(Colombo) REUTERS: Sri Lankan shares ended largely unchanged yesterday, hovering near a more than one-year high hit earlier this week, while the rupee ended weaker as investors awaited policies from the newly elected government.
Mahinda Rajapaksa took oath as Prime Minister earlier in the day, cementing his powerful family’s political comeback, after former wartime defence chief Gotabaya Rajapaksa and his brother assumed office as the seventh president of the island nation on Tuesday.
The President is expected to appoint a 15-member interim cabinet today, to run the government until next parliamentary polls, his party sources said.
Fitch Ratings in a note yesterday said “Sri Lanka’s presidential election significantly increases policy uncertainty” and achieving ambitious growth targets, as the new leader has spelt, could entail stimulus measures that erode fiscal headroom.
However, the Central Bank said Fitch’s statement depicted the complete opposite of the realised positive market response to the outcome of the presidential election.
The benchmark stock index ended little changed at 6,138.33, but close to its highest close since Aug. 9, 2018 hit on Tuesday. The bourse rose 1.53 percent last week, and it is up 1.42 percent for the year.
“The sentiment change will serve as the initial trigger to drum up economic growth from bottom-up. Also, another positive which we expect is cohesive policy implementation, which was not present during the last four years,” said Danushka Samarasinghe, chief executive officer at
Softlogic Capital Markets.
The rupee ended 0.33 percent weaker at 179.60/75 per dollar, edging down from its highest since Aug. 21 hit on Wednesday. It closed at 179.20/40 on Wednesday and is up 1.67
percent so far this year.
Foreign investors were net sellers of riskier assets for the 11straight session yesterday.
They sold a net Rs.295 million (US$1.64 million) worth of shares yesterday, extending the net foreign outflow from the equities market to Rs.9.2 billion for the year, according to index data.
Equity market turnover was Rs.1.3 billion, well above this year’s daily average of about Rs.708.5 million. Last year’s daily average was Rs.834 million.
Meanwhile, foreign investors bought government securities on a net basis for the fourth time in six weeks, buying a net Rs.2.2 billion worth of government securities in the week ended Nov. 13.
Total foreign outflows from government securities through Nov. 13 stood at Rs.48 billion, Central Bank data said.