Sri Lanka stocks end down despite minister’s comments on local debt restructuring

ECONOMYNEXT – Sri Lanka shares fell on Thursday dropping to their recent lowest in three-and-a-half months dragged down by index heavyweights as buyers awaited path on native debt restructuring and IMF, brokers mentioned.

“Investor sentiment dented as they waited for path on native debt restructuring and the IMF deal,” an analyst mentioned.

Nevertheless, early in the present day, State Minister for Finance Shehan Semasinghe mentioned there was no choice taken on native debt restructuring.

Nevertheless, there may be hypothesis {that a} second nominal default and re-structure will likely be imposed on rupee debt holders, which has saved rates of interest elevated.

The principle All Share Value Index (ASPI) closed 0.65 p.c or 52.26 factors decrease at 8,034.74, its lowest since August 2.

Analysts mentioned, regardless that the general finances is not going to have a direct impression in the marketplace, sure insurance policies reminiscent of gas surcharge tax can have an effect on the facility and vitality sectors and total manufacturing sector.

President Ranil Wickremesinghe introduced a surcharge tax on the level of importation, on diesel, petrol and crude oil to pay some loans of the state-run gas retailer.

The finances noticed insurance policies that may enhance the price of doing companies throughout the board, however relieving the federal government from relying on extra cash printing, analysts say.

The market witnessed a turnover of 976 million rupees, lower than a 3rd of this yr’s every day common turnover of three.1 billion rupees.

The market noticed a overseas influx of 56 million rupees. The market has seen a complete internet overseas influx of 18.1 billion rupees thus far for this yr.

Analysts mentioned, a bearish sentiment could be anticipated within the banking and monetary sector till a transparent path is given by the federal government on native debt restructuring.

The market has been on a falling pattern as buyers awaited for cues on insurance policies from the 2023 finances.

Traders are additionally involved over the impression of native debt restructuring on dangerous property, analysts have mentioned, because the market is ready for a debt restructuring choice between the federal government and its collectors forward of an IMF mortgage approval.

The extra liquid index S&P SL20 closed 0.16 p.c or 4.03 factors decrease at 2,460.17.

The ASPI has fallen 6.5 p.c thus far in November after dropping 13.4 p.c in October. It has misplaced 34.2 p.c year-to-date after being one of many world’s greatest inventory markets with an 80 p.c return final yr when massive volumes of cash had been printed.

Ceylinco Insurance coverage, dragging the market down, fell 6.9 p.c to shut at 1,954 rupees a share.

The market heavyweight LOLC fell 2.7 p.c to shut at 338 rupees’ whereas John Keells Holdings closed down 1.1 p.c at 139 rupees.

The listed firms have proven cheap income of their third quarter of the yr, nonetheless, analysts say the disposable revenue of most people as a result of proposed tax hikes is the principle purpose for the unfavourable expectations over the December earnings. (Colombo/Nov17/2022)