Sri Lanka stocks down amid tight forex liquidity and foreigners exit | EconomyNext
ECONOMYNEXT – Sri Lanka stock index slipped for the second straight session on Tuesday (28) after record gains last week amid concerns over a central bank move to preserve U.S. dollars of tightening foreign exchange liquidity further, brokers said.
And the concerns resulted in foreign investors selling a net of 636 million rupees’ worth of shares on Monday. The bourse has suffered a net foreign outflow of 51.2 billion rupees so far this year.
All Share Price Index fell 0.84 percent or 100.79 points to close at 11,907.70, slipping below the record 12,000 points, bourse data showed.
“Index spiked to an intraday high of 12,042 within the first few minutes. Afterwards, following a dull sentiment in the market as the holiday season is approaching, index dropped down significantly while displaying sizable volatility throughout the session and closed the day at 11,908, losing 101 points,” FirstCapital Market Research said.
The more liquid S&P SL 20 index, down 0.07 percent or 2.94 points to close at 4,214.49.
Brokers have cautioned on a downside risk of Sri Lanka’s ability to repay its external debts, amid concerns that the island nation’s risk of sovereign debt default is on the rise after the central bank’s expected inflow of 11.45 billion US dollar including exports, remittances, and revenue from tourism did not materialize.
The central bank, however, said it is expected to boost its official reserves to 3 billion US dollars by end if this month from 1.6 billion a month ago.
The central bank on Monday ordered licences banks to surrender 25 percent of its foreign currency holdings got through foreign remittances, export proceeds, and foreign currency conversions from individual customers on a weekly basis.
Analysts said the move will further tight foreign exchange liquidity in the money market, making it more difficult for importers. They also said the central bank’s move showed the desperateness of or foreign currency.
Facing the increasing risk of sovereign debt default, Finance Minister Basil Rajapaksa visited India early this month seeking some help for economic revival. Government sources say Rajapaksa has been promised 500 million US dollar fuel credit though that comes with some conditions which Sri Lanka had earlier denied.
The day’s turnover was 5.6 billion rupees, above this year’s average daily turnover of 4 billion rupees.
FirstCapital Market report said the Diversified Financials sector and Food, Beverage & Tobacco sector contributed a joint 40 percent to the turnover.
Senkadagala Finance, Expolanka Holdings and Commercial Leasing and Finance Holdings dragged ASPI.
Senkadagala Finance nosedived 24.79 percent to close at 725.00 rupees a share.
Expolanka Holdings the market heavyweight which has a significant component of export and freight business down 1.13 percent to close at 373.25 rupees a share and Commercial Leasing and Finance Holdings fell 2.68 percent to close at 29.10 rupees a share.