Sri Lanka stocks hit 3-week high on hopes of political stability after PM takes office

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ECONOMYNEXT – Sri Lankan shares gained more than 2% on Friday to end at a three-week closing high on hopes of political stability after Prime Minister Ranil Wickremesinghe took office as the interim president strengthened sentiment, brokers said.

Former President Gotabaya Raajapaksa, who fled the county in fear for his life after more than three months of protests, handed in his resignation letter on Thursday in a bid to ease the political crisis after an unprecedented economic crisis.

The main All Share Price Index (ASPI) closed 2.04% or 149.58 points up at 7,467.82, its highest close since June 24.

Political unrest on July 13 and the subsequent two-day curfew caused the market to fall.

On Wednesday, protesters demanded the resignation of Prime Minister Ranil Wickremesinghe and occupied his office after more than four hours of unrest amid repeated tear gas. Later that night, some protesters clashed with security forces when they attempted to occupy the official residence of Speaker of Parliament Mahinda Yapa Abeywardena.

More than 100 people were injured in the two clashes. The increase in clashes comes after Sri Lanka saw protesters storming the president’s official residence in Colombo, demanding his resignation by force after he refused to step down as ousted president.

A new president is expected to be appointed on July 20.

On Friday, Speaker of Parliament Mahinda Yapa Abeywardena formally announced the resignation of President Rajapaksa before Prime Minister Ranil Wickremesinghe was sworn in as interim president before the country’s chief justice.

The more liquid S&P SL20 index gained 2.69% or 62.94 points to close at 2,400.17.

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

Turnover was 1.1 billion rupees, one-third of that year’s average daily turnover of 3.21 billion rupees.

The main ASPI has gained more than 3.16% in July so far after falling 9.3% in June, reversing a 6% gain in May. It lost 23% in April followed by a drop of 14.5% in March.

The market has lost 38.9% 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.

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.

Foreigners bought a net of 6.7 million rupees. The total foreign release so far this year is Rs 938 million.

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

Sampath Bank led the ASPI gain. It gained 4.6% to close at 31.30 rupees per share.

Hayleys gained 7.2% to 67.4 rupees per share, while Browns Investments closed up 6.8% to 7.9 rupees per share. (Colombo/July 15, 2022)


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