ECONOMYNEXT – Sri Lanka stocks closed firmer for a fourth ]straight session on Friday, as investors expect the ongoing government discussions with the visiting 10-member International Monetary Fund (IMF) would end in a positive note to ease the current economic crisis, brokers said.

After the market closed the IMF delegation met President Gotabaya Rajapaksa to discuss about the current economic crisis, a presidential source said.

The main All Share Price Index (ASPI) closed 1.26% or 95.10 points higher at 7,651.19. It has gained 3.1% in the last four sessions.

Foreign investors, however, sold a net of 39.5 million rupees worth of shares on Friday. The market has suffered a total foreign outflow of more than 1.25 billion rupees so far this year.

“There is some hope of an IMF deal. So far nothing has happened as in the past. So investors believe that the outcome will help to stabilise the economy,”  a market analyst said.

The turnover was 1.25 billion rupees, highest since June 07, but still around a third of this year’s daily average turnover of 3.52 billion rupees.

Analyst have said there is a lot of selling pressure in the market because the investors will not see an ideal investment climate at least for the next 9-months due to high interest rates and taxes.

Th 10-member IMF team arrived in Sri Lanka on Monday and began discussions on policy corrections with Prime Minister Ranil Wickremesinghe and the talks have been seen as positive for the investor sentiment. 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 the island nation was frantically looking for dollars to purchase fuel.

The public sector and the schools have moved online for two weeks on the 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 gained 1.59% or 38.75 points to 2,470.19.

The market has so far lost 5.5 in June after gaining 6% in May. It lost 23% in April followed by a 14.5% fall in March.

The market has lost 37.4% 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.

Expolanka Holdings led the gain and ended 3.5% firmer to 192.25 rupees a share and brokers said its  rupees cash dividend announced on Wednesday still attracting more investors.

LOLC Holdings Plc gained 4.1% to 436.25 rupees a share, while Hayleys ended 5.2% to 65.20 rupees a share. (Colombo/June 24/2022)