Sri Lanka stocks jump over 2% after President’s policy statement; turnover hits over 2-mo high
ECONOMYNEXT – Sri Lanka stocks gained for the fifth straight session on Wednesday (03) to end at more than two month high in large turnover as investors bet on the risky assets after positive sentiment returned following the first policy statement by President Ranil Wickremesinghe who explained the plans of debt restructuring and future economic policies, dealers showed.
The turnover was 2.68 billion rupees, its highest since May 23 and more than two-third of this year’s average daily turnover of 3.03 billion rupees.
Wickremesinghe in his policy statement at the parliament revealed the plans on a 4-year IMF loan programme, debt restructuring, fiscal reforms, and dealing with loss making state owned enterprises. He also said the country is in the final stages of the debt restructuring plan that will be presented to the IMF and negotiations will begin with creditors soon.
The main All Share Price Index (ASPI) rose 2.18% or 172.62 points to 8,080.14, its highest since July 2.
“The position the market is in is there’s political stability and there are visible discussions and updates on the debt restructuring. So, that is creating positive sentiments among the investors despite high interest rates,” a market analyst said.
“The earning results are not bad. Quarter on quarter is bad, but compared to the previous year its good. Going forward, we think the momentum will continue especially on the dollar earning companies.”
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 4.5 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 has lost 33.9% 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.
Net foreign sales was 4 million rupees while the total net foreign outflow so far is 387 million rupees.
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.
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’s gain, closed 10% up at 199.8 rupees a share, LOLC closed 8% firmer at 416.5 rupees a share, while LOLC Finance gained 16.9% to 8.3 rupees. (Colombo/Aug 03/2022)
