Fears over an impending sovereign bond rate decline steepen share market’s downward trend

By Hiran H.Senewiratne

The downward trend in the stock market steepened yesterday due to worries among local and foreign investors that Sri Lanka’s sovereign bond rates are declining considerably amid fears that a change of power after the presidential election would adversely impact economic policies, market analysts said.

Recently Bloomberg magazine hinted that in the event of a change/transfer of power in Sri Lanka, it would affect the debt settlement arrangement of the Sri Lankan government with external creditors. Amid those development stock market activities were dull. Both indices moved downwards. The All Share Price Index went down by 91.87 points while S and P SL20 declined by 22.08 points.

Turnover stood at Rs 1.2 billion with five crossings. Those crossings were reported in JKH, which crossed 1.9 million shares to the tune of Rs 316 million; its shares traded at Rs 160, Richard Pieris 3.4 million shares crossed for Rs 69.7 million; its shares traded at Rs 20.50, Alliance 454,000 shares crossed to the tune of Rs 45.5 million; its shares sold at Rs 100, HNB 160,000 shares crossed for Rs 24.8 million; its shares traded at Rs 155 and Cable Solutions 3 million shares crossed for Rs 21 million; its shares fetched Rs 7.

In the retail market companies that mainly contributed to the turnover were; HNB Rs 193 million (1.2 million shares traded), JKH Rs 91.8 million (569,000 shares traded), Commercial Bank Rs 55.7 million (693,000 shares traded), Chevron Lubricants Rs 36 million (313,000 shares traded), Grain Elevators Rs 31.5 million (203,000 shares traded), Lanka IOC Rs 29.4 million (292,000 shares traded), and LOLC Holdings Rs 19 million (54000 shares traded). During the day 31.4 million share volumes changed hands in 9600 transactions.

Yesterday, JKH was the main contributor to the turnover with its crossing and retail trading. Banking and financial sectors firms, especially HNB, moved well despite the down market condition.

Yesterday the rupee opened slightly stronger at Rs 300.75/301.00 to the US dollar, dealers said. Bond yields were significantly up, they said, and stocks opened up 0.13 percent. The rupee closed at Rs 301.50/302.00 against the greenback on the previous day.

In the secondary market, trading was subdued ahead of the bond auction scheduled for Thursday. A bond maturing on 15.12.2026 was quoted at 11.35/50 percent, up from 11.30/55 percent. A bond maturing on 01.07.2028 was quoted at 13.00/25 percent, up from 12.90/13.20 percent.