Stocks ease, ending...
reflects the government’s large debt burden, almost twice as high as B and Caa-rated peers and heavy debt service requirements in relation to both gross domestic product (GDP) and government revenues.
“Although fiscal reforms and improved public-sector enterprise financial performance have started to gain traction, budget deficits remain relatively high and revenue mobilization weak. Therefore, the path of fiscal consolidation and debt reduction will likely be gradual,” Moody’s noted.
“In addition, Sri Lanka has historically had relatively high inflation compared with peers, although inflation has recently moderated to the mid-single digit range where it is likely to remain in the near term,” the rating agency added.
However, stockbrokers said, there has been demand for select stocks, but they were not available in required quantity. They expect the market to gain in high turnover due to reduction in the market interest rate.
The Central Bank slashed the standing lending facility rate or reverse repurchase rate by 50 basis points to a multi-year low of 8.00 percent on Thursday, in a move to reduce commercial banks’ interest rate spreads.
The day’s turnover was Rs.462.2 million, less than last year’s daily average of about Rs.828.4 million.
Shares in Ceylon Tobacco Company PLC fell 0.16 percent to Rs.1,186.30, while conglomerate John Keells Holdings fell 0.61 percent to Rs.227.50 a share. The index’s 14-day relative strength index, which was in an over-bought region, fell to neutral territory, Thomson Reuters data showed.
The index gained 4.8 percent in 2013 after losses in the previous two years, giving a return of 2.18 percent in dollar terms. Many investors locked their funds in risk-free debentures instead of risky assets due to a sluggish bourse amid falling interest rates.
Foreign investors bought Rs.70.6 million (US $ 540,200) worth of shares yesterday after buying a net Rs.22.88 billion worth of stocks last year, compared with a record Rs.38.68 billion net foreign inflow in 2011.