Sri Lanka stocks hover near 6-week high as trade turnover zooms; rupee falls

Reuters – Sri Lankan shares ended marginally higher on Monday, hovering near a six-week high hit last week, as trade turnover touched a more than four-month high amid continued foreign fund outflows, while the rupee ended weaker on dollar demand from importers. ** The benchmark stock index ended 0.02% firmer at 5,384.93, steadying near its highest close since May 3 hit on Thursday. The bourse rose 1.61% last week but it has fallen 11.03% this year so far. ** The central bank cut its key interest rates on May 31 to support a faltering economy as overall business and consumer confidence slumped following deadly bomb attacks in April. ** Sri Lanka is unlikely to hit its full-year economic growth target of 3-4% following the bombings, junior finance minister Eran Wickremeratne told Reuters last month. A Reuters poll has forecast growth to slump to its lowest in nearly two decades this year. ** The government’s pension fund has resumed investing in risky assets as the stock market is “extremely undervalued at the moment and is considered a good time to go in”, the central bank governor said last month at its monetary policy meet. ** Monday’s stock market turnover was 2.18 billion Sri Lankan rupees ($12.34 million), its highest since Feb 11 and more than four times this year’s daily average of about 545.6 million rupees. Last year’s daily average was 834 million rupees. ** Foreign investors sold a net 27.9 million rupees worth of shares on Monday, extending the net foreign outflow for the past six days to 416.3 million rupees. The year-to-date net foreign outflow now stands at 5.94 billion rupees. ** The rupee ended at 176.75/85 per dollar, compared with Friday’s close of 176.70/90, market sources said. ** Analysts expect the rupee to weaken further as money flows out of stocks and government securities. ** The rupee fell 0.14% last week but is up 3.31% for the year. Exporters had converted dollars as investors’ confidence stabilised after a $1 billion sovereign bond was repaid in mid-January. ** The rupee dropped 16% in 2018 and was one of the worst-performing currencies in Asia. ** Foreign investors bought a net 311 million rupees worth of government securities in the week ended June 12, but the island nation’s net foreign outflow was at 21.6 billion rupees so far this year, central bank data showed. 

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