Political uncertainty Bourse’s losses extend to Rs 147B Govt’s Market Borrowing Costs Increase For 2nd Week

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By 2017-08-24

By Paneetha Ameresekere

Stock market investor losses shot up to Rs 147 billion and Government of Sri Lanka's (GoSL's) borrowing costs increased for the second week as the political......uncertainty egged on by the sacking of Justice Minister Wijeyadasa Rajapakshe by President Maithripala Sirisena yesterday continues to bedevil markets.

Stock market investor losses yesterday over Tuesday increased by Rs 5.47 billion, taking up such losses since 30 June to Rs 146.89 billion, while GoSL's borrowing costs rose by ¼% and 0.27% to 9.27% and 9.65% respectively in connection with six and 12 months (182 and 364-day) maturities in the two weeks to yesterday, due to this uncertainty.

The political imbroglio broke out, beginning with the Ravi Karunanayake saga, has since 30 June to date seen Rs 146.89 billion worth of shareholder wealth wiped out, while the benchmark ASPI has declined by 5.39% to 6,383.27 points and the more sensitive S&P SL 20 Index by 6.86% to 3,663.65 points.

The silver lining was foreign investor confidence which has resulted in a net foreign inflow of Rs 27.87 billion in the calendar year to date in the stock market.

Meanwhile, weighted average yields (WAYs) of Treasury (T)-Bills rose for the second consecutive market week at yesterday's auction, resulting in the WAY of the benchmark one year (364-day) T-Bill increasing by 11 basis points (bps) (0.11%) to 9.65% and that of the six months (182-day) by 10 bps (0.1%) to 9.27% respectively, week on week, due to this uncertainty.

Central Bank of Sri Lanka (CBSL) which administers GoSLs debt rejected the Rs 7,950 million worth of offers received for the three month (182-day) maturity probably due to the 'higher' yields (rates) asked by the market. CBSL issued all Rs 20 billion worth of T-Bills, also, originally billed to be issued at yesterday's auction.

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