Possible gains for Sri Lankan bourse from rising US inflation

By Hiran H.Senewiratne

The CSE could look forward to more foreign investments coming into the market with the US inflation rate soaring to more than 7.5 per cent currently. When inflation hits these heights, foreign investors could consider investing in other countries’ equity markets, especially in frontier markets like Sri Lanka, stock market analysts said.

The CSE closed in the green regaining Rs. 65 billion of lost value but the rebound yesterday was not strong enough to push the year- to -date ASPI to a gain, signaling CSE is not yet out of the woods. However, the stock market travelled in a positive direction overall because Central Bank Governor Ajith Nivard Cabraal gave the assurance that there will be no default by Sri Lanka in the US $ 1 billion international sovereign bond repayment, scheduled towards the middle of the year. Sections of the international media reported that Sri Lanka would be rescheduling the repayment of international sovereign bonds this year due to the current financial crisis, market analysts explained.

Yesterday the stock market started on a positive note but at one point during the first half of the session the market slowed down. Later it picked up with a strong buying interest for all blue-chip companies. Accordingly, the market was driven by blue chip companies yesterday, market analysts said.

The ASPI’s year to date return, still reflected a negative 0.15 per cent after having lost over 4 per cent last week. S&P SL20 reduced its YTD negative return to 2.8 per cent from 4.27 per cent on Wednesday. The All- Share Price Index went up by 252 points and S and P SL20 rose by 124 points. Turnover stood at Rs 2.9 billion sans a crossing.

In the retail market top seven companies that mainly contributed to the turnover were, Expolanka Holdings Rs 392 million ( 1.2 million shares traded), Browns Investments Rs 219 million (3.7 million shares traded), Sunshine Holdings Rs 201 million (3.7 million shares traded), ACL Cables Rs 158 million (1.4 million shares traded), Vallibel One Rs 123 million (1.5 million shares traded), Royal Ceramic Rs 115 million (1.6 million shares traded) and Softlogic Holdings Rs 107 million (1.4 million shares traded). During the day 95 million share volumes changed hands in 34000 transactions.

Yesterday, several blue- chip companies drove the market. There was Expolanka Holdings, whose share price gained Rs 16 or five per cent. Its share price shot up to Rs 334 from Rs 318; Sunshine Holdings share price appreciated by 10 per cent or Rs 4.70. Its share price moved to Rs 54.40 from Rs 49.70 and Watawala Plantations share price appreciated by seven per cent or Rs 9.25. Its share price shot up to Rs 138.75 from Rs 129.50.

Further, main contributors to the All- Share Price Index were LOLC 47 points, Expolanka Holdings 32 points, Royal Ceramic Rs 18.5 points and Hayleys 10 points.

It is said that high net worth and institutional investor participation was noted in LOLC Holdings, Sunshine Holdings and ACL Cables. Mixed interest was observed in Expolanka Holdings, Vallibel One and Softlogic Life Insurance, while retail interest was noted in SMB Leasing non-voting, Browns Investments and Renuka Agri Foods.

Yesterday, the US dollar was quoted at Rs 203.40, which was the controlled price of the Central Bank.