ECONOMYNEXT – Sri Lanka shares edged up on Wednesday on positive sentiments from creditors India and China likely to support debt restructuring plans.
“Bourse edged up marginally and managed to settle in the green zone as investor confidence reinstated on the back of the President’s statement on the progress of the debt restructuring talks with the bilateral creditors- China, and India,” First Capital Market Research said.
“Meanwhile, retail participation witnessed only a marginal improvement as investors awaited for further direction on domestic debt restructuring and signing of the IMF board level agreement.”
“With the positive sentiment and the expectation on interest rates to ease down, investor sentiment gradually improved on Banking sector and Treasury counters.”
President Wickremesinghe told parliament on Tuesday that talks with creditors India and China are successful.
“Very soon we will have an answer.”
Sri Lanka has raised taxes and tightened spending to bring a wide budget deficit and unsustainable debt under control. Formal assurances that creditors are willing to re-structure debt has to be given.
State Minister for Finance Shehan Semasinghe said Sri Lanka is expecting to get executive board approval for an International Monetary Fund program by March.
However the market was highly volatile.
The main All Share Price Index (ASPI) closed at 0.12 percent or 9.97 points higher at 8,386.27.
The index has already lost 1.9% within the first two week of January.
The most liquid index S&P SL20 closed flat at 0.00 percent or down 0.13 points at 2,607.38.
First quarter of 2023 is expected to be negative with the taxations going in to effect from January 1st and there are talks of a hike in electricity tariffs, which has gained Cabinet approval and is waiting for recommendations by the Public Utilities Commission of Sri Lanka.
Whereas the second quarter was expected to be more positive with the anticipation of IMF getting through and with the interest rates expected to ease as the taxes starts to generate funds.
Sri Lanka is expecting a further contraction in the economy after a negative growth in 2022, Cabinet Spokesperson Bandula Gunawardena said at the Weekly Cabinet Press Briefing.
The market witnessed a turnover of 1.3 billion rupees, lower than this month’s 1.9 billion rupees average daily turnover.
It is also comparatively much lower than 2022’s daily average turnover of 2.9 billion rupees.
The market saw a net foreign inflow of 2.8 million rupees. The net foreign inflow for the first two weeks of January was 200 million rupees. The total foreign inflow of 2022 was 31 billion rupees.
Sampath Bank pushed the index up to close at 3.9 percent higher at 36.9 rupees.
Richard Pieris gained 2.7 percent to close at 22.5 rupees and ACL Cables closed 3.9 percent higher at 71.2 rupees a share. (Colombo/Jan18/2023)