economic & market review - peoplesbank.lk · economic & market review for the month of july...
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Economic & Market Review
For the Month of July 2017
3Investment Banking Unit
GDP
Inflation (Year –on-Year change %)
0
500000
1000000
1500000
2000000
2016 1st Q 2016 2nd Q2016 3rd Q 2016 4th Q2017 1st Q
0
1
2
3
4
5
6
7
8
Economic Background The outlook for global growth appears to be firming according to the
latest update of the World Economic Outlook of the International
Monetary Fund (IMF) in July 2017. The Sri Lankan economy is
expected to record a modest recovery in the forthcoming quarters
following the low growth witnessed in the first quarter of 2017. The
recovery of the agriculture related activities and the positive
performance of the industry and services related activities together
with the reinstatement of GSP+ facility are expected to contribute to
economic growth.
The YoY inflation as measured by CCPI was 4.8% in July 2017 and i
nflation calculated for June 2017 was 6.1%. YOY inflation of Food
Group has decreased from 9.1% in June 4.8% in July 2017 and that
of Nonfood Group has decreased from 4.8% to 4.7% during this
period. Inflation is expected to ease further towards the end of 2017
and stabilize thereafter due to the tight monetary policy stance
maintained since the end of 2015 and the dissipation of the ‘one-off’
impact of the tax structure on inflation.
Meanwhile, private sector credit that was growing at an elevated level
during 2016 and early 2017, indicates clear signs of deceleration in
recent months, although at a slow pace. In view of high nominal and
real interest rates prevailing in the market, it is expected that growth
of monetary and credit aggregates would moderate further during the
remainder of the year. The recent decline in the yields on government
securities is expected to gradually transmit to other market interest
rates in the forthcoming period.
In the external sector, export performance continued to improve in
May 2017 led by agricultural exports. However, the continued
increase in expenditure on imports has caused a further widening of
the cumulative trade deficit. Tourist arrivals and earnings from
tourism improved in June 2017, albeit at a slower pace, while
workers’ remittances continued to slow during the first half of 2017
on account of prevailing economic and geopolitical uncertainties in
the Middle East. Nevertheless, the capital market, both government
securities and the Colombo Stock Exchange (CSE), witnessed a
noticeable influx of foreign funds (on a net basis) from March 2017.
Meanwhile, Sri Lanka received the third tranche of the IMF-Extended
Fund Facility (EFF) amounting to US dollars 167.2 million. Reflecting
these developments, gross official reserves stood at US dollars 6.7
billion as at end July 2017. Renewed investor confidence and
anticipated direct investment inflows are expected to further
strengthen the external sector outlook. Meanwhile, the Sri Lankan
rupee depreciated against the US dollar by 2.6 per cent by end July
2017.
Source – Central bank of Sri Lanka
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Equity Market Overview for the Month.
Colombo equities closed the month of July on
negative note despite continuous foreign inflows. ASI
closed at 6,637.39 with a drop of 28.66 index points
(-0.4%) while S&P SL 20 index closed 11.91 index
points lower (-0.3%) at 3,811.01. Foreign investors
continued to be on the buying side with a net inflow
of LKR 3.5 bn.
INVESTMENT
BANKING UNIT
Lakmal, & Trimalie
0112 206795
0112 206787 [email protected] [email protected]
CONTACT US
No. 75, Sir Chittampalam A Gardiner Mw,
Colombo 02, Sri Lanka.
0112458946 – 0112458913
Fax: 0112458842
Market Turnover
Market Capitalization
Foreign Buying & Selling in the Market
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Mill
ion
s
2,980.002,990.003,000.003,010.003,020.003,030.003,040.003,050.003,060.003,070.003,080.00
Bill
ion
s
0.00
200.00
400.00
600.00
800.00
1,000.00
1,200.00
1,400.00
Mill
ion
s
FBuy
FSell
ASPI
S&P 20 SL
6,550.00
6,600.00
6,650.00
6,700.00
6,750.00
6,800.00
7/3
/20
17
7/5
/20
17
7/7
/20
17
7/1
1/2
01
7
7/1
3/2
01
7
7/1
7/2
01
7
7/1
9/2
01
7
7/2
1/2
01
7
7/2
5/2
01
7
7/2
7/2
01
7
7/3
1/2
01
7
3,750.00
3,800.00
3,850.00
3,900.00
3,950.00
7/3
/20
17
7/5
/20
17
7/7
/20
17
7/1
1/2
01
7
7/1
3/2
01
7
7/1
7/2
01
7
7/1
9/2
01
7
7/2
1/2
01
7
7/2
5/2
01
7
7/2
7/2
01
7
7/3
1/2
01
7