Business

Stocks, bonds suffer Rs. 72 b net outflow in 2019

Sri Lanka’s bonds and stocks continued to bleed for the second year in a row, although the recorded net foreign outflows in 2019 have been far less than that of 2018, despite the economic impact of the Easter Sunday attacks in April.

According to available data from the Colombo Stock Exchange (CSE) and the Central Bank of Sri Lanka (CBSL), the total net foreign outflow from stocks and government securities from 1 January to 20 December 2019 was Rs. 72 billion.

This compares favourably to the over Rs. 187 billion net foreign outflows that were recorded in 2018.
Total net foreign outflows reported by CSE during the period from 1 January to 20 December is Rs. 11.4 billion while the total outflows from government securities up to 18 December exceeded Rs. 60 billion.

Stocks
At the end of Q1 2019, net foreign outflows at CSE stood at Rs. 6 billion. However in Q2 there was a partial recovery with a Rs. 274 million net foreign outflow, despite the Easter incidents and the resultant economic standstill.

By the end of the first week following the attacks, foreign purchases were recorded at Rs. 2.4 billion while foreign sales were Rs. 907.8 million. By the second week, foreign purchases decreased to Rs. 175.4 million while foreign sales also dropped to Rs. 119.4 million. In the third week, ended 10 May, foreign purchases were recorded at Rs. 296.6 million and foreign sales were at Rs. 318 million.

Despite the economic disruption caused by the Easter Sunday attacks, Sri Lanka’s equity market saw a lower foreign outflow in H1 2019 compared to H1 2018.

According to the data, net foreign outflows from 1 January to 30 June 2019 were Rs. 24.8 billion, while Rs. 30.6 billion net foreign outflows were reported at the end of the corresponding period last year.

In H1 of 2019, CSE recorded foreign inflows of Rs. 23.58 billion and Rs. 29.94 billion of foreign outflows, recording a net foreign outflow of 6.37 billion. In the same period last year, CSE recorded Rs. 49 billion foreign inflows while outflows were reported as Rs. 50.65 billion, recording a net foreign outflow of Rs. 1.6 billion.

Q3 recovered further with a net foreign inflow of Rs. 3.7 billion, compared to Rs. 6.14 billion net foreign outflows during the same period last year.

During the month of October, Rs. 1.7 billion net foreign outflows had been reported which intensified in November with Rs. 6.4 billion net foreign outflows, higher than the overall Q1 net foreign outflows.

CSE suffered a net foreign outflow of Rs. 6.15 billion following the Easter Sunday incidents up to 8 November. In November, Sri Lanka held the Presidential Elections 2019 and Gotabaya Rajapaksa was elected as the President of the country.

During the first 20 days in December, CSE witnessed a net foreign outflow of Rs. 680 million, a drastic drop from the previous month.

Bonds
Meanwhile, treasury bills and bonds held by foreigners witnessed a net outflow of Rs. 60.5 billion compared to Rs. 159.8 billion last year.

Treasury bills and bonds held by foreigners during H1 of 2019 came down to Rs. 146 billion from Rs. 164.5 billion, resulting in a net foreign outflow of Rs. 18.4 billion, compared to the outflows during the corresponding period last year as it came down to Rs. 295.4 billion from Rs. 324.3 billion, recording a net foreign outflow of Rs. 28.9 billion.

The stock market saw foreign purchases of Rs. 57.9 billion while stocks worth Rs. 64 billion were sold by foreigners, from the Easter Sunday incidents up to 8 November, the week before th Presidential Elections 2019.

According to the CBSL, treasury bills and bonds held by foreigners saw a net foreign inflow of Rs. 268 million during the first week following the attacks. Reversing the trend, at the end of the second week, government securities witnessed a net foreign outflow of Rs. 3.2 billion.

However, by the end of the third week, foreign outflows further aggravated as a net foreign outflow of Rs. 10.7 billion was recorded.

The rupee appreciated by 0.86% during the period from 1 January to 20 December 2019. The rupee depreciated by 3.5% against the US dollar during this period as it increased to Rs. 180.9 on 8 November from Rs. 174.6 on 18 April.