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Sri lanka News – Sri Lanka’s stock market saw its worst foreign outflow in more than one year as an offshore fund sold shares in top private lender Commercial Bank despite the market gaining for the second session led by conglomerate John Keells Holdings, brokers said.

The market saw a net foreign outflow of 1.1 billion rupees, the worst since September 3, 2021. However, the total net foreign inflow so far for this year is 17.7 billion rupees.

Twenty million shares were sold in Commercial Bank by a foreign fund to David Pieris at 50 rupees per share, three brokers said.

“It could be due to the banking sector’s outlook being vulnerable at the moment due to debt restructuring talks,” an analyst said.

“They may not be very bullish on the banking sector because the results are just about to come and the economy has gone on a roller coaster ride. So they are not expecting anything wonderful in the sector,” another analyst said.

The main All Share Price Index (ASPI) closed 0.35 percent or 29.13 points firmer at 8,322.62.

The market was pushed by conglomerate John Keells Holdings, which helped to push the index after the company’s joint venture with India’s Adani Group boosted the share buying, brokers said.

The market has been on a falling trend as investors awaited for cues on policies from the 2023 budget which is scheduled to be presented next week amid panic selling from time to time.

The market saw a turnover of 2.3 billion rupees, the highest in three months, but lower than this year’s average turnover of 3.0 billion rupees.

Analysts say the market will remain bearish until the budget for 2023 is presented on November 14, but expect to see a bullish sentiment in January.

Investors are also concerned over the impact of local debt restructuring on risky assets, analysts have said, as the market is waiting for a debt restructuring decision between the government and its creditors ahead of an IMF loan approval.

The market is taking a wait-and-see approach after the tax proposals were published. The corporate tax rates are expected to be increased to 30 percent.

The more liquid index S&P SL20 closed 0.74 percent or 18.70 points higher at 2,560.28.

The ASPI has fallen 3.2 percent so far in November after losing 13.4 percent in October. It has lost 31.9 percent year-to-date after being one of the world’s best stock markets with an 80 percent return last year when large volumes of money were printed.

The listed companies have shown reasonable profits in their third quarter of the year, however, analysts say the disposable income of the general public due to proposed tax hikes is the main reason for the negative expectations over the December earnings.

John Keells Holdings, contributing most to the index’s gain, ended 3.1 percent higher at 139.7 rupees a share.

Commercial Bank gained 1.2 percent to 50 rupees and Aitken Spence closed 1.5 percent firmer at 132 rupees a share. (Colombo/Nov10/2022)

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