Tuesday Markets: Bourse Suffers NFOs 8th Day

By Paneetha Ameresekere | Published: 2:00 AM Nov 24 2021

By Paneetha Ameresekere

The bourse suffered net foreign outflows (NFOs) for the eighth consecutive market day to yesterday due to sustained uncertainty with a figure of Rs 155.99 million, thereby increasing NFOs in the calendar year to Rs 48.48 billion. In the 212 market days that have transpired in the calendar year to yesterday, the bourse has suffered NFOs in 183 (86.32 per cent) of those days.

Nonetheless, the ‘common or garden’ ASPI made a pyrrhic gain for the second consecutive market day to yesterday, this time by 1.03 per cent to 10,928.60 points and the so called ‘more sensitive’ S&P SL 20 Index by 1.34 per cent to 3,747.53 points on a Rs 6.62 billion turnover on a share volume of 216.22 million on Monday. 

Capital Alliance Ltd (CALT) will list its equity shares on the Colombo Stock Exchange (CSE) via an Initial Public Offering today, the Company said.  

CALT offers 41,177,236 ordinary shares for a 12.5 per cent stake to the public, priced at Rs 10 per share. 

The proceeds raised via the IPO will be utilised to strengthen the Company’s core capital. CALT is one of the five non-bank primary dealers in the country. It also give advise on equities investments.

Money market was short for the 52nd  consecutive market day to yesterday , thereby causing persistent rate pressure, with market shortfall increasing for the 7th  consecutive market day, this time by 7.02 per cent (Rs 20,226 million) to Rs 308,182 million. 

Money market liquidity during yesterday’s trading decreased for the fourth consecutive market day, this time by Rs 43,504 million (US$ 215.16 million) due to the possible settlement/s Central Bank of Sri Lanka  (CBSL’s) sales of US dollars from the country’s foreign reserves at  Friday’s administered, albeit discounted price of Rs 202.19 to the US dollar to the market for the import of so called essential items such as petroleum and LP Gas and/or Government of Sri Lanka’s (GoSL’s) foreign debt servicing commitments and/or CBSL’s dollar sales and/or swaps to/with GoSL and/or CBSL’s swaps with the market. 

MP Rs 1.82 Trillion

GoSL’s non-demand pull inflationary face value money printing (FVMP) debt increased for the second consecutive market day to yesterday, this time by Rs 23,278 million and its FVMP debt as a whole by 1.30 per cent to a record  Rs 1,815,460.43 million (Rs 1.8155 trillion) yesterday.  GoSL’s FVMP debt has been over Rs one trillion for a record consecutive 84 market days to yesterday due to a lack of revenue.

 GoSL’s at least theoretical MP borrowing costs decreased by 1.22 per cent (Rs 608.14 million) to Rs 49,127.03 million due to market preference to invest in riskless, low returns Treasury T-Bonds and T-Bills in secondary market trading on Monday, rather than invest in the lucrative private sector, the engine of growth, due to uncertainty.

CBSL’s open market operations (OMO) data don’t capture transactions between CBSL and other central banks, Asian Clearing Union and the IMF. Transactions between GoSL and CBSL are foreign reserves neutral.  CBSL is not transparent in its OMO data. 

Dead 139 days 

The interbank foreign exchange (FX) market was ‘dead’ for the 139th consecutive market day to yesterday (Tuesday) with no outright transactions taking place, coupled with all trades in the FX market, including bank-client trades too, since midnight 6 September, mandated to be executed under a controlled exchange rate (ER) regime of between Rs 202-203 to the dollar, aiding in the spawning of a black market. Non-commercial consumer credit card trades such as for education and health may be executed at a premium of five per cent over the administered ER of Rs 203 to the dollar, leading to such trades being executed at the Rs 213-214 levels to the dollar.

Commercial trades with  approvals, which may involve the passing of speed money have to be executed at the administered and discounted price of Rs 203 to the dollar, after, apparently dipping into the country’s Spartan foreign reserves, to meet such commitments.

By Paneetha Ameresekere | Published: 2:00 AM Nov 24 2021

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