US’ clamping of 100 percent tariffs on imports from China brings down share market

CSE activities were yesterday negative, as was the case with other major Asian markets, due to the imposition of 100 percent tariffs on Chinese imports into the US market by the US government.

Sri Lanka is expected to lose more than 100,000 jobs in the apparel sector if the US’ reciprocal 45 percent tariff is not amended in Sri Lanka’ favour. At present, a considerable amount of exports, especially apparel, tea and cinnamon go to US market, which amounts to US $ 3 billion. So far no positive response has come from the US government, following the request letter from Sri Lanka. This had negatively impacted yesterday’s market, market analysts said.

Amid those developments both indices moved downwards. The All Share Price Index went down by 251.8 points, while the S and P SL20 declined by 97.7 points.

Turnover stood at Rs 3.08 billion with five crossings. Those crossings were reported in JKH, which crossed 15 million shares to the tune of Rs 289 million and its shares traded at Rs 19.20, HNB 200,000 shares crossed to the tune of Rs 54.8 million; its shares traded at 274, Ambeon Holdings 2 million shares crossed for Rs 52 million; its shares traded at Rs 26, Commercial Bank 250,000 shares crossed for Rs 37.75 million; its shares sold at Rs 127 million and Sampath Bank 200,000 shares crossed to the tune of Rs 20.9 million; its shares sold at Rs 104.50.

In the retail market top six companies that have mainly contributed to the turnover were; JKH Rs 592 million (30.6 million shares traded), Pickme Rs 381 million (5.4 million shares traded), Commercial Bank Rs 238 million (1.7 million shares traded), HNB Rs 192 million (700,000 shares traded), Sampath Bank Rs 107 million (1 million shares traded) and CTC Rs 88.8 million (58300 shares traded). During the day 103 million shares volumes changed hands in 15816 transactions.

It is said that manufacturing sector was the main contributor to the turnover, especially JKH, while the banking sector was the second largest contributor to the turnover, mainly with HNB and Commercial Bank.

Hayleys PLC said it has purchased ordinary shares of Diesel and Motor Engineering PLC (DIMO), resulting in the conglomerate now owning a 10.83 stake in that company. CSE sources said.

Yesterday, the rupee was quoted at Rs 300.50/301.25 to the US dollar in the spot market, weaker from 299.75/300.25 on previous day dealers said, while bond yields were up.

Sri Lanka’s export earnings from the US may drop, but reduced incomes will also cut imports by the same amount unless the central bank prints money to create extra demand unrelated to dollar earnings, analysts say.

There is also excess liquidity in the money markets from last month’s inflows, which can trigger delayed demand if they are used as credit to provide loans.

Sri Lanka’s rupee usually weakens due to flaws in the operating framework of the central bank (conflicting anchors) when private credit picks up. Of late, however, the rupee has been kept stable with better policy reducing anchor conflicts.

Oil prices are also down, as are some other base metals commodities, amid tighter US policy and bad sentiment, though the same can happened to tea.

WTI crude dropped to 57 dollars a barrel and Brent to 61 dollars over the past week or about 10 dollars.

A bond maturing on 15.12.2026 was quoted at 9.50/60 percent, up from 9.40/55 percent.

A bond maturing on 15.12.2027 was quoted at 10.05/15 percent.

A bond maturing on 01.05.2028 was quoted at 10.45/50 percent.

A bond maturing on 15.10.2028 was quoted at 10.50/65 percent, up from 10.50/60 percent.

A bond maturing on 15.09.2029 was quoted at 10.90/11.00 percent.

A bond maturing on 15.12.2029 was quoted at 10.95/11.05 percent, up from 10.80/90 percent.

An auction of Rs. 80,000 million Treasury bills was ongoing. An auction of Rs.100,000 million Treasury bonds is due on Thursday.

By Hiran H Senewiratne