Gloomy predictions for Sri Lankan economy negatively impact bourse

By Hiran H.Senewiratne

The CSE’s trading activities dipped below the average level yesterday. The latest LMD-Nielsen Business Confidence Index (BCI) survey notes that a majority of 76 per cent of respondents in a poll revealed that they expect local economic conditions to go from bad to worse, market analysts said.

Last Friday’s fuel price hikes by the Ceylon Petroleum Corporation have resulted in increased prices in essentials, including pharmaceutical and food items, air fares, shipping and freight charges and prices in all other sectors. Further, the global oil price hike due to the Russian- Ukrainian crisis puts additional pressure on the local economy when the country is in dire need of dollars to run the country, market analysts added.

Consequently, both indices inclined downwards. The All- Share Price Index went down by 112 points and S and P SL20 declined by 41.7 points. Turnover stood at Rs 1.3 billion, which was below the average level of Rs 3.5 billion, with a single crossing. The crossing took place in Hayleys, which crossed 200,000 shares to the tune of Rs 20.5 million; its shares traded at Rs 102.50.

In the retail market top seven companies that mainly contributed to the turnover were; Expolanka Holdings Rs 253 million (914,000 shares traded), Browns Investments Rs 104 million (9.5 million shares traded), LOLC Holdings Rs 82.2 million (98000 shares traded), Dipped Products Rs 80.5 million (1.9 million shares traded), Dialog Rs 63.5 million (4.7 million shares traded), Access Engineering Rs. 50.7 million (2.4 million shares traded), LOLC Finance Rs 49.7 million (2.8 million shares traded). During the day 51.3 million shares changed hands in 17000 transactions.

Further, some stock market investors voice concern that the IMF always promotes Washington’s interests indirectly. Several countries, such as, Argentina, Pakistan have been protesting against the IMF, stock market analysts said. With these issues the government is now in a dilemma on whether to go for an IMF bailout or not. A senior International Monetary Fund official will be visiting Sri Lanka today and tomorrow to brief President Gotabaya Rajapaksa on the funds assessment of the crisis-hit economy, Sri Lanka mission chief Masahiro Nozaki told the media.

Sri Lanka’s rupee was quoted at 265/80 to the US dollar on Monday, dealers said, after the central bank allowed the rupee to fall from a previous rate of Rs. 200 to the dollar. The central bank still has a surrender requirement where banks have to sell dollars to the central bank for new money, further weakening the rupee against the US dollar, some analysts warned.