Shareholder wealth wipe-out increases to Rs 20B

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Shareholder wealth wiped out in the two consecutive market days to yesterday more than doubled to Rs 19.55 billion, with the bourse falling for the second consecutive market day, sustained by uncertainty and complemented by an over 30 per cent inflation, with the appointment of UNP leader Ranil Wickremesinghe as the island’s 39th Finance Minister did little or nothing to assuage the fears of the bourse. A high inflationary regime favours the fixed income market over the bourse for better returns.

Consequently the ASPI fell for the second consecutive market day to yesterday, this time by 0.28 per cent to 8,370.16; equivalent to a 12 day low. A figure lower than this last took place on 13 May with a number of 8,098.41 points, data showed. Subsequently the S&P SL 20 Index too decreased, declining by 1.29 per cent to 2,780.03 points at yesterday’s trading.

Resultantly, the bourse suffered a net foreign outflow (NFO) of Rs 11.60 million yesterday, increasing NFOs in the calendar year to date to Rs 1.40 billion.  Turnover made yesterday was Rs 1.66 billion on a 72.15 million share volume.

Meanwhile, the Colombo Stock Exchange in a circular yesterday said that they have approved the listing of 2.76 million ordinary shares of Alpha Fire Services Ltd., by way of an introduction.

 Rupee

In related developments, the guided benchmark market “spot,” administered since last Friday (13 May) closed unchanged at Rs 360/365 to the US dollar in two way quotes for the seventh consecutive market day to yesterday, market sources “Finance Today.”

They further said that trades in the administered “spot” (Rs 360/365) were mainly restricted to “bank-client” outright trades, while the interbank foreign exchange (FX) market was however dominated by swaps, which were outside the domain of the FX market for this purpose.

YoY as at yesterday, this administered market “spot” has weakened by between 80.23-82.27 per cent (Rs 160.25-164.75), thereby causing cost push inflationary pressure as Sri Lanka is an import dependent economy.

In related developments, the administered ‘spot’ for official purposes, YoY as at yesterday has depreciated by 80.13 per cent (Rs 159.87). Yesterday, the value of this official administered ‘spot’ was fixed at Rs 359.38 to the dollar, while a year ago it was Rs 199.51. Meanwhile, the administered market ‘spot’ a year ago was Rs 199.75/200.25 to the dollar in two way quotes.

The official administered ‘spot’ is used for transactions involving only among the GoSL, Central Bank of Sri Lanka (CBSL) and the country’s foreign reserves. It’s administered to show Sri Lanka’s foreign debt in rupee terms low, while in the case of the administered market ‘spot’, to show a lower cost of living and/or inflation. ‘Spot’ trades are settled after two market days from the date of transaction. CBSL, the steward of GoSL debt and its foreign reserves deals in ‘spot’.

By Paneetha Ameresekere