The stock market wracked by sustained uncertainty, fell for seven consecutive market days to yesterday, last seen two years ago, when the Covid-19 Pandemic wreaked havoc on the economy, shrinking it by a record 3.6 per cent in 2020. Consequently, shareholder wealth wiped out in the review seven day period to yesterday, increased to Rs 145.74 billion.
Asia Securities in a report yesterday said negative impacts on the bourse consequent to Tuesday’s announcement of tax increases were the upping of corporate income tax, withholding tax on dividends and telecoms levies, respectively.
Consequently the ASPI sank to a 20 day low yesterday, declining by 0.54 per cent, yesterday over Tuesday to 8,064.69 points and the S&P SL 20 Index by 0.89 per cent to 2,655.38 points. In the seven market days to yesterday the ASPI has declined by 409.80 points (4.84 per cent) and the S&P SL 20 Index by 189.59 points (6.66 per cent). Prior to yesterday’s ASPI figure, a value lower than this was last recorded on 12 May 2022 with a number of 7,754.62 points.
Turnover made yesterday was Rs 1.21 billion on a share volume of 772.71 million. Nonetheless the stock market enjoyed pyrrhic net foreign inflows (NFIs) for the third consecutive market day to yesterday, with yesterday’s figure being Rs 20.33 million. Nonetheless, the stock market suffered a net foreign outflow of Rs 1.31 billion in the calendar year to yesterday.
The guided benchmark market ‘spot’, administered since 13 May closed unchanged at Rs 360/365 to the US dollar in two way quotes for the twelfth consecutive market day to yesterday (1 June), market sources told ‘Finance Today’.
The band in which the “guided market ‘spot’” may operate is +/- three per cent of the administered ‘spot’ value for transactions involving the Government of Sri Lanka (GoSL), Central Bank of Sri Lanka (CBSL) and /or between the GoSL and/or CBSL with the market, which was Rs 360.11 to the US dollar yesterday.
They further said trades in the administered market ‘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, such as trades involving CBSL, GoSL and/or CBSL, GoSL and the market, YoY to yesterday has depreciated by 80.27 per cent (Rs 160.35). Yesterday, the value of this official administered ‘spot’ was fixed at Rs 360.11 to the dollar, while a year ago it was Rs 199.76. 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, 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