Sri Lanka market gain on speculation over business tycoon becoming MP, handling economy

ECONOMYNEXT – Sri Lanka stocks gained 1.4 percent on Thursday (09) on speculation that top corporate leader Dhammika Perera who is a chairman and director in a number of listed companies filling the national list seat after the resignation of former finance minister Basil Rajapaksa, brokers said.

The All Share Price Index (ASPI) closed 108.44 points firmer at 7,881.13.

“The market solely moved on the news of Dhammika Perera’s possible entry to the market. Otherwise, it was fairly moderate,” a top market analyst said.

Former finance minister Basil Rajapaksa, the brother of President Gotabaya Rajapaksa, resigned on Thursday, a month after his elder brother Mahinda Rajapaksa resigned from the prime minister post.

The ruling Sri Lanka Podujana Peremuna (SLPP) sources said Dhammika Perera has agreed to become a lawmaker and contribute towards coming out of the current economic crisis. Perera was not immediately available for comment.

The turnover, however, dropped to almost a month’s low generating only 917 million rupees, less than a quarter of this year’s average 3.7 billion rupees.

The more liquid S&P SL20 index was up 1.53 percent or 38.65 points to 2,567.74.

Analysts have said although the market gained, it was still under a lot of selling pressure as a marginal call up to 80 percent was stabilizing.

Most investors have been on the sidelines following Prime Minister Ranil Wickremesinghe’s comments on Tuesday about the next three weeks going to be tough for Sri Lanka with fuel and cooking gas shortages at a “very difficult” low, with the government not ruling out the possibility of a ration system.

Foreign investors bought a net 2.5 million rupees’ worth of shares on Thursday. The market has witnessed a total foreign outflow of 959 billion rupees so far this year.

The market has so far lost 2.7 percent in June after gaining 6 percent in May. It lost 23 percent in April and 14.5 percent in March.

The market has lost 35.5 percent so far this year after being one of the world’s best stock markets with an 80 percent return last year when large volumes of money were printed.

Sri Lanka’s sovereign default has already led it to restricted/selective default rating by rating agencies and weighed on investor sentiment.

Investors are also concerned over the steep fall of the rupee from 200 to 370 levels so far in 2022.

All Share Price Index was mainly pushed up by Royal Ceramics Lanka, which gained 10.5 percent to 29.50 rupees a share.

All the counters are companies in which Dhammika Perera owned significant stake.

Vallibel One rose 20 percent to 34.10 rupees a share, while Hayleys ended up 6.6 percent to 69.10 rupees a share. (Colombo/June 09/2022)