Vallibel One, Expolanka, John Keells Holdings shares fall
COLOMBO: Sri Lanka‘s shares slipped, as investors adopt a wait and see approach followed by a stagnant market as investors pry for clarity on local debt restructuring and optimization, an analyst said.
“The market is not condensed with high volumes and is stagnant on a wait and see approach with regard to firmer news on debt restructuring and optimization,” an analyst said.
The main All Share Price Index (ASPI) was down 0.25 percent or 22.37 points to 8,892.37, while the most liquid index, S&P SL20, was down 0.64 percent or 16.76 points to 2,587.71.
So far the Central Bank Governor Nandalal Weerasinghe has said, Sri Lanka’s public bank deposits and stability of the banking system will be safeguarded in any reorganization of domestic debt.
“There is speculation about the stability of public deposits and banking system stability,” Gov. Weerasinghe told a public forum.
“In any kind of debt optimization, we will ensure and safeguard banking system stability as well as the protection of public deposits.”
A key objective of the central bank is maintaining financial sector stability, he said.
“Investors are likely to invest after the Central Bank provides firmer assurances,” an analyst said.
Sri Lanka’s banks said assurances has been received that the stability of the sector cannot be risked in a planned domestic debt overhaul, to make the defaulted debt sustainable under a program with the International Monetary Fund.
Analysts say that the market is adopting a wait and see approach as the assurances provided on debt optimization were given by an Association rather than from a legitimate entity.
“Until firm assurances are granted we may see slow trading activity,” an analyst said.
“Central Bank of Sri Lanka (CBSL) has assured the banks that the regulatory stance in the on-going Domestic Debt Optimization (DDO) discussions with the diverse stakeholders will be that, the banking sector stability cannot be put at risk,” Sri Lanka Bank’s Association said in a statement.
“The trend should pick up in the days to come,” an analyst said.
Sri Lanka is confident of meeting its debt restructuring objectives and no longer intends to borrow for infrastructure projects that don’t promise returns, Foreign Minister Ali Sabry said, adding that the country has learnt its lesson.
The market generated a revenue of 425 million rupees, below the daily average of 1.4 billion rupees.
Majority of the turnover was made from the energy sector bringing in 169 million rupees.
The market turnover generation indicates that there is no panic selling present in the market, an analyst said.
Sri Lanka’s banks have sought clarity on a proposed domestic debt restructure, questioning whether there is a non-voluntary element in the plan, and have also called for transparent discussions with all banks.
Sri Lanka’s Central Bank and Treasury officials have said that there will be voluntary debt ‘optimization’ for domestic debt holders.
Top losers were Vallibel One, Expolanka and John Keells Holdings, on selling pressure and profit taking.
The market also generated a foreign inflow of 18 million rupees, having an outflow of 1.5 million rupees bringing the net foreign inflow to 1.7 billion rupees.