Stocks edge up from near 7-year low
REUTERS: Sri Lankan shares rose yesterday, snapping their 10-session losing streak to recover from its lowest close in nearly seven years as investors bought beaten down shares.
The rupee edged higher for the second session after four straight days of losses, but traders said sectarian violence was still denting investor sentiment. Most investors have shied away from the market since the April 21 bombings that killed more than 250 people in coordinated attacks on churches and luxury hotels. Islamic State claimed responsibility. The International Monetary Fund (IMF) on Tuesday approved the disbursal of a $164 million tranche of a loan programme, bringing the total disbursed to more than US$1.16 billion.
Sri Lanka’s budget and current account deficits could widen more than forecast because of the Easter Sunday bombings but the island’s economy should still grow 3.5 percent this year, as previously expected, the IMF added yesterday.
Sri Lanka’s economic growth is expected to slump to its lowest in nearly two decades this year, a Reuters poll showed last week. Tourism, foreign investment and overall business activity have all dropped after the bombings.
The benchmark stock index ended 1 percent firmer yesterday at 5,251.79, edging up from its lowest close since Aug. 30, 2012, which it hit on Wednesday.
Turnover was Rs.552.4 million (US$3.14 million), less than this year’s daily average of around Rs.555.8 million. Last year’s daily average was Rs.834 million.
Foreign investors sold a net Rs.358 million worth of shares yesterday, extending the year to date net foreign outflow to Rs.4.7 billion worth of equities.
The rupee closed slightly firmer on dollar-selling by exporters and banks.
The rupee gained 0.2 percent to close at 175.90/176.10 per dollar, compared with Wednesday’s close of 176.20/40, market sources said.
Analysts expect the currency to weaken as money flows out of stocks and government securities.
The rupee gained 0.6 percent last week and is up 3.8 percent for the year. Exporters had converted dollars as investor confidence stabilised after a US$1 billion sovereign bond was repaid in midjanuary.
The rupee dropped 16 percent in 2018 and was one of the worstperforming currencies in Asia.
Foreign investors sold a net 10.8 billion rupees worth of government securities in the week ended May 8, extending net foreign outflow to Rs.20.8 billion so far this year, Central Bank data showed.
Investor sentiment was damaged at the end of last year when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved parliament. A court later ruled the move unconstitutional, but the political turmoil led to credit rating downgrades and an outflow of foreign funds.