ECONOMYNEXT – Sri Lanka stocks gained for an eighth consecutive session on Monday (08), pushed up by Lanka IOC as the country allowed the energy firm to open 50-filling stations across the island in a move to avoid a future fuel crisis.
The main All Share Price Index (ASPI) rose 1.08% or 89.6 points to 8,422.97, its highest since May 23. It has risen 10.4% in the last eight sessions.
“With the government giving approval for Lanka IOC to open 50 sheds in the country, it pushed the market. However, there were selling in most of the main counters due to fears of unprecedented tax increases in interim budget on Tuesday,” a top market analyst said.
“Those taxes will have an impact on the overall corporate performances but at the most few investors are pushing index heavy counters up.”
The government will present an interim budget on Tuesday, revising the budget presented last year as the country is going through an unprecedented economic crisis.
President Ranil Wickremesinghe in the Parliament on August 3 revealed the plans on a 4-year IMF loan programme, debt restructuring, fiscal reforms, and dealing with loss-making state-owned enterprises.
On Friday, he said Sri Lanka will have to deal with the IMF as the country is expected to bring in heavy taxes and other revenue methods to show IMF.
The turnover was 3.33 billion rupees, more than this year’s average daily turnover of 3.05 billion rupees.
Sri Lanka has already declared sovereign debt default on April 12 this year and failed to pay its first sovereign debt in May amid a deepening economic crisis which later turned into a political crisis and led to the change in the president, cabinet, and government.
The more liquid S&P SL20 index moved up, closing at 2.42% or 66.01 points stronger at 2,794.15.
Sri Lanka is facing its worst fuel and economic crisis in its post-independent era and the economy is expected to contract 7% this year.
The main ASPI gained 8.9 percent in August so far after gaining 5.3% in July. It lost 9.3% in June, 23% in April, and 14.5% in March.
The market has lost 31.1% so far this year after being one of the world’s best stock markets with an 80% return last year when large volumes of money were printed.
Sri Lanka’s sovereign debt default on April 12 has already led the country to be rated with restricted/selective default rating by rating agencies, which has weighed on investor sentiment.
Net foreign outflow was 62 million rupees on Monday while the total net foreign outflow so far this year is 921 million rupees.
Investors are also concerned over the steep fall of the rupee from 203 to 370 levels so far in 2022.
LOLC Holdings which pushed the ASPI, closed 15% up at 583.5 rupees a share, and Lanka IOC closed 16.2% up at
131.3 rupees a share, while Chevron Lubricants gained 16.6% to 94.7 rupees. (Colombo/Aug 08/2022)