BRS Market Report April 2022
- April 30, 2022
- Posted by: bartleet
- Categories: Capital Markets, Share Market
Market Performance
Colombo Bourse ends a volatile month in red
Despite the closure for two weeks during April, the bourse depicted a mixed trend throughout the month, with both indices ending in red. The ASPI lost 1,279.61 points (-14.37% MoM) to close at 7,624.26 while the S&P SL20 declined 321.69 points (-17.22% MoM) to close at 2,509.24. The volatile nature observed in the market arose mainly due to the weak investor sentiment triggered by the growing economic uncertainty in the country. UAL (87.57%) and LOFC (52.11%) appeared as the biggest losers of the month.
Negative investor sentiment kept the market subdued
The market posted a turnover of LKR 17.7bn, averaging a daily turnover (11 trading days) of LKR 1.6bn recording a decline from LKR 2.5bn in March 2022. Local investor participation continued to remain strong (~94% of total turnover) during the month. EXPO was the top contributor to turnover (~39%) while BIL and LOLC followed suit in terms of turnover contributing ~8% and ~6% respectively. BIL emerged as the top contributor in terms of volumes (~26%) followed by SEMB (X) (~12%) and LOFC (~9%). The Bourse recorded a cumulative market turnover of LKR 377.5bn for the first four months in 2022.
Macro News
CBSL announced unprecedented rate hikes for Standard Deposit Facility Rate (SDFR) & Standard Lending Facility Rate (SLFR) by 700 basis points each, to 13.5% and 14.5% respec- tively. The decision was taken by the Monetary Board of the Central Bank of Sri Lanka after observing the build-up of aggregate demand, domestic supply disruptions, exchange rate depreciation and the elevated prices of commodities globally which will ultimately impose unbearable inflationary pressures.
The change in the Colombo Consumer Price Index (CCPI) rose from 18.7% (YoY) in March 2022 to 29.8% (YoY) in April 2022. The price increases seen in food items mainly paved the way for the escalation of inflation rate.
Fitch Ratings placed the National Long-Term Ratings of 12 Sri Lankan non-bank financial institutions (NBFIs) on Rating Watch Negative (RWN) considering the downside risks to the NBFIs’ credit profiles amid increased economic and financial-market volatility in Sri Lanka.
The World Bank agreed to provide USD 600mn in financial assistance to address the current economic crisis in Sri Lanka. The financial assistance will be provided to meet medicinal drugs and health needs, social security, agricultural and food security and gas needs.