Sri Lankan shares jumped 6% on Tuesday to a nine-month high after the country’s parliament approved a key domestic debt restructuring plan over the weekend, while inflation also cooled sharply.
The CSE All Share index was up 6.33% to 10,040.94 as of 0725 GMT and was set for its best day in nearly 15 months. The market was closed from Thursday through Monday.
Sri Lanka’s parliament on Saturday approved a plan that seeks to rework part of the island nation’s $42 billion domestic debt, a move that is part of the conditions for the International Monetary Fund’s $2.9 billion bailout package.
Sri Lankan shares end lower as consumer staples, communication services weigh
The surge was “primarily driven by the banking sector, as investors perceived the domestic debt optimisation would have minimal impact on the financial system and be positive for the overall market,” said Udeeshan Jonas, chief strategist at Colombo-based equity research firm CAL.
Sri Lanka, which last year tumbled into its worst financial crisis in more than seven decades, is asking international bondholders to take a 30% haircut and is seeking similar concessions from investors in its domestic dollar-denominated notes.
Financial stocks dominated gains on the CSE on Tuesday, led by a 14% jump in LOLC Holdings and a 20% surge in Commercial Bank of Ceylon.
Meanwhile, data on Friday showed Sri Lanka’s inflation eased to 12% in June from 25.2% in May.
The CSE is up about 18% so far this year, compared to a 30% drop in 2022 at the peak of its crisis.
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