22 May 2019 08:53 am
REUTERS: Sri Lankan shares closed higher for a third straight session yesterday, moving further away from a near seven-year closing low hit last week, as local investors bought beaten-down stocks.
Traders, however, said sectarian violence still weighed on investor sentiment. Most investors have shied away from the market since the April 21 bombings that killed more than 250 people. The International Monetary Fund (IMF) on May 14 approved the disbursal of a $164 million tranche of a loan programme, bringing the total disbursed to more than $1.16 billion.
Sri Lanka’s economy should still grow 3.5 percent this year and there has not been a revision yet, the IMF added on Thursday. Sri Lanka’s economic growth is expected to slump to its lowest in nearly two decades this year, a Reuters poll showed last week. Tourism, foreign investment and overall business activity have all dropped after the bombings.
The benchmark stock index ended 0.6 percent firmer yesterday at 5,291.28. It fell 1.28 percent last week. The markets were closed on Monday for a special holiday. Turnover was Rs.330.6 million (US$1.88 million), well below this year’s daily average of around Rs.562.6 million. Last year’s daily average was Rs.834 million.
Foreign investors sold a net Rs.43.4 million worth of shares yesterday, extending the year-to-date net foreign outflow to Rs.5.8 billion worth of equities. The rupee ended at 176.25/40 per dollar, weaker than Friday’s close of 175.90/176.10, market sources said.
Analysts expect the currency to weaken as money flows out of stocks and government securities. The rupee gained 0.1 percent this week and is up 3.9 percent for the year. Exporters had converted dollars as investor confidence stabilised after a US$1 billion sovereign bond was repaid in mid-January.
The rupee dropped 16 percent in 2018 and was one of the worst-performing currencies in Asia.
Foreign investors sold a net Rs. 433.2 million worth of government securities in the week ended May 15, extending net foreign outflow to Rs.21.2 billion so far this year, Central Bank data showed. Investor sentiment was damaged at the end of last year when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved parliament.
A court later ruled the move unconstitutional, but the political turmoil led to credit rating downgrades and an outflow of foreign funds.