ASPI and S&P SL20 close marginally higher while the yield curve steepens at the long end ahead of a LKR 250 billion Treasury bond sale
Key Highlights
The Colombo Stock Exchange closed marginally higher on Monday, while activity in the secondary bond market remained subdued as investors positioned ahead of a large Treasury bond auction scheduled for July 30. Yields on medium- to long-dated government securities edged up over the week even as short-term Treasury bill rates eased, and banking system liquidity expanded further.
Stock Market Summary
The All Share Price Index added 14.48 points to close at 21,187.22, while the S&P SL20 gained 6.18 points to end at 5,948.74. Turnover came in at LKR 2.07 billion, 17.2% above the monthly average, though volume fell to 65.14 million shares. Trading was concentrated in the Capital Goods sector, which accounted for 42% of turnover, with banking and food, beverage & tobacco counters making up a further 39% combined. Foreign investors were net buyers on the day, though on a smaller scale than recent monthly and year-to-date outflow trends.
Fixed Income Summary
Secondary bond trading was quiet ahead of the Public Debt Management Office’s planned issuance of LKR 250 billion in Treasury bonds across four maturities — 2031, 2034, 2036 and 2037. Yields on the 5-year and 6-year segments rose by 20 and 25 basis points respectively over the week, while short-term Treasury bill rates eased, with the 91-day rate falling 18 basis points to 9.95% at the latest auction. Overnight liquidity in the banking system rose to LKR 173.80 billion from LKR 163.07 billion.
Currency Market Update
The Sri Lankan rupee held broadly stable against the US dollar, trading at LKR 336.25, a marginal appreciation from LKR 336.26 previously.
Business Impact
The steepening in longer-dated bond yields signals rising costs for longer-tenor government borrowing, a trend businesses and financial institutions holding government securities will be watching closely as the week’s bond auction approaches. Easing short-term rates and expanding system liquidity, meanwhile, point to more accommodative near-term funding conditions for banks and corporates.
What to Watch Next
Markets will focus on the outcome of Thursday’s LKR 250 billion Treasury bond auction, which will offer a clearer signal on investor demand and pricing across the yield curve.
Key Numbers
| Metric | Value |
|---|---|
| ASPI | 21,187.22 (+14.48 pts / +0.07%) |
| S&P SL20 | 5,948.74 (+6.18 pts / +0.10%) |
| Market Turnover | LKR 2.07 billion |
| Market Volume | 65.14 million shares |
| Net Foreign Flow (Equity) | +LKR 15.68 million |
| USD/LKR | 336.25 |
| Overnight Liquidity | LKR 173.80 billion |
| Upcoming T-Bond Auction | LKR 250 billion (30 July) |
Source: Colombo Stock Exchange market data, Central Bank of Sri Lanka statistics and publicly available market information.