REUTERS - Sri Lankan shares extended gains yesterday to hit their highest close in 11 weeks, boosted by foreign inflows into equities, while the rupee ended weaker.
Foreigners bought on a net basis for the first time in 12 sessions, purchasing a net Rs.85.3 million worth of shares yesterday, but the bourse saw net foreign outflows to Rs.6.92 billion so far this year, the index data showed.
The Sri Lankan government’s decision to launch a US$2.2 billion Japanese-funded Light Railway Transit (LRT) project and some other stalled infrastructure projects also boosted investor sentiment, brokers said.
The benchmark stock index ended up 0.12 percent at 5,515.81, its highest close since April 18.
The index rose 2.67 percent for the week, notching its second consecutive weekly gain. However, the bourse is down 8.87 percent so far this year.
Stock market turnover yesterday was Rs.505 million (US$2.87 million), less than this year’s daily average of about Rs.545.5 million. Last year’s daily average came in at Rs.834 million.
The government’s launch of central highway and light railway projects helped lift hopes that the country’s transformation would result in a faster economic growth rate, stockbrokers said.
Sri Lanka is unlikely to hit its full-year economic growth target of 3-4 percent following Easter Sunday bombings and a Reuters poll has forecast growth to slump to its lowest in nearly two decades this year.
Meanwhile, the currency closed a tad weaker at 176.10/15 per dollar, compared with Thursday’s close of 176.00/25, as importer dollar demand surpassed banks’ greenback sales. The rupee rose 0.17 percent for the week, and is up 3.69 percent so far this year.
The rupee dropped 16 percent in 2018 and was one of the worst-performing currencies in Asia.
The island nation raised $2 billion via 5-year and 10-year sovereign bond sales last week, tapping global capital markets for the second time in three months.
Foreign investors bought a net 2.26 billion rupees worth of government securities in the week ended June 26, but the island nation’s net foreign outflow was at Rs.18.4 billion so far this year, the Central Bank data showed.
The Central Bank cut its key interest rates on May 31 to support a faltering economy as overall business and consumer confidence slumped following deadly bomb attacks in April.