News & market updates

IMF's Ranil Salgado said rising oil prices from a widening Middle East war and a weak El Niño monsoon are the biggest downside risks to India's FY27 GDP, and the IMF cut its 2026/27 growth forecast by 10 bps to 6.4%. The IMF will reassess India's national accounts after the statistics office rebases GDP to 2022/23, expected by end-2026.

Secondary bond market was quiet ahead of the 22 July Monetary Policy announcement; yields closed broadly steady to marginally higher with select tenors at 10.30%, 12.00% and 12.00%. Net liquidity surplus rose to Rs.148.13bn, SDFR deposits Rs.103.38bn, USD/LKR ~336.25/336.30.

Asian stocks rose as hopes of Middle East mediation pulled Brent down to $88.88/bbl from a one-month high, while investors awaited major tech earnings and monitored rising U.S. Treasury yields and interest-rate expectations.

Oil prices eased as reports of mediation between the U.S. and Iran offset fresh strikes; Brent fell 0.9% to $88.44/bbl and U.S. WTI dropped 0.9% to $82.50/bbl.

The Ceylon Chamber of Commerce and Sri Lanka's private sector urged a faster shift to renewables—particularly solar and energy storage—to meet rising electricity demand and reduce reliance on imported fossil fuels, calling for stable policy, streamlined approvals, financing, procurement and net metering.

Colombo Stock Exchange fell 0.80% as the All Share Price Index closed at 21,234.81 amid escalating West Asia tensions and rising oil prices. Top decliners included Dialog Axiata and Commercial Bank, with market flows shifting from equities to fixed income amid higher interest rates.

Foreign holdings of rupee government securities rose by Rs. 7.67 billion last week to Rs. 176.56 billion. Secondary bond yields firmed after Treasury auctions and geopolitical-driven oil price moves while T-bill yields softened, liquidity surplus rose to Rs. 167.97bn and USD/LKR closed ~336.2.

Asian shares slipped as Gulf fighting pushed Brent crude above $90/bbl, stoking inflation fears and increasing the likelihood of earlier Fed rate hikes. Packed tech earnings and AI valuation worries add downside risk to equities while higher yields support fixed income.

Brent crude rose 2.37% to $90.19/bbl as US‑Iran strikes and disruptions around the Strait of Hormuz curtailed shipments, pushing prices to their highest since June 11 and extending a strong weekly gain.

Teejay has committed USD 2.57m to a 7.2 MW rooftop solar array and USD 2.65m to replace coal with certified biomass. Together the projects are expected to cut facility emissions (solar ~13%, biomass ~49%), boost renewables and could meet a 42% Scope 1/2 cut by 2030, possibly by Sept 2026.

The Ceylon Chamber of Commerce convened stakeholders to map priorities to accelerate Sri Lanka's renewable energy transition, prioritising solar expansion, net‑metering, procurement frameworks, financing and energy storage. Participants called for stable policy, streamlined approvals, grid upgrades and better access to finance to boost investment and delivery.

Foreign investors bought a net US$23.2mn of Sri Lankan rupee government bonds in the week to July 16, lifting foreign holdings to Rs 176,561mn — the highest since July 27, 2023. The inflow comes amid a 100bp May policy-rate hike and recent rupee stabilization.

KPMG says Sri Lanka's credit rebound faces a major test after the Central Bank raised the policy rate by 100 basis points to 8.75%, a move expected to moderate private-sector credit growth. Lower fuel and vehicle imports, resilient remittances and stronger tax revenue are seen supporting a return to a current-account surplus and fiscal consolidation.

Colombo's ASPI fell 1.7% this week while turnover hit a 65-week low of about Rs. 722.64 million; top drags on the index included John Keells (JKH), PKME and NDB. Banking led turnover (notably Sampath Bank) and activity was concentrated in capital goods, food & beverage and energy names.

Oil prices rose as US-Iran hostilities intensified and Iran signalled the possibility of closing the Red Sea route, with Brent up $0.70 to $84.93/bbl and WTI up $0.81 to $79.76/bbl.

The government advanced energy infrastructure ahead of Budget 2027, ordering Delft, Analaitivu and Nainativu to be developed as Green Energy Islands and reviewing 14 petroleum projects including eight new storage tanks at Kolonnawa and Muthurajawela. Major grid works reviewed include a second 220 kV underground cable to Colombo, multiple transmission projects, a STATCOM at Padukka, rooftop solar integration, and the planned resumption of JICA-backed projects with 2027 funding.

Sri Lanka stocks closed lower as the ASPI fell 0.20% to 21,405.41 and market turnover hit a 52-week low of Rs 722.6m. Banks led turnover at Rs 184.3m; Commercial Bank, RIL Property, Melstacorp and People's Leasing were among gainers while John Keells and Digital Mobility were among laggards, and oil prices rose on Gulf tensions.

Shantha Bandara (CEO of Sunshine Healthcare Lanka) was reappointed president of the Sri Lanka Chamber of the Pharmaceutical Industry (SLCPI) for the 2026/27 term. His mandate focuses on turning governance and ethics reforms into regulatory and pricing changes to protect medicine availability and affordability amid exchange-rate volatility and rising freight, fuel and electricity costs.

Miwayz launched on July 12 with over 25,000 pre-registered drivers and passengers and announced strategic partnerships with Dialog Axiata (Dialog Touch payment integration and fuel vouchers) and TVS, plus a 0% commission driver model and passenger discounts.

Oil prices slipped as traders took profits and assessed U.S. strikes on Iran and the risk of supply disruptions via the Strait of Hormuz; Brent was $84.95/bbl and WTI $79.45/bbl. Markets remain wary that further disruption to exports could push prices materially higher.

Weekly Treasury bill auction sold the full Rs.120 billion offered as weighted average yields fell (91-day 10.13%, 182-day 10.27%, 364-day 10.20%). Secondary bond yields edged higher on Middle East tensions; net liquidity surplus was Rs.147.19bn and USD/LKR closed at 336.30/336.40.

THASL CEO Priantha Fernando urges Sri Lanka to pivot from mass tourism to high-value experiential travel—targeting India and China—and backs a revised 2026 target of about 2.5 million arrivals and $3.5 billion in earnings. He calls for stronger destination marketing, MICE/wellness/sports focus, digital integration and restored airline capacity.

Treasury has authorised government institutions to reprice or extend eligible public procurement contracts to reflect higher fuel, freight and material costs, with measures applied retrospectively and effective until 30 September 2026. The Circular targets construction works (using CIDA price-adjustment formulas) and permits use of PPIs, freight/shipping indices or documented cost evidence for other procurements.

Asian stocks rallied after U.S. CPI fell 0.4% in June and annual core inflation eased to 2.6%, cutting rate-hike odds and sending two-year Treasury yields down 11bp to 4.19%. Oil steadied around $85.80/bbl and China's Q2 GDP slowed to 4.3%.

Colombo market fell to a three-month low as the ASPI slipped 0.50% (107.39 pts) to 21,424.99 and the S&P SL20 dropped 0.37% (22.04 pts) to 6,000.15. Foreign investors were net sellers of Rs.126.9m; main negative contributors included Carson, Melstacorp, Vallibel One and John Keells, while Lanka IOC, Ceylon Cold Stores and Dipped Products led turnover.

The Free Trade Zone Manufacturers' Association urged the government to operationalise power wheeling, lower industrial energy costs and set up dedicated fuel stations in Katunayake and Biyagama to protect export manufacturing competitiveness. The group also asked for a review of industrial diesel pricing.

Global markets fell sharply as Gulf tensions and Iran's claim to have closed the Strait of Hormuz drove Brent crude up 4.3% to $79.31/bbl, lifting bond yields and reviving inflation and interest-rate tightening concerns.

Oil rose about 2% to a four-week high as the US and Iran stepped up attacks in the Strait of Hormuz and the US reinstated a naval blockade; Brent was $84.98/bbl and WTI $79.79/bbl.

Lanka IOC PLC held its 24th AGM on 09 July 2026 where shareholders approved the audited financial statements for the year ended 31 March 2026 and declared a dividend. The board highlighted strategic priorities including digital transformation, retail network expansion, growth in lubricants/petrochemicals, and pursuit of EV charging and renewable energy projects.

Foreign portfolio inflows into rupee-denominated government securities totalled Rs 32.04 billion for the week ending 9 July—the largest weekly inflow since Feb 2013—raising foreign holdings to Rs 168.90 billion. Secondary bond yields re-priced higher mid-week amid rising oil prices and geopolitical risk, T-Bill auction yields broadly steady, and the rupee weakened to ~Rs 335.8; a Rs 150 billion Treasury Bond auction across three maturities is scheduled on 15 July.