REUTERS: Sri Lankan stocks rose for the sixth straight session yesterday to hit their five-week high led by banking and beverage shares, but foreign investors exited from risky assets with the start of presidential poll campaigning. The rupee currency ended weaker.
Sri Lanka’s Central Bank left its key rates unchanged yesterday after loosening policy earlier this year, although growth is likely to remain subdued as the economy faces rising global risks.
Local investors picked up select shares, with one of the two presidential frontrunners, former wartime defence chief Gotabaya Rajapaksa, possibly getting the broader support of other smaller parties after President Maithripala Sirisena’s center-left Sri Lanka Freedom Party (SLFP) pledged its backing for his candidature in the election scheduled for Nov. 16.
Rajapaksa started his campaign on Wednesday, while the other strong candidate Sajith Premadasa, the Housing Minister who has the backing of most of the rural poor, kicked off his campaign on Thursday.
The benchmark stock index ended 0.35 percent firmer at 5,834.66, rising for the sixth straight session to its highest close since Sept. 5.
The bourse rose 2.54 percent for the week. So far this year, the index has dropped 3.6 percent.
Equity market turnover was Rs.1.13 billion (US$ 6.26 million), nearly double of this year’s daily average of about Rs.659 million. Last year’s daily average was Rs.834.0 million.
Foreign investors were net sellers for the eight straight session. They sold a net Rs.46.4 million worth of shares, extending the year-to-date net foreign outflow to Rs.3.7 billion of equities, according to index data.
Meanwhile, the rupee fell 0.1 percent weaker at 180.65/75 per dollar compared with Thursday’s close of 180.50/65. The currency is up 0.4 percent for the week and 1.1 percent so far this year.
Foreign investors bought government securities on a net basis for the first time in seven weeks, buying 522 million rupees worth of government securities in the week ended Oct. 2.
The foreign outflows, which are one of the major reasons behind the rupee’s recent weakness, may not abate until after a parliamentary election in 2020, some
The Central Bank does not release foreign trade numbers on a daily basis, but weekly data in the past five weeks through Sept. 25 has shown a steady outflow. Sri Lanka has seen a net foreign outflow of Rs.54.8 billion through Oct. 2, according to Central Bank data.