Shareholder wealth wiped out increases Rs 83B

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Shareholder wealth wiped out in the two consecutive market days to yesterday increased to Rs 82.82 billion as investors continued to flee the bourse amidst uncertainty and high inflation. A high inflationary regime makes the interest rate market more attractive for investments, rather than the bourse.

Complementing these developments, market indices fell to an eight calendar day low, with market indices falling for the second consecutive market day to yesterday, where the ASPI, yesterday over the previous market day Monday declining by 1.48 per cent to 7,772.08 points and the more sensitive S&P SL 20 Index by 2.38 per cent to 2,485.21 points, respectively.

Figures lower than this was last seen on 7 June 2022, with the ASPI and S&P recording figures of 7,631.13 and 2,454.48 points, respectively. Tuesday was “Poson Poya” holiday to the market.

Subsequently, the bourse suffered net foreign outflows (NFOs) for the second consecutive market day to yesterday, with yesterday’s figure being Rs 5.76 million, thereby increasing NFOs in the calendar year to date to Rs 1.13 billion. Turnover made yesterday was Rs 1.12 billion on a 50.65 million share volume.

Administered “Spot’s” Tenure Synchronises YoY

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 twentieth consecutive market day to yesterday, synchronizing with last year’s performance, where then took the administered, coupled with an inflexible “spot” in operation then, also closed unchanged for the twentieth consecutive market day to 15 June 2021 at Rs 199.75/200.25 to the dollar in two-way quotes.

  Meanwhile, yesterday, the administered market “spot” was down by between 80.23-82.27 per cent (Rs 160.25-164.75) year-on year (YoY), thereby causing cost push inflationary pressure as Sri Lanka is an import dependent economy; market sources told Finance Today.

The band in which the “guided market ‘spot’” may currently operate is fixed at +/- three per cent of the officially administered “spot” value, where the latter is applicable 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 fixed at  Rs 359.85 to the dollar yesterday.

They further said that 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.

By Paneetha Ameresekere