Rs 146B Shareholder Wealth Wiped Out

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By Paneetha Ameresekere

The bourse suffered an ignominious crash at yesterday’s trading, on the eve of its London promotional tour fixed for Thursday, witnessing  Rs 146 billion worth of shareholder wealth being wiped out due to a mix of rising rates because of over 20 per cent persistent inflation coupled with nagging uncertainty.

Consequently the ASPI fell to a 147 day low, declining by 313.03 points (2.99 points) to 10,142.29 points and the S&P SL 20 Index by 133.97 points (3.68 per cent) to 3,505.15 points, a 19 day low, on a Rs 2.13 billion turnover on a 97.06 million share volume, yesterday.

The ASPI last suffered a figure lower than this on 1 November 2021 with a value of 10,132.12 points and the S&P SL 20 Index a value of 3,438.25 points on 9 March 2022, respectively.

Nonetheless, the bourse enjoyed a pyrrhic net foreign inflow of   Rs 134.61 million yesterday, though in the calendar year to date it has suffered a net foreign outflow of Rs 2.34 billion. 

In related developments, the benchmark ‘spot’ weakened by Rs 10 (3.28 per cent) to Rs 295/315 to the US dollar in two way quotes in the interbank foreign exchange (FX) market  yesterday led by persistent uncertainty.

 However, a year ago the market exchange rate in interbank FX trading fetched a stronger value of Rs 199/200 to the dollar in two way quotes in one week’s forwards, down Rs 96-110 ( 48.55 per cent) in two way quotes year-on-year to yesterday. A weak exchange rate causes cost-push inflationary pressure as Sri Lanka is an import dependent economy.

 ‘Spot’ trades are settled after two market days of transaction. The FX market a year ago was trading in one week’s forwards to find the true value of the dollar because of strictures on the shorter tenures to show reduced values of GoSL’s foreign debt in rupee terms as GoSL deals in ‘spot’, under an inflated/overvalued administered ‘spot’ regime, which was Rs 198.45 to the dollar then, compared to its depreciated value of Rs 294.98 yesterday, a YoY depreciation of Rs 101.53 (51.16 per cent).