Stocks, rupee gain; polls awaited

Saturday, 9 November 2019 02:52 - - {{hitsCtrl.values.hits}}

Reuters: Shares edged higher on Friday, snapping a four-day losing streak, as investors picked up banking and beverage shares ahead of the presidential vote on 16 November.

The country’s main Tamil party on Thursday announced their support for Sajith Premadasa, the Housing Minister and one of the two presidential front-runners, giving him an edge over his rival Gotabaya Rajapaksa.

There are growing concerns over giveaways promised by the two top presidential candidates after officials and a credit rating agency warned that their pledges could push the country deeper into debt.

The International Monetary Fund (IMF) approved the release of the sixth tranche of a $ 1.5 billion loan program for Sri Lanka, but asked the authorities to show fiscal discipline.

Sajith Premadasa has promised free housing for all, free school uniforms and meals for students, and free fertiliser for farmers among other things.

Gotabaya Rajapaksa has vowed to cut in half a value added tax of 15% and abolish some taxes as a way to reignite consumption.

The benchmark stock index ended 0.38% firmer at 5,954.62, although it rounded off the week with a 1.3% drop, ending a four-week run of gains. The index is down 1.62% for the year.

Political analysts say the leading candidates are locked in a tough fight, although Sajith Premadasa has been gaining at grass-root level due to his poverty elimination policies and support from minorities.

Beverage and banking stocks were among the top gainers, with Ceylon Tobacco Company PLC rising 3.7%, Commercial Bank of Ceylon PLC 1.7%, conglomerate John Keells Holdings PLC 0.33% and Sampath Bank PLC 1.1%.

The rupee ended 0.11% firmer at 180.50/65 per dollar, compared with Thursday’s close of 180.70/181.00. The currency is up 1.2% so far this year.

Foreign investors were net sellers of riskier assets in 12 out of 13 sessions on Friday. They sold a net Rs. 11.4 million ($63,157.89) worth of shares on Friday, extending the net foreign outflow from the equities market to Rs. 5.79 billion for the year, according to index data.

Equity market turnover was Rs. 722.6 million, more than this year’s daily average of about Rs. 680.7 million. Last year’s daily average was Rs. 834 million.

Meanwhile, foreign investors bought government securities on a net basis for the third time in five weeks, buying a net Rs. 1.88 billion worth of government securities in the week ended 6 November.

Total foreign outflows from government securities through 6 November stood at Rs. 50.2 billion, Central Bank data said.

The Central Bank left its key rates unchanged on 11 October after loosening its monetary policy this year. However, growth is likely to remain subdued in the face of rising global risks.