Bourse indices decline in the wake of policy uncertainties

By Hiran H.Senewiratne 

The CSE yesterday evinced some negative sentiments despite the CSE withdrawing  a ‘contentious’ circular issued in January 2021. This was followed by a clarification in early February that market regulators should report investors’ credit position, market analysts said.

The withdrawal came into effect as a result of stockbroker firms making representations with regard to system limitations and practical constraints regarding the submission of certain information required by circulars bearing number 06-1-2021 dated January 29, 2021 and 01-02-2021 dated February 1, 2021, issued by the CSE. 

The market was bullish last morning and touched 7467 or 170 points and later the market witnessed profit taking but it began to decline. The previous  day market sentiment was positive because of the Chinese loan facility reported  in a Chinese government bank twitter. But yesterday’s market decline began because of news that the Chinese loan is still in its discussion stages. Moreover,  the government’s inconsistent policies also added insult to injury, market analysts said.

Amid those developments both indices moved downwards. All Share Price Index went down by 21.55 points and S and P SL20 declined by 3.91 points. The turnover stood at Rs. 2.8 billion without a crossing.

In the retail market, top five contributors to the turnover were, Dipped Products Rs. 435.6 million (8.3 million shares traded), Expolanka Rs. 337.3 million (seven million shares traded), LOLC Rs. 283.5 million (845,000 shares traded), Vallibel One Rs. 214.3 million (3.9 million shares traded), Browns Investment Rs. 214.3 million (3.9 million shares traded). During the day, 143.9 million share volumes changed hands in 25949 transactions.

Seylan Bank PLC  had decided to go ahead with the previously announced listed BASEL III compliant debenture issue though with few changes. Originally, Seylan in July last year announced a listed debenture worth Rs. 10 billion, upon over subscription of Rs. 5 billion initially, Rs. 3 billion thereafter and Rs. 2 billion finally. It was to be via senior unsecured listed rated redeemable debentures and BASEL III compliant, Tier II, listed, rated, unsecured, subordinated redeemable debentures with a Non-Viability Conversion (to be issued as subordinated debt of the Bank). Having obtained shareholder approval, the bank in November announced to defer the move considering the prevailing market conditions subject to review in the first quarter of 2021. The Seylan Board last week passed a resolution to proceed with the issue subject to certain changes to the type and quantum of debentures.

Sri Lanka’s rupee quoted steady at 197.00/197.50 levels to the US dollar in the one-week forwards market on Tuesday, while bond yields remained unchanged, dealers said. The rupee last closed in the one- week forward market at 197.50/198.00 to the dollar on Monday.

In the secondary market bond yields were unchanged while the overall market witnessed dull activity, dealers said.