Share price depreciations in several companies; National Long-Term Rating downgrades for 10 local banks

By Hiran H.Senewiratne

CSE trading experienced a decline due to witnessing some selling pressure on Softlogic Life and Softlogic Capital stocks yesterday. Consequently, other companies too noted price depreciations, stock market analysts observed.Market shares fell in mid- day trade, due to a negative sentiment among investors resulting from continuing delays in processing the IMF loan that was supposed to be acquired by the first quarter of 2023.

“We think debt restructuring could be pushed back to end-2023 due to delays in the IMF programme, a Standard Chartered Research report said.

“IMF Board approval for Sri Lanka’s Extended Fund Facility (EFF) programme has been delayed as negotiations with bilateral lenders are taking longer than expected. We now expect board approval to happen in Q2-2023 (versus Q1 previously), given the delays in securing financing assurances from bilateral creditors, the statement said.

Sri Lanka is expecting a further contraction in the economy after negative growth in 2022, Cabinet spokesperson Bandula Gunawardena said. A World Bank report previously said the gross domestic product of Sri Lanka was expected to contract 9.2 percent in 2022 and a further 4.2 percent in 2023.Amid those developments both indices moved upwards. The All- Share Price Index went down by 71.47 points and S and P SL20 declined by 18.38 points.

Turnover stood at Rs 1.5 billion with two crossings. Those crossings were reported in Lanka IOC, which crossed 200,000 shares for Rs 35.8 million, its shares traded at Rs 179 and LB Finance 715,000 shares crossed to the tune of Rs 26.1 million, its shares traded at Rs 36.50.

In the retail market top seven companies that mainly contributed to the turnover were, Softlogic Capital Rs 575 million (34.6 million shares traded), Softlogic Life Insurance Rs 258 million (2.3 million shares traded), Lanka IOC Rs 70.9 million (397,000 shares traded), Expolanka Holdings Rs 49.2 million (286,000 shares traded), Browns Investments Rs 33 million (5.2 million shares traded), Jetwing Symphony Rs 27.8 million (four million shares traded),Melstacorp Rs 27.5 million (598,000 shares traded). During the day 80.8 million share volumes changed hands in 16000 transactions.

Fitch Ratings has downgraded the National Long-Term Ratings of 10 local banks following the recent sovereign downgrade and recalibration of the agency’s Sri Lankan national rating scale.The recalibration is to reflect changes in the relative creditworthiness among Sri Lankan issuers following Fitch’s downgrade of Sri Lanka’s Long-Term Local Currency Issuer Default Rating (IDR) to ‘CC’ from ‘CCC’/Under Criteria Observation on December 1, 2022.

Fitch typically does not assign Outlooks or applies modifiers to sovereigns with a rating of ‘CCC+’ or below. This would negatively impact banking sector counters.Yesterday the Central Bank- announced US dollar buying rate was Rs 360.99 and the selling rate Rs 371.46.