January 13, 2019, 7:27 pm
Foreign investors are expected look at Sri Lanka and other Asian markets in a more positive manner.
By Hiran H.Senewiratne
The CSE is expecting net foreign inflows to increase in the next few months because many investors are once again considering investing in Asian stock markets due to uncertainties in the US economy, CSE Market Development Head Niroshan Wijesundara said.
" Several foreign investors exited Asian markets, including Sri Lanka, to invest in the US stock market due to the adjustment of fed interest rates. But foreign investors are now looking at Asian stock markets with the recent partial shut down of the US economy, Wijesundera told The Island Financial Review.
He said that last Thursday the net foreign outflow was Rs. 700 million and many foreign investors will look at Sri Lanka and other Asian markets in a positive manner.
" Current volatile situation will gradually settle with the stabilizing of the Sri Lanka economy over the next few weeks or after the budget, Wijesundera said.
Foreign investors sold a net Rs. 274 million worth of shares on Thursday. They have been net sellers of Rs. 14.1 billion worth of stocks since a political crisis in Sri Lanka began on Oct. 26. The bond market saw outflows of Rs. 74.3 billion between Oct. 25 and Jan. 2, market statistics indicated.
The rupee ended at 181.90/182.10 per dollar on last Thursday, compared with 182.25/40 in the previous session, market sources said. On Jan.3 the rupee had fallen to an all-time low of 183.00 against the dollar.
The rupee fell 19 percent in 2018, making it one of the worst-performing currencies in Asia, according to Refinitiv data, due to heavy foreign outflows.
The rupee has declined about 5 percent since the political crisis started.
The Central Bank said last week it would stick to an exchange rate policy of cautious intervention in times of excessive volatility in the forex market.
The policy is designed to maintain a competitive exchange rate and support the rebalancing of the current account, thereby supporting a gradual build-up of reserves, Central Bank chief Dr.Indrajit Coomaraswamy said last week, unveiling economic policies for 2019.
The political crisis is expected to ease, though tense relations between President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe could cause fiscal problems, analysts say. Parliament has approved Rs. 1.77 trillion ($9.39 billion) to meet the first four months of expenditure in 2019, averting a government shutdown from Jan. 1, sources said.
Sri Lanka plans to increase government spending by 13.2 percent from last year to Rs. 4.47 trillion ($24.51 billion) in 2019, Finance Ministry said sources said.