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SL bleeds Rs.76 b more than 2019

2 years ago

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  • CSE sees huge net outflow in 2020

  • Foreign Treasury bills decline to Rs. 6.83 b

  • Rupee depreciates by 3.29%

  Sri Lanka’s equity and bonds markets wrapped up the year, recording a massive overall net foreign outflow throughout the year, which is over Rs. 76 billion higher than the net foreign outflows, reported in 2019.Net foreign outflows recorded from the equity and bond market in 2020 stood at about Rs. 148.44 billion as of31 December, out of which Rs. 97.84billion was the net foreign outflows from the Treasury bills and bonds held by foreigners, while the rest of the net foreign outflows were from the Colombo Stock Exchange (CSE). The net outflow during this period is substantially higher than the Rs. 72billion in overall net foreign outflow reported from 1 January-20 December 2019, during which period the Easter Sunday incident shook the country’s economy. Even before the end of the first half of 2020, Sri Lanka lost over Rs. 100 billion in foreign exchange as foreign investors were pulling out of the country’s government securities and stocks, according to data from CSE and the Central Bank of Sri Lanka (CBSL). Sri Lanka reported a whopping net foreign outflow of Rs. 101.4 billion from 1 January up to the third week of June 2019. Out of this Rs. 101.4 billion, Rs. 83 billion was net outflow from Treasury bills and bonds and the rest was outflow from CSE.2020 is the third consecutive year CSE is recording net foreign outflows as the last net foreign inflow CSE recorded was in 2017, which was Rs.17.65 billion. In 2018, net foreign outflows reported from the CSE was Rs. 23.2 billion, which reduced by about 50% to Rs. 11.8 billion in 2019amidst the Easter Sunday incident and the presidential election. However, in 2020, outflows intensified and recorded a net foreign outflow of Rs. 50.6 billion up to 31December. Issuing a statement on Thursday (31 December), the CSE stated that the net foreign outflow is too largely in line with the foreign fund outflow trend recorded in emerging and frontier markets. Meanwhile, Treasury bills and bonds held by foreigners witnessed a massive Year-on-Year (YoY) decline as Rs.97.84 billion net foreign outflows reported during the period from 1January to 24 December 2019,compared to Rs. 60.5 billion in the previous year. Treasury bills and bonds held by foreigners came down to Rs.6.83 billion on 24 December from Rs.104.67 billion on 29 December 2019,which is concerning given they have hit one-digit billion from three-digit billion in the beginning of 2020. Nevertheless, net foreign outflows reported in 2019were much lower than the Rs. 159.8billion net foreign outflows reported in 2018, the year where the political coup took place. On the other hand, the Sri Lankan rupee (LKR) witnessed a depreciation of 3.29% in 2020 compared to an appreciation of 0.7% in the previous year. The rupee was Rs. 189.18 as at31 December 2020. The lowest value the rupee hit in 2019 was Rs. 200.4against the US dollar on 8 and 9 April.

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