ECONOMYNEXT – Shares in Sri Lanka tumbled Thursday to their lowest level in three and a half months, dragged down by index heavyweights as investors awaited guidance on local debt restructuring and the IMF, brokers said.
“Investor sentiment has shaken as they await guidance on local debt restructuring and IMF deal,” one analyst said.
However, early in the day, State Finance Minister Shehan Semasinghe said no decision had been made on local debt restructuring.
However, there is speculation that a second nominal default and restructuring will be imposed on holders of rupee debt, which has kept interest rates high.
The main All Share Price Index (ASPI) closed down 0.65% or 52.26 points at 8,034.74, its lowest since August 2.
Analysts said that while the overall budget will not directly impact the market, some policies such as the fuel surcharge may affect the power and energy sectors and the entire industry. manufacturer.
President Ranil Wickremesinghe announced a point-of-import surcharge on diesel, gasoline and crude oil to pay certain loans from the state-run fuel retailer.
The budget included policies that would raise the cost of doing business across the board, but relieve the government of reliance on excessive money printing, analysts said.
The market recorded a turnover of 976 million rupees, less than a third of this year’s average daily turnover of 3.1 billion rupees.
The market saw a foreign inflow of Rs 56 million. The market has recorded a total net inflow of Rs 18.1 billion so far this year.
According to analysts, a bearish sentiment can be expected in the banking and financial sector until a clear direction is given by the government on the restructuring of local debt.
The market trended lower as investors waited for clues on the 2023 budget policies.
Investors are also worried about the impact of local debt restructuring on risky assets, analysts said, as the market awaits a decision on debt restructuring between the government and its creditors before the approval of a loan from the IMF.
The more liquid S&P SL20 index closed down 0.16% or 4.03 points at 2,460.17.
ASPI has fallen 6.5% so far in November after losing 13.4% in October. It has lost 34.2% since the start of the year after being one of the best stock markets in the world with a return of 80% last year when large volumes of money were printed.
Ceylinco Insurance, dragging the market lower, fell 6.9% to close at 1,954 rupees per share.
Market heavyweight LOLC fell 2.7% to close at 338 rupees while John Keells Holdings closed down 1.1% at 139 rupees.
Listed companies posted reasonable profits in the third quarter of the year, however, analysts say the disposable income of the general public due to proposed tax hikes is the main reason for negative expectations for December results. (Colombo/November 17, 2022)