Sri Lanka stocks recover from 2-month low on hopes of IMF deal

- economynext.com

ECONOMYNEXT – Sri Lanka stocks recovered on Wednesday (29), recovering  from a two-month closing low hit on the previous session on the hopes that the country will finally reach an IMF deal, brokers said.

The main All Share Price Index (ASPI) closed 0.73% or 53.26 points higher at 7,365.92, recovering from its lowest close since April 27.

“The market moved up on the hopes of an IMF deal as the staff-level discussions ended today while there was some bargain hunting as market had slipped significantly,” a top market analyst said.

“However, this is not sustainable because the economic concerns are still heavy while the T-bill rates moved up close to 300 basis points.”

The IMF expected to issue a statement on its discussions with Sri Lankan officials on Thursday.

The yields in T-bills rose between 180-312 basis points at a weekly auction on Wednesday.

Government on Monday has declared that it can only provide fuel for essential services including health and all non-essential services to work online as the country has run out of fuel, while Power and Energy Minister on Sunday asked the public to use fuel sparingly as there was no fuel shipment scheduled to arrive into Colombo in the foreseeable future.

The Minister said that Sri Lanka’s oil suppliers are wary to supply after the recent downgrades.

The turnover was 778.7 million rupees, less than a quarter of of this year’s daily average turnover of 3.47 billion rupees.

Market analysts have said investors were heavily feeling the pinch of economic crisis as the country’s fuel bunkers have dried out the island nation was frantically looking for dollars to purchase fuel.

The public sector and the schools have moved online for two weeks on the government’s advice to reduce transport and save fuel.

Though a new prime minister and a new cabinet have been appointed, analysts see little progress on both the economical and political fronts. The country is struggling to ensure a continuous supply of fuel due to a shortage of US dollars.

The more liquid S&P SL20 index up 0.59% or 13.84  points to 2,350.28.

The market has so far lost 9.1% in June after gaining 6% in May. It lost 23% in April followed by a 14.5% fall in March.

The market has lost 39.7% 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 has already led the country to be rated with restricted/selective default rating by rating agencies, which has weighed on investor sentiment.

Investors are also concerned over the steep fall of the rupee from 203 to 370 levels so far in 2022.

The gain was led by Senkadagala Finance, which gained 23.1% to 393.8 rupees a share.

Expolanka gained 3.2% to 175.3 rupees a share, while Browns Investment up 2.7% to 7.5 rupees a share. (Colombo/June 29/2022)

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