Sri Lanka stocks hit six-week high on hopes of political stability; concerns remain

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ECONOMYNEXT – Sri Lanka’s major stocks closed stronger, gaining 4.4% on Tuesday (17) to hit a six-week high on hopes of political stability in the crisis-hit country after violent clashes, although Concerns remain about the economic crisis, dealers said.

“The market is moving on the positives as there are signs of political stability. But this momentum will not last long as interest rates in the market are already high,” a market analyst said.

The main All Share Price Index (ASPI) closed 4.44% or 359.24 points at 8,457.65 at the close, its highest close since April 6, according to official data.

The market analyst said the momentum will only last long if the prime minister keeps his promises.

Wickramasinghe was named the country’s prime minister on Thursday for a record sixth time.

He addressed the nation on Monday about its economic crisis. Wickramasinghe said Sri Lanka will be going through the worst in the coming days with power cuts on maps that could be up to 3 p.m.

On Saturday, a four-member cabinet was appointed to lead – foreign affairs, public administration and home affairs, urban development, and SLPP party power and energy.

Since the Prime Minister’s appointment, the market has been on an upward trajectory as investors see it as a sign of stability with the end of the political stalemate. However, analysts said Tuesday’s conduct in parliament raised some concerns.

The curfew imposed at 11 p.m. was lifted at 5 a.m. on Tuesday morning and the curfew was put in place from time to time following a violent clash between supporters of the former Premier Minister Mahinda Rajapaksa and anti-government protesters unharmed.

Rajapaksa resigned after his supporters brutally attacked peaceful protesters on May 9.

The attacks took place despite the state of emergency in the country in the presence of the police.

Since the violence, the market remained closed for two days until Wednesday.

The most liquid S&P SL20 index rose 5.54% or 147.50 points to close at 2,809.81.

Turnover for the day was 2.75 billion rupees, its highest since April 28 and more than half of this year’s average daily turnover of 4.2 billion rupees.

The 84.5 billion euro economy has already suspended foreign debt payments because it ran out of dollars. 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.

On Tuesday, the rupee was trading at around 365 against the US dollar, down from 360 on Friday.

The market has gained 10.9% in May so far after losing 14.5% in March and 23% in April.

Overall, the market has lost 30.8% 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 for a net worth of Rs 55.9 million worth of shares. The market has seen a total outflow of Rs 1 billion since the start of the year.

Today’s gain generated a market capitalization of Rs 232 billion.

Shares of Expolanka Holdings rose 13.1% to close at 219.75 rupees per share, LOLC gained 11.3% to close at 553.75 rupees per share, while Browns Investment ended up 16 .2% to 7.20 rupees per share. (Colombo/May 17/2022)


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