Shares rise to 12-week closing high; rupee firmer

Friday, 12 July 2019 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Sri Lankan shares rose for the third straight session on Thursday to a 12-week closing high, as investors bought diversified and telecom stocks ahead of a key policy rates announcement later in the day.

The benchmark stock index hit its highest close since 18 April on Wednesday, buoyed by the Government’s decision to launch a $2.2 billion Japan-funded Light Railway Transit (LRT) project and some other stalled infrastructure projects, brokers said.

The index ended up 0.71% at 5,561.28. It rose 2.67% last week, notching its second consecutive weekly gain. However, it is down 8.11% so far this year.

Shares in conglomerate John Keells Holdings PLC jumped 3.42%, LOLC Holdings PLC ended 5.92% firmer, Sri Lanka Telecom PLC closed up 6.33% and Dialog Axiata PLC rose 3.23%. Stock market turnover was Rs. 523 million ($2.98 million), slightly below this year’s daily average of about Rs. 542.2 million. Last year’s daily average came in at Rs. 834 million.

Foreign investors sold a net Rs. 44.8 million worth of shares on Thursday, extending the year-to-date net foreign outflow to Rs. 7.29 billion, index data showed. The Government’s launch of the central highway and light railway projects helped lift hopes that the country’s transformation would result in a faster economic growth rate, stockbrokers said.

Sri Lanka is unlikely to hit its full-year economic growth target of 3-4% following Easter Sunday bombings and a Reuters poll has forecast growth to slump to its lowest in nearly two decades this year. Meanwhile, the currency closed firmer at 175.35/45 per dollar, compared with Wednesday’s close of 175.50/60, as dollar sales by banks surpassed importer greenback demand. The rupee rose 0.17% last week, and is up 4.13% so far this year.

The rupee dropped 16% in 2018 and was one of the worst-performing currencies in Asia. The island nation raised $2 billion via 5-year and 10-year sovereign bond sales last month, tapping global capital markets for the second time in three months.

Foreign investors sold a net Rs. 3.93 billion worth of Government securities in the week ended 3 July, extending the year-to-date net foreign outflow to Rs. 22.4 billion, the Central Bank data showed. The Central Bank cut its key interest rates on 31 May to support a faltering economy as overall business and consumer confidence slumped following deadly bomb attacks in April.