Stocks edge up from near 7-year low

Daily Mirror (Sri Lanka) - - MIRROR BUSINESS -

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.

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