Sri Lanka stocks down as economy comes to still amid fuel crisis
ECONOMYNEXT – Sri Lanka stocks fell over 1 percent on Monday (02), as uncertainties in the market continued with the economy was gradually coming into a halt due to an acute fuel shortage, brokers said.
The main All Share Price Index (ASPI) closed 1.31% or 97.93 points lower at 7,359.55.
Many public offices and all schools were closed on Monday due to a government decision to save fuel. Sri Lanka is facing its worst fuel crisis in its post-independent era.
“The uncertainty in the market is continuing to bring the sentiments down meanwhile the market is expecting the central bank to hike rates at July 07 policy review meeting,” a market analyst said.
“This sentiment will continue.”
Analysts have said the market had a lot of gloomy sentiments as investors did not know what to do as the market was under selling pressure with no takers.
Sri Lanka is yet to finalise a deal with the IMF while potential lenders are waiting for an IMF deal, government officials say.
Last week’s T-bill auction saw yields rising between 180-312 basis points, which also raised concerns among stock market investors.
Government has also 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.
The turnover was 1.3 billion rupees, less than a half of this year’s daily average turnover of 3.38 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&P SL20 index rose 1.48% or 35.18 points to 2,345.08.
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 39.8% 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 fall was led by Sampath Bank, which fell 4.2% to 29.70 rupees a share.
Browns Investment slipped 6.6% to 7.10 rupees a share, while Expolanka closed weaker 2.8% at 171.50 rupees a share. (Colombo/July 02/2022)
