Sri Lanka stocks end at 5-week high as Wickremesinghe voted as president

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ECONOMYNEXT – Sri Lanka stocks gained for the fourth consecutive session on Wednesday (20) to end at a five-week closing high, as the parliament voted Acting President Ranil Wickremesinghe as the island nation’s 8th executive President, brokers said.

The main All Share Price Index (ASPI) closed 0.89% or 67.96 points up at 7,712.08, its highest close since June 14.

“The market moved on the optimism there will be some stability in the medium term in the political front following the appointment of the new President,” a top market analyst said.

“However, there is still volatility in the market and I think it will be there until a cabinet is appointed as that gives some certainty to the investors on policy stability.”

He said the investor community was divided on the Presidential candidates.

Sri Lanka’s parliament on Wednesday elected Ranil Wickremesinghe, a six-time Prime Minister as the island nation’s 8th Executive President of the crisis-hit island.

The appointment came in a week after the former-President Gotabaya Rajapksa fled the country halfway into his presidential tenure, forced out by angry protesters as the country’s economic condition worsened.

Acting President Ranil Wickremesinghe, Dullas Alahapperuma and the Marxists Janatha Vimukthi Peramuna leader Anura Kumara Dissanayake were the candidates for the election.

Previously analysts said the market was hopeful for an all-party unity government which could  boost the sentiment.

The more liquid S&P SL20 index gained 0.75% or 18.36 points to close at 2,477.81.

Sri Lanka is facing its worst fuel crisis in its post-independent era and the economy is expected to contract between 8-10% this year.

Foreigners bought a net of 160,800 rupees. The total foreign outflow so far this year is 802 million rupees.

The turnover was 1.33 billion rupees, less than a half of this year’s daily average turnover of 3.1 billion rupees.

The main ASPI has gained 5.0% in July so far after falling 9.3% in June, reversing a 6% gain in May. It lost 23% in April followed by a 14.5% fall in March.

The market has lost 36.9% 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.

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

Sampath Bank, leading the ASPI’s gain, rose 2.8% to close at 33.5 rupees a share.

Hatton National Bank gained 3.0% to 83.9 rupees a share, while Hayleys closed 3.6% stronger at 73.00 rupees a share. (Colombo/July 20/2022)

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