Stocks, rupee firmer as presidential frontrunner files nomination

Tuesday, 8 October 2019 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Stocks and rupee closed firmer yesterday after presidential frontrunner Gotabaya Rajapaksa, who faced uncertainty over his candidature, filed a nomination early in the day.

Investor confidence returned after the former wartime defence chief, who is seen as a strong leader among the 35 candidates, filed nominations to contest in Sri Lanka’s presidential election scheduled for 16 November.

However, investors were cautious as they waited for policies of the political parties.

Rajapaksa faced a legal case challenging his Sri Lankan citizenship, but Sri Lanka’s Appeal Court on Friday dismissed the petition, removing a major barrier he faced in contesting the poll.

The benchmark stock index ended 0.33% firmer at 5,708.92, further moving away from its lowest level since 22 July hit on Thursday. The Bourse fell 1.42% last week. So far this year, the index has dropped 6%.

Equity market turnover was Rs. 277.5 million ($ 1.54 million), less than half of this year’s daily average of about Rs. 655.2 million. Last year’s daily average was Rs. 834.0 million.

Foreign investors were net sellers of Rs. 17 million worth of shares on Monday, extending the year-to-date net foreign outflow to Rs. 3.1 billion of equities, according to index data.

Meanwhile, the rupee ended 0.3% firmer at 180.85/95 per dollar compared with Friday’s close of 181.35/50. The currency is up 0.97% this year.

The International Monetary Fund cut its forecast for Sri Lanka’s 2019 economic growth to 2.7% from 3.5%, as the Easter Sunday attacks on hotels and churches earlier this year dented tourism and broader business activity.

Foreign investors bought government securities on a net basis for the first time in seven weeks, buying Rs. 522 million worth of government securities on week ended 2 October.

The foreign outflows, which are one of the major reasons behind the rupee’s recent weakness, may not abate until after a parliamentary election in 2020, some analysts said.

The Central Bank does not release foreign trade numbers on a daily basis, but weekly data in the past five weeks through 25 September has shown a steady outflow.

Sri Lanka has seen a net foreign outflow of Rs. 54.8 billion through 2 October, according to Central Bank data.