CSE investor sentiment soars on Chinese financial assistance news

By Hiran H.Senewiratne

CSE investor sentiment was propped up yesterday when Chinese ambassador to Sri Lanka Qi Zhenhong announced that the Chinese government is considering extending to Sri Lanka US $ 2.5 billion in financial assistance in two components. The share market was also boosted by the news that Sri Lanka is seeking support from the IMF for a bailout, stock market analysts said.

“The Chinese government is considering US $ 2.5 billion – a US $ 1 billion loan, 1.5 billion dollars buyers’ credit, ambassador Qi told a media conference in Colombo.

Under this loan, buyer’s credit is usually a loan given by Exim Bank of China to purchase goods and services from the People’s Republic and has been used to finance infrastructure in the island in the past.

Amid those developments both indices moved upwards. The All -Share Price Index moved up by 67.9 points and S and P SL20 rose by 29.8 points. Turnover stood at Rs 1.1 billion sans a single crossing. In the retail market top seven companies that mainly contributed to the turnover were; Expolanka Holdings Rs 194 million (752,000 shares traded), Browns Investments Rs 120.9 million (10.8 million shares traded), LOLC Finance Rs 79.8 million (4.5 million shares traded), JKH Rs 74.8 million (77,000 shares traded), Royal Ceramic Rs 47.5 million (953,000 shares traded), ACL Cables Rs 44.1 million (552,000 shares traded) and Hayleys Rs 40.3 million (407,000 shares traded). During the day 51.6 million share volumes changed hands in14000 transactions.

The CSE turnover level and investor participation was low compared to the previous year. It is said that high net worth and institutional investor participation was noted in Hayleys, Commercial Bank and JKH. Mixed interest was observed in Expolanka Holdings, LOLC Finance and LOLC Holdings, while retail interest was noted in Browns Investments, SMB Leasing nonvoting and Dialog Axiata.

Transportation sector was the top contributor to the market turnover (due to Expolanka Holdings) and Food, Beverage and Tobacco sector was the second highest contributor to the market turnover (due to Browns Investments),

Sri Lanka’s bond market remained inactive yesterday in dull market trade, brokers said while the rupee was quoted around 275 in bids with no offers.

Commercial banks were offering to sell dollars at 274.99 rupees for telegraphic transfer and buy at 264.66 rupees on Friday.

In the secondary market, only a bond maturing on 01.08.2024 was quoted at 14.30/40 per cent on Monday, up from 14.18/28 a day earlier. Sri Lanka’s debt office is issuing 56.5 billion rupees to be sold in a Treasury bills auction to be held on Wednesday (23).

The 56.5 billion bills will be split into 20 billion maturing in 3-months, 15 billion in 6-months and 21.5 billion in 1-year.