Sri Lanka stocks recover from near 3-wk low in moderate turnover; more gains expected
ECONOMYNEXT – Sri Lanka stocks gained on Tuesday (30) for the first time in six sessions and recovered from a near three-week low on the hopes the IMF deal would be signed soon, brokers said.
Analysts believe the index to gain during the week due to possible optimism in the interim budget presented by President Ranil Wickremesinghe as the country’s finance minister.
The main All Share Price Index (ASPI) up 1.52% or 132.93 points to 8,865.40, rising from its lowest close since August 10 hit on the previous day.
The market generated 1.8 billion rupees in turnover, nearly half of this year’s average daily turnover of 3.11 billion rupees.
“There was no particular reason for the market to move up today. However, we saw the easing of margin selling and there is a speculation of the government finalising the IMF staff level agreement tomorrow,” an analyst said.
Sri Lanka’s President Ranil Wickremesinghe presented the interim budget of 2022 to the parliament on Tuesday.
He said IMF negotiations were reaching final stage and discussions on debt restructuring will be held with main countries.
He proposed to increase the VAT to 15 percent from 12 percent and cut down various state sector expenditures.
In the last few sessions, investors were concerned about the various revenue-based tax hike the government is expected to impose to fulfill for a possible IMF program as well as to get the country out of it’s economic crisis.
Sri Lanka defaulted on its foreign debt on April 12 and deepened an economic collapse into a political crisis. Sri Lanka is facing its worst fuel and economic crisis in its post-independence era. The economy is expected to contract more than 8 percent this year.
The more liquid S&P SL20 index ended 1.13% or 32.07 points up at 2,862.75.
The main index ASPI has lost 14.6 percent in August so far after gaining 5.3 percent in July. It lost 9.3 percent in June, 23 percent in April, and 14.5 percent in March.
The index has lost 27.5 percent so far this year after being one of the world’s best stock markets with an 80 percent return last year when large volumes of money were printed.
Net foreign inflow was 237 million rupees on Tuesday. The total net foreign outflow so far this year is 147 million rupees.
Investors are also concerned over the steep fall of the rupee from 203 to 370 levels so far in 2022.
Richard Pieris pushed the index up, closing 8 percent higher at 21.50 rupees a share.
John Keells Holdings closed 2.2 percent up at 125.7 rupees a share, while Aitken Spence gained 4.6 percent to 130.5 rupees. (Colombo/Aug30/2022)
