CSE recovers from 15-month closing low on bargain hunting

Reuters: Shares closed firmer yesterday, recovering from four consecutive sessions of decline to a near 15-month closing low, as investors picked up battered stocks.

However, foreign investors continued to offload the island nation’s risky assets, limiting the gains.

The Colombo stock index ended 0.21% higher at 6,194.63, but posted a fall of 0.5% for the week in its sixth straight weekly drop. For the month, it shed 3.2%, the biggest since August 2017.

“Buyers were chipping in where they saw values,” said Softlogic Stockbrokers Deputy Chief Executive Hussain Gani. “If this buying momentum can be backed up, market will recover faster.”

Foreign investors net sold equities worth Rs. 151.7 million ($ 958,912.77), extending the year-to-date foreign outflows to Rs. 1.3 billion this year.

Turnover was Rs. 946.9 million, more than this year’s daily average of Rs. 935 million.

Shares of Distilleries Company of Sri Lanka PLC rose 2.5%, Cargills (Ceylon) PLC ended 4.4% firmer and Ceylon Tobacco Company PLC climbed 0.2%.

Finance Minister Mangala Samaraweera said last week the economy was likely to grow about 4.5% this year, below a Central Bank estimate of 5%.

The International Monetary Fund (IMF) said on 20 June Sri Lanka’s economy remained vulnerable to adverse shocks because of sizable public debt and large refinancing needs.

Ratings agency Moody’s said on Wednesday a strengthening dollar since mid-April has increased the credit risk of several emerging markets, including Sri Lanka, due to currency depreciation.

Moody’s said a strong dollar would also lead to a drop in foreign exchange reserves of countries such as Argentina, Ghana, Mongolia, Pakistan, Sri Lanka, Turkey and Zambia.