Sri Lanka stocks extend falls to over 2-week low; rupee edges lower

Reuters: ** Sri Lankan shares fell for a third straight session on Tuesday and closed at their lowest in more than two weeks in dull trade, while the rupee ended slightly lower, market sources said. 

** On Friday, the central bank cut its key interest rates to support its faltering economy as overall business and consumer confidence slumped following deadly bomb attacks in April. 

** Traders said the Easter Sunday bombings and violence following the attacks, and worries over slowing economic growth weighed on investor sentiment. Most investors have shied away from the market since the April 21 bombings that killed more than 250 people. 

** Sri Lanka is unlikely to hit its full-year economic growth target of 3-4% following the bombings, junior finance minister Eran Wickremeratne told Reuters last month. A Reuters poll has forecast growth to slump to its lowest in nearly two decades this year. 

** The central bank chief said on Friday that he expected the economy to grow by 3% or less this year due to the impact of the Easter attacks, and the bank was preparing a downward revision to its earlier projection for 4% growth. 

** The benchmark stock index ended 0.42% weaker on Tuesday at 5,277.32. It rose 0.3% last week, recording its second straight weekly gain. The bourse has declined 12.81% so far this year. Sri Lankan markets are closed on Wednesday for a holiday. 

** The government’s pension fund has resumed investing in risky assets as the stock market is “extremely undervalued at the moment and is considered a good time to go into”, the central bank governor said on Friday. 

** Turnover was 184.9 million rupees ($1.05 million), less than this year’s daily average of around 543.3 million rupees. Last year’s daily average was 834 million rupees. 

** Foreign investors sold a net 13.01 million rupees worth of shares on Tuesday, extending the year-to-date net foreign outflow to 5.57 billion rupees worth of equities. 

** The rupee ended at 176.45/55 per dollar, compared with Monday’s close of 176.40/60, market sources said. 

** Analysts expect the rupee to weaken further as money flows out of stocks and government securities. 

** The rupee fell 0.06% last week but is up 3.5% for the year. Exporters had converted dollars as investor confidence stabilised after a $1 billion sovereign bond was repaid in mid-January. 

** The rupee dropped 16% in 2018 and was one of the worst-performing currencies in Asia. 

** Foreign investors bought a net 716.3 million rupees worth of government securities in the week ended May 29, but the island nation saw a net foreign outflow of 18.4 billion rupees so far this year, central bank data showed. 

** Investor sentiment was damaged at the end of last year when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved parliament. A court later ruled the move unconstitutional, but the political turmoil led to credit rating downgrades and an outflow of foreign funds.  

($1 = 176.4000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Subhranshu Sahu)

Sri Lanka tourist arrivals plunge 70-pct in May

ECONOMYNEXT – Tourist arrivals to Sri Lanka plunged 70 percent in May from a year ago after Easter Sunday’s suicide bombings but promotions and events are underway to restore the island’s image as a destination, an official said.

Sri Lanka Tourism Promotion Board (SLTPB) chairman Kishu Gomes said that with security being tightened to ensure safety for visitors the number of arrivals is expected to revive.

“Seven travel advisories have been softened,” he told a news conference held to announce the Colombo International Logistics Conference 2019 in August, billed as a forum to promote the island’s attractions as an international logistics hub.

Gomes said the logistics conference, on August 1 and 2, where about 100 foreign delegates and families are expected, would be one of several events planned in the island that would help restore its image as a popular travel destination.

There was an exodus of tourists after the April suicide attacks on churches and hotels by Islamist extremists that killed over 250 people, including foreigners, resulting in a sharp drop in hotel occupancy and affecting other sectors like food suppliers.

Gomes said arrivals fell 70 percent to 37,000 in May 2019 from a year ago.

The months of April, May and June as well as September and October are considered as Sri Lanka's off-peak tourist season when arrivals usually fall.

Tourist arrivals to Sri Lanka fell 7.5 percent to 166,975 in April this year from a year ago after the Easter Sunday bombings.

Gomes said the authorities were working to revive visits with the effort being helped by softening of travel advisories by key origin markets like Germany, India, China, the Netherlands, Norway, Switzerland and Italy.

He said there were large numbers still coming to Sri Lanka from countries which had issued travel warnings like the United Kingdom and United States as well as countries which had not issued travel advisories like the Maldives and East Asian nations.

The government will spend over 900 million rupees till the year end to promote the island as a travel destination, he said.