Sri Lankan shares end lower on consumer staples drag; economy contracts in Q2

Sri Lankan shares closed lower on Friday dragged down by a decline in consumer staples and communication services, while data later showed the country’s economy contracted in the second quarter.

The CSE All Share index settled down 0.58% at 11,465.73.

Sri Lanka’s economy shrank 3.1% in the April-June quarter, official data showed on Friday, as the country struggles to inch out of its worst financial crisis in decades.

The downturn was driven by high inflation, a depreciating currency and lower purchasing power, the Census and Statistics Department said in a statement.

The agriculture sector grew 3.6% from a year earlier, while output from industries contracted 11.5% and services dropped 0.8%, the department said.

Sri Lanka’s central bank projects that gross domestic product (GDP) will shrink by 2% this year, having contracted 7.8% in 2022.

Distilleries Company of Sri Lanka Plc and Ceylinco Insurance Plc were the top losers on the index, falling 2.9% and 3.6%, respectively.

Trading volume on the index fell to 36.8 million shares from 51.2 million shares in the previous session.

The equity market’s turnover fell to 784.1 million Sri Lankan rupees ($2.43 million) from 1.45 billion rupees in the previous session, according to exchange data.

Foreign investors were net buyers, purchasing stocks worth 64.3 million rupees, while domestic investors were net sellers, offloading shares worth 752.5 million rupees, the data showed.