ECONOMYNEXT – Sri Lanka stocks closed weaker on Monday (20) for the fifth consecutive session on weak sentiments as the country is going through its worst economic crisis as a dollar shortage wiped out the country’s fuel supply resulting in a standstill, dealers said.

The main All Share Price Index (ASPI) closed 0.6% or 47.83 points lower at 7,424.56, its lowest close since April 27.

The index plunged over 1.5 percent during the day, but recovered in the latter part of the trading.

“It was a volatile market and the trading opened with the usual negative sentiments, but recovered on the news of IMF discussions in Colombo,” a top market analyst said.

“Otherwise there was nothing much in the market today.”

An 10-member IMF team arrived in Sri Lanka and began discussions on policy corrections with Prime Minister Ranil Wickremesinghe.

However, Sri Lanka must show progress on debt restructuring before IMF lends any money.

Market analysts have said investors were heavily feeling the pinch of economic crisis as the country’s fuel bunkers have dried out with the the island nation was frantically looking for dollars to purchase fuel.

The public sector and the schools have moved to online for two weeks on government’s advice to reduce transport and save fuel.

Though a new prime minister and a new cabinet have been appointed, analysts see little progress on both the economical and political fronts. The country is struggling to ensure a continuous supply of fuel due to a shortage of US dollars.

The more liquid S&P SL20 index fell 0.16% or 3.73 points to 2,364.92

The day’s turnover was 822 million rupees, less than a quarter of  this year’s daily average of 3.6 billion rupees.

Foreign investors sold a net of 39.9 million rupees worth of shares on Monday. The market has witnessed a total foreign outflow of more than 1 billion rupees so far this year.

The market has so far lost 8.3% in June after gaining 6% in May. It lost 23% in April followed by 14.5% fall in March.

The market has lost 39.3% so far this year after being one of the world’s best stock markets with an 80% return last year when large volumes of money were printed.

Sri Lanka’s sovereign debt default has already led the country to be rated with restricted/selective default rating by rating agencies, which has weighed on investor sentiment.

Investors are also concerned over the steep fall of the rupee from 203 to 370 levels so far in 2022.

All Share Price Index was mainly dragged down by John Keells Holdings, which lost 0.8% to 120.00 rupees a share.

Dipped Products fell 5.4% to 26.30 rupees a share, while Central Finance slipped 4.3% to 55.80 rupees a share. (Colombo/June20/2022)