Sri Lankan stocks slide further; net foreign outflow continues as CB keeps policy rates steady

Sri Lanka, Oct 02 (Insights Equity) – The Colombo Stock Exchange (CSE) extended losses for the fourth straight session today despite the country’s Central Bank, in a surprise move, kept its key policy rates unchanged while net foreign outflow continued for the tenth consecutive session.

ASPI down 0.2 percent as unchanged rates fail to impress investors: The broad market All Share Price Index (ASPI) edged down 9.80 points, 0.17 percent weaker than yesterday to stand at 5,807.74 points, amid unchanged key policy rates by the country’s banking regulator, keeping Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) at 7.25 percent and 8.50 percent respectively.

Meanwhile, more liquid S&P SL20 index dropped 7.03 points, 0.24 percent lower than the previous session to reach 2,963.03 points at the close of the session.

Though a rate hike was widely expected in the wake of third rate hike for the year by the US Federal Reserve last week, the unchanged rates reflect the concerns over the country’s economic growth which is expected to slow down to sub 4 percent in 2018 according to IMF.

The growth slumped to 3.3 percent last year, a 16-year low, amid unfavourable weather conditions and tight fiscal and monetary policies.

Turnover improves amid off-board trades: The day’s turnover more than doubled from yesterday to reach LKR395.2 mn (USD2.3 mn), nearly half of the year-to-date average daily turnover of LKR782.1 mn (USD4.6 mn).

Number of shares transacted stood at 20.1 mn, compared to 8.6 mn of yesterday as the market witnessed a single crossing accounting for 34 percent of the day’s turnover.

Net foreign outflow jumps nearly three times: With unchanged policy rates failing to reverse the ongoing sell-off by overseas investors, net foreign selling, at LKR133.7 mn (USD0.8 mn) today, continued for the tenth consecutive session, expanding the year-to-date net foreign outflow to LKR6.3 bn (USD37.5 mn).

Commercial Bank leads the turnover generation driven by foreign selling: With the crossing of 1.2 mn shares transacted at LKR111.0 per share, Commercial Bank spearheaded the daily turnover generation with a 40 percent of contribution as the stock slumped 0.4 percent driven by foreign selling.

Meanwhile, the banks, finance and insurance sector led the sector-wise contribution to the turnover with 52 percent followed by diversified holdings which made up 31 percent.

Furthermore, Nation Lanka Finance and Asia Asset Finance were two of the highest gainers in the market today while Sierra Cables and Teejay Lanka were amongst the most actively traded counters during the day.

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