Tuesday Markets: Market Capitalisation passes record Rs 5T

By Paneetha Ameresekere | Published: 2:00 AM Dec 1 2021

By Paneetha Ameresekere

Market capitalisation in the bourse passed the pyrrhic Rs five trillion mark yesterday in the midst of continuous net foreign outflows (NFOs) due to sustained uncertainty. Nonetheless, market capitalisation increased to Rs 5.11 trillion, while the bourse made gains for the fourth consecutive market day to yesterday, with the common or garden ASPI increasing by 2.13 per cent to 11,440.53 points and the so called sensitive S&P SL 20 Index by 1.21 per cent to 3,875.96 points on a Rs 10.05 billion turnover and on a 350.24 million share volume. 

However, NFOs passed Rs 50 billion for a calendar year in only the second time in its 125 year old history, when the bourse suffered a Rs 414.26 million (US$ 2.05 million) NFO at yesterday’s trading. Consequently, NFOs in the calendar year to yesterday increased to Rs 50.22 billion. The only other time that NFOs passed Rs 50 billion was last year, where it registered a record high NFO figure of Rs 51.04 billion due to similar uncertainty.

 Further, yesterday was the 13th consecutive market day that the bourse suffered NFOs, which is the third highest number of days that the bourse has suffered NFOs in the calendar year to date. 

Also, yesterday was the 188th market day the bourse has suffered NFOs, equalling the record highest number of NFOs that it has suffered in its 125 year history which was last year. In the 217 market days that have transpired in the calendar year to yesterday, the bourse has suffered NFOs in 86.64 per cent of those days, which is also the second highest ever NFOs the bourse has suffered NFOs in percentage terms, with the highest being last year where it suffered NFOs in 90.82 per cent of the market days (207) that transpired that year. Yesterday’s NFOs which are equivalent to $ 2.05 million will be met from the country’s Spartan foreign reserves at the administered, albeit discounted ‘spot’ price which was Rs 202.05 to the US dollar yesterday.

 FVMP Debt Rs 1.83 Trillion 

Government of Sri Lanka’s (GoSL’s) face value money printing (FVMP) debt, albeit non inflationary, increased by Rs 47,726 million (2.67 per cent) to Rs 1,834,887.88 million (Rs 1.8349 trillion) yesterday. GoSL’s FVMP debt has been over Rs one trillion for a record consecutive 89 market days to yesterday due to a lack of revenue. GoSL’s at least theoretical MP borrowing costs sharply decreased for the third consecutive market day to yesterday, this time by 0.97 per cent (Rs 452.15 million) to Rs 46,305.16 million due to market preference to invest in riskless, low returns Treasury (T) Bonds and T Bills in secondary market trading, rather than lend to the private sector, the engine of growth, due to uncertainty. Money market was short for the 57th consecutive market day to yesterday, thereby causing persistent rate pressure, with market shortfall increasing by 15.03 per cent (Rs 39, 496 million) to Rs 302,303million. 

Money market liquidity during yesterday’s trading decreased by Rs 87,220 million (US$ 433.49 million) due to the possible settlement/s of GoSL’s foreign debt servicing commitments and/or due to the depreciation of the country’s foreign reserves for the purchase of so called essential imported items such as petroleum at the discounted, albeit ‘spot’ price of Rs 201.21 to the US dollar at Friday and/or Central Bank of Sri Lanka’s (CBSL’s) dollar transactions with the GoSL and/or CBSL’s swaps with the market. 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 144 days 

The interbank foreign exchange (FX) market was ‘dead’ for the 144th consecutive market day to yesterday 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.

By Paneetha Ameresekere | Published: 2:00 AM Dec 1 2021

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