Stock market surges as Govt. flags projects; rupee steady

Friday, 5 July 2019 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Sri Lankan shares ended firmer on Thursday, touching their highest intraday gain in more than eight months, a day after the Government launched a $2.2 billion Japanese-funded project, boosting investor sentiment; while the rupee ended steady.

The benchmark stock index jumped 1.8% to its highest percentage gain since 1 November 2018. The bourse ended up at 5,508.97, its highest close since 18 April.

The index rose 0.16% last week and posted its first monthly gain for the year in June. However, the bourse is down 8.98% so far this year. The launch of the Light Railway Transit (LRT) project late Wednesday lifted real-estate stocks, with Access engineering ending 4.11% higher, while Property Development PLC closing 4.79% firmer. The biggest gainers in the index were diversified and banking stocks. Shares in Distillers Company of Sri Lanka rose 10.39%, while conglomerate John Keells Holdings PLC ended 1.54% stronger.

Foreigners sold on a net basis for 18 sessions in 19, selling a net Rs. 3.5 million worth of shares on Thursday and extending the year-to-date net foreign outflows to Rs. 7.01 billion, the bourse data showed.

Stock market turnover on Thursday was Rs. 858.1 million ($4.88 million), well above this year’s daily average of about Rs. 545.9 million. Last year’s daily average was Rs. 834 million. The Government’s plan to launch central highway and light railway projects (http://www.ft.lk/top-story/Govt-flags-off-2-2-b-Light-Railway-Transit-project/26-681279; http://www.ft.lk/front-page/Cabinet-approves-cable-car-project-in-Nuwara-Eliya/44-681272) 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 steady at 176.00/25 per dollar as banks’ dollar sales offset the importer greenback demand. The rupee rose 0.17% last week, and is up 3.75% 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 week, tapping global capital markets for the second time in three months.

Foreign investors bought a net Rs. 2.26 billion worth of government securities in the week ended 26 June, but the island nation’s net foreign outflow was at Rs. 18.4 billion so far this year, 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.