Yields on Sri Lankan Treasuries Fall; stable guide post


ECONOMYNEXT – Shares in Sri Lanka gained for the fourth straight session on Tuesday (02) to close at a two-month high on hopes an IMF deal would be signed by the end of August and the country would experience a certain economic stability, the dealers showed.

Turnover was 2.4 billion rupees, its highest since May 23 and more than two-thirds of this year’s average daily turnover of 3.03 billion rupees.

The main All Share Price Index (ASPI) rose 1.79% or 138.95 points to 7,907.52 from its lowest since July 3.

“We are seeing positivity coming to the market in the new month as we get closer to a possible IMF program,” a market analyst said.

“Yesterday’s price revision is also working well, with Lanka IOC driving the market higher. There is progress in some economic reforms as we see good revenues in (earning) dollar businesses.

The lack of fuel at state-owned Ceylon Petroleum Corporation means that Lanka IOC, a subsidiary of Indian Oil Corporation (IOC), has increased its sales volume, which may lead to higher profits, analysts said.

The more liquid S&P SL20 index rose, closing 2.32% or 56.71 points lower at 2,501.80.

Sri Lanka is facing its worst energy and economic crisis in its post-independence era and the economy is expected to shrink by 8-10% this year.

The main ASPI has gained 2.3% 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 35.3% so far this year after being one of the best stock markets in the world with a return of 80% last year when large volumes of money were printed.

Net overseas sales were 16 million rupees while total overseas net outflows so far are 382 million rupees.

Sri Lanka’s sovereign debt default on April 12 has already led to the country being rated with a restricted/selective default rating by rating agencies, which has weighed on investor sentiment.

Investors are also concerned about the rupee’s sharp fall from 203 to 370 levels so far in 2022.

Lanka IOC, which pushed the ASPI gain, closed 11.7% higher at 99.7 rupees per share, Expolanka closed 4% higher at 174.8 rupees per share, while Hayleys closed up 4.9% at 82.20 rupees. (Colombo/August 2, 2022)

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