Non-nationals seeing greater value in listed equities; end July net foreign inflow to CSE Rs. 784 million

By Hiran H.Senewiratne

The CSE ended July with a net foreign inflow of Rs. 784 million, as non-nationals appear to see greater value in listed equities.

The inflow also helped to reduce the year to date net outflow to Rs. 384 million as opposed to Rs. 1.1 billion as at end June and Rs. 1.7 b as at end March and Rs. 2.7 billion at the end of January, stock market analysts said.

Amid those developments CSE trading activities were positive throughout yesterday due to some degree of political stability being established in the country. The country recorded a trade surplus in June with private credit smashed to resurrect a soft-peg and a fuel credit line from India running out, but forex shortages persist amid money printing, forced dollar sales and forex sales, analysts explained.

Imports fell 26 per cent to US$ 1,226 million in June, while exports rose 23.9 per cent to US $1,249 million, giving a trade surplus of US $ 21 million with hardly any inflows to the government.

Expat workers remitted US $ 274 million through official channels. In June there was a lockdown style scenario, as the country ran out of fuel due to forex shortages. Non-oil imports collapsed 35.6 per cent to US $1,026 million.

This scenario created some positive sentiments towards the stock market yesterday. Although mixed reactions were witnessed in the stock market there was considerable investor participation and satisfactory turnover yesterday. The All- Share Price Index went up by 37.4 points and S and P SL20 declined by 9.5 points. Turnover stood at Rs 1.8 billion with a single crossing. The crossing was reported in JKH, which crossed 470,000 shares to the tune of Rs 470,000 shares, a share fetching Rs 119.75.

In the retail market top seven companies that mainly contributed to the turnover were, Lanka IOC Rs 421 million (4.6 million shares traded), Expolanka Holdings Rs 288 million (1.7 million shares traded), Dipped Products Rs 128 million (3.4 million shares traded), Browns Investments Rs 99.5 million (14.2 million shares traded), Kelani Valley Plantations Rs. 58.4 million (572,000 shares traded), Hayleys Rs. 48.4 million (627,000 shares traded) and Hayleys Fabrics Rs 41.9 million (1.1 million shares traded). During the day 75.7 million share volumes changed hands in 220,000 share transactions.

Further, stock market investor sentiment will likely increase with the reducing fuel prices this week. Sri Lanka- imported refined fuel/petrol is being benchmarked on a Singapore petroleum formula, which was US $ 157 per barrel and has now gone down to US $ 112. This would create some additional relief for the Sri Lanka economy, market analysts said. Yesterday, the Central Bank- announced US dollar parity rate was Rs 358.71. The buying rate was Rs 357.27 and the selling rate Rs 368.50.