Some traders buying stocks in anticipation of Parliament dissolution
Despite the country being gripped by a constitutional face-off Colombo’s share investors propped the market up marginally for most of the week but it ended mixed on Friday amidst attractive valuations and certain traders’ hope of the court holding with the dissolution of Parliament decision, analysts said.
For more than a month the market has been gripped by the impasse between President Maithripala Sirisena and his sacked Prime Minister Ranil Wickremesinghe, who refuses to step down. Among several petitions in court, hearings are underway in a petition challenging Mr. Sirisena’s directive to dissolve Parliament and Mahinda Rajapaksa’s refusal to step down as the stop-gap Prime Minister despite losing two no-confidence motions last month.
“The market was lifted when the regime change happened in late October when Mr. Rajapaksa became the Prime Minister. This is mainly because they see him as being ‘good’ for the market. We can see that now too, with the stalemate some traders are expecting dissolution of Parliament when the Supreme Court makes its decision,” one analyst noted. Also there are some good valuations currently and many high networth investors are bagging good stocks, another analyst noted.
On the back of this standoff, Fitch Ratings recently said it had downgraded Sri Lanka’s long-term foreign-currency issuer default rating to B from B+. The move reflected “heightened external refinancing risks, an uncertain policy outlook, and the risk of a slowdown in fiscal consolidation as a result of an ongoing political crisis”, Fitch said.
On Friday, the All Share Price Index increased by 0.61 per cent to close at 6,063.72 whilst the more liquid S&P SL 20 Index declined 0.03 per cent to close at 3,193.99. The total turnover was Rs. 611.6 million. Top traded counters were John Keells Holdings, Janashakthi Insurance and Access Engineering on Friday and most of the week. Net foreign outflow is Rs. 18.8 billion so far for the year 2018.