Industrials, domestic buying lift shares to record high

REUTERS: Sri Lankan shares ended higher yesterday, hitting a record peak in the session and notching their best week in nearly a year, aided by a surge in industrial stocks and sustained buying from domestic investors.

The CSE All-Share index (.CSE) closed 0.85 percent higher at 13,280.94, its eighth straight day of gains. The index is up 8.6 percent already in 2022, after an 80 percent surge last year.

A combination of lack of avenues to invest in, inflation and companies reporting better numbers due to import curbs sapping foreign competition is driving the rally, said Abhijit Kukreja, senior vice president for emerging markets equities at New York-based brokerage Auerbach Grayson. Kukreja added that the rally was driven by local investors. “Foreign investors were heading for the door so they could get their money back because dollars were getting short.”

Sri Lanka is facing its worst financial crisis in decades with foreign exchange reserves dwindling and debt repayments looming.

Yesterday, domestic investors were net buyers and snapped up shares worth Rs.11.48 billion (US $ 56.62 million), while foreign investors were net sellers, exchange data showed.

The equity market’s turnover was Rs.11.64 billion. It is deceiving to think that the market is “blockbuster”, Kukreja added, pointing to gains mostly coming from Expolanka (EXPO.CM) and LOLC (LOLC.CM), while the traditional top gainers in which foreign investors had holdings were largely flat. Logistics firm Expolanka soared nearly 1,200 percent in 2021, while conglomerate LOLC surged 760 percent.

Yesterday, conglomerate Vallibel One (VALI.CM) led the rally with gains of 15.2 percent.

Meanwhile, Sri Lanka signed a deal with Indian Oil Corp’s local unit to lease 75 oil tanks, as the island moved closer to securing a US $ 500 million fuel credit line from India.