Sri Lanka’s T-bill yields ease ahead of policy rate decision

ECONOMYNEXT – Sri Lanka shares closed firmer for a second session on Wednesday, a day after 2023 budget was passed in the parliament amid concerns over IMF loan approval and loan structuring, brokers said.

The main All Share Price Index (ASPI) closed 2.2 percent or 173.42 points higher at 8,173.86, its highest since November 15.

The budget for 2023 was passed with a 37 majority vote in the 225-member parliament on Tuesday (22).

Brokers said, even though the market is gaining, investors are not confident of the sustainability of gains.
“We see a bull-trap now,” a broker said.

“Market falls for a couple of days and then recovers and then slips again. We don’t see investors having any confidence in the market.”

Analysts expect the central bank to consider some action to ease its tight monetary policies after inflation easing for the first time in October.

In the past sessions, the index continued to fall on the speculation of a local debt restructuring although no proper decision has been taken.

State Minister for Finance Shehan Semasinghe told parliament during the budget debate on Wednesday that Sri Lanka will continue to pay its domestic loans and no local debt restructuring has been discussed.

“There has been no discussion regarding domestic debt treatment. Therefore, I humbly ask all the MPs here, without doing or fact checking, do not comment on these things,” Semasinghe told the parliament.

The budget saw policies that will increase the cost of doing business across the board, but relieving the government from depending on excess money printing, analysts say.

The market witnessed a turnover of 1.5 billion rupees, half of this year’s daily average turnover of 3 billion rupees.

The market saw a foreign inflow of 6.4 million rupees, extending the total net foreign inflow to 18.3 billion rupees so far for this year.

The more liquid index S&P SL20 closed 2.4 percent or 58.6 points higher at 2,513.57.

The ASPI has fallen 4.9 percent so far in November after losing 13.4 percent in October.
It has lost 33.1 percent year-to-date after being one of the world’s best stock markets with an 80 percent return last year when large volumes of money were printed.

Richard Pieris, led the market rise with a 11 percent gain to close at 22.2 rupees a share.
Expolanka Holdings rose 6.5 percent to close at 147.7 rupees, while Hayleys gained 6.8 percent at 71.9 rupees.

The listed companies have shown reasonable profits in their 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 the negative expectations over the December earnings. (Colombo/Nov23/2022)

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