Ban on open accounts on imports pepping share market

By Hiran H.Senewiratne

CSE investor sentiment is growing positive in tandem with the Central Bank’s decision to ban open accounts on imports. Globally, Sri Lanka is being marked as a strategically important tourism destination and this factor too is benefiting the share market, stock market analysts said.

With the banning of the open account import system by the Central Bank, the importer could open Letters of Credit for imports, through which arrangement banks are ready to issue dollars. This shows stability in the domestic foreign exchange market, analysts observed.

Apart from that, Sri Lanka has now relaxed the mandatory dollar conversion requirements for service exporters to encourage them to bring dollars into the country as the sector has converted only about 20 per cent of the dollars it has earned in the first six months of this year. The proceeds received on or after August 12 will not be required to be converted immediately, a Central Bank source said.

Tourism sector stocks also indicated some active participation. Globally, Sri Lanka has been recognized as a strategically important tourism destination, when other tourist destinations are facing multiple issues in external and internal environments, stock market analysts added.

Amid those developments shares gained over 1 per cent within the first hour of trade yesterday, pushed by index heavy shares. ‘We are seeing investors coming back to the index heavy shares and that’s driving the market up, a market analyst said.

The main All- Share Price Index moved up 111 points. The most liquid index S&P SL20 moved up 66.3 points. Turnover stood at Rs 3.1 billion with a single crossing. The crossing was reported in Melstacorp, which crossed 800,000 shares to the tune of Rs 40 million; its shares traded at Rs 50.

In the retail market, eight companies that mainly contributed to the turnover were, Expolanka Holdings Rs 595 million (2.5 million shares traded), Lanka IOC Rs 327 million (1.8 million shares traded), Agstar Rs 186 million (13.6 million shares traded), Hayleys Fabrics Rs 167 million (four million shares traded), Lankem Develoment Rs 143 million (5.6 million shares traded), Prime Land Residencies Rs101 million (12.6 million shares traded) ,CIC (Voting) Rs 89.7 million (1.4 million shares traded) and CIC (Non- Voting) Rs 88 million (1.9 million shares traded). During the day 130 million share volumes changed hands in 37000 share transactions.

Yesterday, the Central Bank’s US dollar buying rate was Rs 357.37 and the selling rate Rs 368.69. The country’s inflation is still at a higher level, which is around 58.90 per cent.