&P SL20 index moved up, closing at 4.46% or 125.09 points stronger at 2,928.96.
Sri Lanka is facing its worst fuel and economic crisis in its post-independent era and the economy is expected to contract 7% this year.
The main ASPI gained 12.6 percent in August so far after gaining 5.3% in July. It lost 9.3% in June, 23% in April, and 14.5% in March.
The market index has lost 28.7% so far this year after being one of the world’s best stock markets with an 80% return last year when large volumes of money were printed.
Sri Lanka’s sovereign debt default on April 12 has already led the country to be rated with restricted/selective default rating by rating agencies, which has weighed on investor sentiment.
Net foreign outflow was 268 million rupees on Wednesday while the total net foreign outflow so far this year is 1.1 billion rupees.
Investors are also concerned over the steep fall of the rupee from 203 to 370 levels so far in 2022.
Expolanka which pushed the ASPI, closed 12% up at 225 rupees a share, Hayleys closed 17.5% up at 107.8 rupees a share, and Dipped Products while gained 19.8 to 41.1 rupees. (Colombo/Aug10/2022)
