November 18, 2019 / 11:39 AM / 2 months ago

Sri Lankan stocks jump to more than 1-year high, rupee up after Rajapaksa poll win

COLOMBO, Nov 18 (Reuters) - Sri Lankan shares jumped to their highest in more than a year in heavy volume, while the rupee rose to a two-and-half month high on Monday, after former wartime defence chief Gotabaya Rajapaksa won the presidency by a big margin.

** Rajapaksa made national security his top priority after being sworn in on Monday at an ancient temple in the north-central city of Anuradhapura, where he received blessings from Buddhist monks. Majority of Sinhala Buddhists voted for him after he campaigned on promises to make the nation safer in the aftermath of the Easter bombings earlier this year.

** Standard Chartered Bank (SCB), in a note to investors, said the election outcome was positive for Sri Lanka and reduced political uncertainty, which should boost economic growth.

** “Sri Lanka’s political establishment faces the twin economic challenges of boosting growth and improving debt sustainability. We expect support across party lines for ongoing cooperation with the IMF to address these problems,” SCB said in the note. ** It also said: “Negotiating a new IMF programme is crucial to ensuring market access, in our view, given large upcoming government external refinancing needs of $3 billion a year over the next five years. We expect the IMF to remain supportive; it has already agreed to a slower pace of fiscal consolidation.”

** Analysts before the election had raised concerns over giveaways promised by the two top presidential candidates, after officials and a credit rating agency warned that their pledges could push the country deeper into debt. ** Rajapaksa has vowed to cut by half a value-added tax of 15% and abolish some taxes as a way to reignite consumption. ** The benchmark stock index, which jumped near 1.9% in the early trade, ended 1.8% firmer at 6,129.56, its highest close since Aug. 10, 2018. The bourse rose 1.53% last week, and it is up 1.28% for the year. ** The day’s gain was the biggest single day rise since July 29. ** “Since we already have the macroeconomic stability and now got the political stability, investors will be positive with expected growth in low interest rates,” said Dimantha Mathew, head of research at broker First Capital Holdings.

** The rupee ended 0.5% firmer at 179.40/80 per dollar, its highest since Aug. 30. It closed at 180.10/30 on Friday and is up 1.8% so far this year.

** Foreign investors were net sellers of riskier assets for an eighth straight session on Monday.

** They sold a net 391.6 million rupees ($2.18 million) worth of shares on Monday, extending the net foreign outflow from the equities market to 8 billion rupees for the year, according to index data.

** Equity market turnover was 2.4 billion rupees, its highest since Sept. 17 and well above this year’s daily average of about 696 million rupees. Last year’s daily average was 834 million rupees.

** Meanwhile, foreign investors bought government securities on a net basis for the fourth time in six weeks, buying a net 2.2 billion rupees worth of government securities in the week ended Nov. 13.

** Total foreign outflows from government securities through Nov. 13 stood at 48 billion rupees, central bank data said. ** For a report on global markets, click ** For a report on major currencies, click ($1 = 179.4500 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Alex Richardson)

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