Recent outflows are modest against the year’s total, but equities and Treasury holdings are both moving lower
Foreign investors were net sellers on the Colombo Stock Exchange on seven of the last nine trading sessions, while their holdings of Sri Lankan government securities have also dropped from their recent peak.
Between 22 September and 2 October, net foreign outflows from equities totalled about LKR 693 million. Only two sessions saw net foreign buying, and both were small. The heaviest day saw about LKR 193 million leave the market. Friday’s net outflow of LKR 140.2 million was concentrated in a single counter, which accounted for roughly 83% of the total.
In the government securities market, foreign holdings stood at LKR 196.9 billion on 24 September, down 4.45% from the previous week. That is about 7.7% below the peak of LKR 213.4 billion on 10 September, a drop of roughly LKR 16.5 billion in two weeks.
Both measures need context. Net foreign outflows from equities stand at LKR 57.5 billion for the year to date. Spread across the roughly 197 weekdays so far this year, that averages more than LKR 290 million a day, nearly four times the pace of the past nine sessions, which is about LKR 77 million a day. The recent selling is therefore mild by this year’s standards, even though it has been persistent.
The government securities picture is similar. Holdings of LKR 196.9 billion are slightly above the LKR 194.2 billion recorded in mid-August, so the recent fall has mostly reversed a rise that began after that date. Foreign investors hold only about 1% of the LKR 18.85 trillion of government securities outstanding, which means domestic buyers largely set market conditions.
Other markets show no sign of strain. Secondary market Treasury yields were unchanged on Friday, and the 91-day, 184-day and 364-day bills moved only 2 to 5 basis points at the latest auction. LKR 201 billion in bids was received for the LKR 80 billion on offer. The rupee edged firmer to LKR 330.62 per US dollar from LKR 330.70.
The two datasets do not cover the same period. The equity flow figures run to 2 October, while the government securities holdings data end on 24 September, so they should be read as parallel trends and not as cause and effect.
Key Numbers
| Indicator | Latest | Context |
|---|---|---|
| Net foreign equity flow, 9 sessions | About -LKR 693 Mn | Net sellers on 7 of 9 sessions |
| Net foreign equity flow, 2 Oct | -LKR 140.2 Mn | Month to date: -LKR 234.4 Mn |
| Net foreign equity flow, year to date | -LKR 57.5 Bn | |
| Foreign holdings of government securities (24 Sep) | LKR 196.9 Bn | -4.45% week on week |
| Change from 10 Sep peak (LKR 213.4 Bn) | About -7.7% | About -LKR 16.5 Bn |
| Share of outstanding government securities | About 1% | Total LKR 18.85 Tn |
| USD/LKR | 330.62 | From 330.70 |
Business Impact
Sustained foreign selling can affect confidence and the rupee, but the data point to a limited effect so far. The currency and the yield curve have been steady, and domestic demand at the Treasury bill auction was strong. Businesses planning foreign-currency payments or floating-rate borrowing have so far seen no sign that the outflows are feeding through to funding costs. Readers should watch whether the pace of selling picks up or the next holdings data show further declines.
This article reports market data and is not investment advice.
Source Attribution: Colombo Stock Exchange market data, Central Bank of Sri Lanka statistics and publicly available market information.