Stocks end at 1-week peak in thin trade; rupee edges higher

Tuesday, 11 June 2019 00:22 - - {{hitsCtrl.values.hits}}

Reuters: Sri Lankan shares ended firmer for the second straight session on Monday in dull trade to hit a one-week closing high, while the rupee ended slightly stronger, market sources said.

The benchmark stock index ended 0.47% firmer on Monday at 5,298.18, further moving away from its lowest close since 17 May hit on Thursday. It fell 0.24% last week and declined 12.1% this year so far.

On 31 May, the Central Bank cut its key interest rates to support a faltering economy as overall business and consumer confidence slumped following deadly bomb attacks in April.

Sri Lanka is unlikely to hit its full-year economic growth target of 3-4% following the bombings, junior Finance Minister Eran Wickremeratne told Reuters last month. A Reuters poll has forecast growth to slump to its lowest in nearly two decades this year.

The Government’s pension fund has resumed investing in risky assets as the stock market is “extremely undervalued at the moment and is considered a good time to go in,” the Central Bank Governor said last month at its monetary policy meet.

Monday’s stock market turnover was Rs. 75.5 million ($ 428,247.31), its lowest since 4 January and well below this year’s daily average of about Rs. 531.1 million. Last year’s daily average was Rs. 834 million.

Foreign investors sold a net Rs. 7.2 million worth of shares, extending the year to date net foreign outflow to Rs. 5.53 billion. The rupee ended at 176.40/50 per dollar, compared with Friday’s close of 176.45/55, market sources said. Analysts expect the rupee to weaken further as money flows out of stocks and government securities. The rupee fell 0.03% last week but is up 3.51% for the year. Exporters had converted dollars as investor confidence stabilised after a $1 billion sovereign bond was repaid in mid-January.

The rupee dropped 16% in 2018 and was one of the worst-performing currencies in Asia.

Foreign investors sold a net Rs. 3.5 billion worth of government securities in the week that ended on 4 June, extending the island nation’s net foreign outflow to Rs. 21.9 billion so far this year, Central Bank data showed.