ECONOMYNEXT – Sri Lanka stocks gained for the ninth consecutive session on Tuesday (09) and generated the highest turnover in five months, pushed up by energy sector shares mainly Lanka IOC as the country allowed the energy firm to open 50-filling stations across the island in a move to avoid a future fuel crisis, dealers said.
The turnover was 5.3 billion rupees, more than this year’s average daily turnover of 3.06 billion rupees. The highest since March 25.
Lanka IOC contributed around 40% or 1.99 billion to the market turnover.
The main All Share Price Index (ASPI) rose 0.91% or 77.03 points to 8,500.00. It has risen 10.6% in the last nine sessions.
“The market is continuing to move on Lanka IOC and we think some investors may move to equities from fixed deposits,” a top market analyst said.
However, there’s selling in market heavyweights as well.
On Tuesday Sri Lanka announced a 75 percent electricity tariff hike.
Investors say the move will add to the woes of manufacturing firms.
The government tabled an interim budget on Tuesday, revising the budget presented last year as the country is going through an unprecedented economic crisis.
President Ranil Wickremesinghe in the Parliament on August 3 revealed the plans on a 4-year IMF loan programme, debt restructuring, fiscal reforms, and dealing with loss-making state-owned enterprises.
On Friday, he said Sri Lanka will have to deal with the IMF as the country is expected to bring in heavy taxes and other revenue methods to show IMF.
Sri Lanka has already declared sovereign debt default on April 12 this year and failed to pay its first sovereign debt in May amid a deepening economic crisis which later turned into a political crisis and led to the change in the president, cabinet, and government.
The more liquid S&P SL20 index moved up, closing at 0.35% or 9.73 points stronger at 2,803.88.
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 9.9 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 index has lost 30.4% 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.
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.
Net foreign inflow was 74 million rupees on Tuesday while the total net foreign outflow so far this year is 847 million rupees.
Investors are also concerned over the steep fall of the rupee from 203 to 370 levels so far in 2022.
Aitken Spence which pushed the ASPI, closed 8.3% up at 113.8 rupees a share, and Chevron Lubricants closed 13.8% up at
107.8 rupees a share, Lanka IOC while gained 5.7 to 138.8 rupees. (Colombo/Aug 09/2022)