Ripple effects felt in bourse following Silicon Valley Bank collapse

By Hiran H.Senewiratne

CSE trading became negative despite positive macroeconomic factors yesterday owing to the collapse of the US’s 16th largest bank, the Silicon Valley Bank on Friday morning. It is the second-largest failure of a financial institution in US history, market analysts said.

“California regulators closed down the tech lender and put it under the control of the US Federal Deposit Insurance Corporation. The FDIC is acting as a receiver, which typically means it will liquidate the bank’s assets to pay back its customers, including depositors and creditors. This has impacted the entire global stock market, these analysts said.

“The market has been on a constant green for the last few sessions and is bound to come down, which is what we are seeing now. The market went down on profit taking and consolidations on the IMF,” the analysts added.

“The stock market started on a negative note and edged- down in mid-day trade, as the market was consolidating on the International Monetary Fund agreement discussion due on March 20, an analyst explained.

Amid those developments both indices moved downwards. The All -Share Price Index was down by 117.4 points, while the most liquid share S&P SL20 declined by 25.2 points Turnover stood at Rs 238 million with five crossings. Those crossings were reported in Vidul Lanka, where 108.9 million shares crossed to the tune of Rs 653 million, its shares traded at Rs 6, Melstacorp 3.5 million shares crossed to the tune of Rs 203 million, its shares traded at Rs 58, JKH 950,000 shares crossed to the tune of Rs 134.9 million and its shares traded at Rs 142, Amana Takaful nine million shares crossed for Rs 109.8 million, its share fetched Rs 12.20 and Sampath Bank 200,000 shares crossed to the tune of Rs 27.4 million, its shares traded at Rs 54.8 million.

In the retail market top seven companies that mainly contributed to the turnover were; Softlogic Capital PLC Rs 73.6 million (5.8 million shares traded), Expolanka Holdings Rs 63.4 million (431,000 shares traded), Sampath Bank Rs 52.9 million (969,000 shares traded), Melstacorp Rs 48.3 million (836,000 shares traded), Lanka IOC Rs 40.6 million (215,000 shares traded), Dialog Axiata Rs 36.5 million (3.5 million shares traded) and JKH Rs 33 million (233,000 shares traded). During the day 238 million share volumes changed hands in 14000 transactions.

Yesterday the Central Bank quoted Rs 318/323 to the US dollar in mid-morning trade Monday in the spot market after opening at 315/322, dealers said, as data showed de-leveraging supporting the appreciation of the peg.

The rupee had been stabilizing around Rs 320 to the US dollar in mid Central Bank purchases in the last few trading days. Spot sales volumes have eased after the initial rush of around 100 million US dollars a day.