ECONOMYNEXT – Sri Lanka stocks slipped on Thursday (30), ending the month in red as negative sentiments in the market continued while sharp increase the yields of T-bills at the weekly auction also weighed on the appetite, brokers said.

An IMF statement after a series of discussions with the government authorities did not impress investors.

The main All Share Price Index (ASPI) closed 0.32% or 23.59 points lower at 7,342.33.

“The market activity was extremely low and there was a lot of gloomy sentiments. There’s a lot of selling pressure, but there are no takers,” a market analyst said.

“Investors don’t know what to do.”

On the previous day, the market moved up on the hope of a positive IMF outcome.

On Thursday, IMF said Sri Lanka has made significant progress towards developing a policy package to stabilize the country, however public debt is still assessed to be unsustainable. The global lender also estimated to have a sharp contraction in the 2022 economic growth.

Investors are also negative after yields in T-bills rose between 180-312 basis points at a weekly auction on Wednesday.

Government on Monday has declared that it can only provide fuel for essential services including health until July 10 and all non-essential services to work online as the country has run out of fuel, while Power and Energy Minister on Sunday asked the public to use fuel sparingly as there was no fuel shipment scheduled to arrive into Colombo in the foreseeable future.

The Minister said that Sri Lanka’s oil suppliers are wary to supply after the recent downgrades.

The turnover was 785.4 million rupees, less than a quarter of of this year’s daily average turnover of 3.42 billion rupees.

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.

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 down 0.68% or 15.92  points to 2,324.36.

The market in the month of June has lost 9.3% after gaining 6% in May. It lost 23% in April followed by a 14.5% fall in March.

The market has lost 39.9% 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.

The fall was led by Melstacorp, which slipped 4% to 35.6 rupees a share.

Expolanka fell down 1.4% to 172.7 rupees a share, while LOLC fell 1.5% to 392.2 rupees a share. (Colombo/June30/2022)