ECONOMYNEXT – Sri Lanka’s main stock index closed higher at a more than two-week high on Monday (23) on hopes of political stability as the island nation saw more ministers appointed, but concerns regarding the economic recovery still weighed on sentiment, dealers said.
“The market was very bullish today. We were expecting mixed sentiment, but the index continued to rise,” a market analyst said.
The main All Share Price Index (ASPI) closed up 2.53% or 208.88 points at 8,474.49.
“This is a short-term sentiment though and it will likely last until the end of June if political stability at least continues,” the analyst said.
Sri Lanka on Monday appointed six new ministers, bringing the total to 20 so far and the president promised to limit the cabinet to 25.
The market has been volatile throughout the past week as there were positives on the political front and negatives on the economic front, as fuel shortages raised concerns about paralysis in transport sectors and manufacturing.
The day’s turnover was 2.7 billion rupees, more than half of this year’s average daily turnover of 4.1 billion rupees.
Sri Lanka’s sovereign default has already led it to limited/selective defaults from rating agencies. The 84.5 billion euro economy has already suspended foreign debt payments because it ran out of dollars.
The Prime Minister has promised to announce the country’s economic policy this week after getting the debt repayment statistics.
The most liquid S&P SL20 index rose 3.85% or 105.99 points to close at 2,856.90.
Investors are also concerned about the sharp drop in the rupee, which has fallen more than 80% since it was allowed to show flexibility on March 7.
The market has gained 11.1% in May so far after losing 23% in April and 14.5% in March.
The market has lost 30% so far this year after being one of the best stock markets in the world with a return of 80% last year.
Foreign investors sold Rs 25.6 million net worth of shares. The market has seen a total outflow of Rs 1.2 billion since the start of the year.
Monday’s gain helped boost the market capitalization by 137 billion rupees.
Shares of Expolanka gained 9.1% to close at 239.50 rupees per share, LOLC rose 10.7% to close at 616.25 rupees per share, while Browns Investment finished up 13, 1% to 9.50 rupees per share. (Colombo/23 May/2022)