Sri Lanka stx at over 5-mth high after IMF statement: market sees foreign inflow for 14th session

ECONOMYNEXT – Sri Lanka stocks rose on Friday (02) for the fourth session to end at more than a five-month high on Friday (02) with renewed buying interests after investor appetite for risky assets boosted following an IMF staff level deal was finalized a day before, brokers said.

The main All Share Price Index (ASPI) shot up 0.67% or 61.64 points to 9,316.45, its highest since March
29.

The market generated 4.2 billion rupees in turnover, higher than this year’s average daily turnover of
3.14 billion rupees.

The market saw a net foreign inflow was 525.7 million rupees on Friday. The bourse has seen a net
foreign inflow of 1.2 billion rupees so far this year after a 2.6 billion rupees of net inflow in the last 14 straight sessions.

The IMF announced that it has reached staff level agreement with Sri Lanka on Thursday (01), with
possible a 48-month 2.9 billion dollars in Extended Fund Facility (EFF) once the debt restructuring is
done.

This facility is subjects to many conditions and the agreement needs to be approved by IMF
management and the Executive Board.

Sri Lanka’s parliament passed a reform oriented interim budget for 2022.

The budget is aimed at almost doubling the tax-to-GDP ratio to 15 percent by 2025 from 8.2 percent at
the end of 2021. President Ranil Wickremesinghe, who is also the island nation’s finance minister,  raised the value added tax to 15 percent with effect from Thursday from 12 percent. The increase comes after he raised the VAT to 12 percent on May 31 from an earlier 8%.

A new monetary law was also presented in the budget reading to prevent money printing and political
interference in the Central Bank.

Sri Lanka defaulted on its foreign debt on April 12 and deepened an economic collapse into a political
crisis. Sri Lanka is facing its worst fuel and economic crisis in its post-independence era. The economy is
expected to contract more than 8 percent this year.

The more liquid S&P SL20 index ended 0.14% or 4.29 points up at 3,009.61.

The main index ASPI has gained 17.3 percent in August after gaining 5.3 percent in July. It lost 9.3
percent in June, 23 percent in April, and 14.5 percent in March.

The index has lost 24.3 percent so far this year after being one of the world’s best stock markets with an
80 percent return last year when large volumes of money were printed.

Investors are also concerned over the steep fall of the rupee from 203 to 370 levels so far in 2022.

LOLC Finance pushed the index up, closing 18.7 percent higher at 8.9 rupees a share.

Senkadagala Finance closed 21.9 percent up at 445.3 rupees a share and Browns Investments gained
6.5 percent to 8.2 rupees. (Colombo/Sept02/2022)



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