Sri Lanka shares gain after Paris Club proposal

ECONOMYNEXT – Sri Lanka shares continued to gain on Friday closing on positive sentiments on news over a possible debt restructuring from Paris Club, brokers said.

The main All Share Price Index (ASPI) closed 0.84 percent or 74.02 points higher at 8,843.75, the highest index gain since October 27.

The market witnessed a turnover of 2 billion rupees, lower than this year’s daily average turnover of 3 billion rupees.

The market saw a foreign inflow of 876 million rupees. The total net foreign inflow stood at 21.2 billion rupees so far for this year.

“The market was pushed up over the news of a potential 10 year debt moratorium,” analysts said.

The Paris Club group of creditor nations has proposed a 10-year debt moratorium on Sri Lankan debt and 15 years of debt restructuring as a formula to resolve the island nation’s prevailing currency crisis.

Former Central Bank Governor Indrajit Coomaraswamy said in a forum last week that the government is in discussions with Asian Development Bank (ADB) and World Bank to get loans of 1.9 billion US dollars after a reform program with the International Monetary Fund is approved.

A policy loan now being discussed with the World Bank may bring around 700 million US dollars, Coomaraswamy told a business forum organized by CT CLSA Securities, a Colombo-based brokerage.

The Asian Development Bank may also give around 1.2 billion US dollars most of which will be budget support, he said.

In the last few sessions market gained after the Central bank governor said market rates should eventually ease despite the fears of a domestic debt restructuring as inflation falls, increased liquidity in dollar markets, and the inter-bank liquidity improves.

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

The more liquid index S&P SL20 closed 1.25 percent or 34.90 points higher at 2,809.49.

So far in December ASPI gained 2.2 percent.

The ASPI gained 0.5 percent in November after losing 13.4 percent in October.

It has lost 28.2 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.

Expolanka pushed the index up to close at 5.9 percent to 207.8 rupees.

Browns Investments gained 6.9 percent to close at 7.7 rupees and John Keells Holdings gained 2.5 percent to close at 143.5 rupees. (Colombo/Dec 05/2022)

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