Sri Lanka shares up amid renewed interest on LIOC shares; concerns remain
ECONOMYNEXT – Sri Lanka stocks gained over 1 percent Friday (01), recouping some losses made in the previous session on renewed interest in energy sector firm Lanka IOC, brokers said.
However, concerns over economic political instability remained as the government is yet to address the key issues including reforms.
The main All Share Price Index (ASPI) closed 1.57% or 115.15 points higher at 7,457.48.
“We see a renewed interest in energy sector shares as investors are trying to restructure,” a market analyst said.
“But we don’t think this will be sustainable.”
Lanka IOC gained 8.3 percent to 78.6 rupees a share on Friday.
Lanka IOC has been getting traction among investors since the new fuel price formula is in place and when an electricity formula comes in place, investors believe the sector to move up further,” the analyst said.
Analysts have said the market had a lot of gloomy sentiments as investors didn’t know what to do as the market was under selling pressure with no takers.
On Thursday, IMF said Sri Lanka has made significant progress towards developing a policy package to stabilize the country, however public debt is still assessed to be unsustainable. The global lender is also estimated to have a sharp contraction in the 2022 economic growth.
The rise in T-bill yields also has dampened the sentiment this week. The T-bill yields also rose between 180-312 basis points in the weekly auction on Wednesday.
Government on Monday has declared that it can only provide fuel for essential services including health until July 10 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 1.4 billion rupees, less than a half of this year’s daily average turnover of 3.40 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 more liquid S&#38;P SL20 index rose 1.97% or 45.90 points to 2,380.26.
The market in the month of June has lost 9.3% after gaining 6% in May. It lost 23% in April followed by a 14.5% fall in March.
The market has lost 39% 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 Ceylinco Insurance, which rose 7.3% to 2.150.0 rupees a share.
Melstacorp rose 6.2% to 37.8 rupees a share, while Sampath Bank closed firmer 2.7% at 31 rupees a share. (Colombo/July 01/2022)