CSE dips to near 1-week closing low

Tuesday, 22 May 2018 00:00 - - {{hitsCtrl.values.hits}}

Colombo (Reuters): Sri Lankan shares declined to a near one-week closing low yesterday (21 May), dragged by diversified stocks, as investors waited for more clarity on the political and economic front.

But foreign investors bought the island nation’s risky assets on a net basis, capping the fall.

The Colombo stock index ended 0.40% weaker at 6,466.07, its lowest close since 15 May. It rose 0.2% last week, in its first weekly gain in four.

Foreign investors, who have been net sellers of shares worth Rs. 646.8 million ($4.10 million) so far this year, net bought equities worth Rs. 152 million yesterday.

“Market opened the week softly with local retail investors on the sidelines waiting for direction,” said Softlogic Stockbrokers assistant manager Hisham Haniffa. “Investors are also waiting to see the real impact of the flooding.”

Heavy monsoon rains have killed five people, prompting authorities to warn against landslides and floods in low-lying areas after spill gates had to be opened across the island.

Turnover was Rs. 524 million, less than this year’s daily average of Rs. 993.4 million.

The recent fuel price hike also weighed on investor sentiment, stockbrokers said.

State-run Ceylon Petroleum Corp (CPC) raised retail prices for gasoline and diesel last week in response to increases in global oil prices. Lanka IOC, a subsidiary of Indian Oil Corp, also increased fuel prices.

Shares of conglomerate John Keells Holding PLC fell 0.6%, BRAC Lanka Finance PLC plunged 20.9%, Lanka ORIX Leasing Co PLC declined 3.3%, and Lanka IOC slipped 0.3%.

The depreciation in rupee also weighed on the market, analysts said, as it is likely to hit profits of some listed firms that rely heavily on imports.

The rupee hit a fresh low of 158.50 per dollar on 16 May on importer demand for the US currency.

Analysts said concerns over political instability following President Maithripala Sirisena’s decision to suspend the parliament last month after 16 legislators from his ruling coalition defected, dented market sentiment.

On 8 May, Sirisena urged his own coalition government and the opposition to end a power struggle to achieve ambitious goals including anti-corruption measures. ($1 = 157.7000 Sri Lankan rupees)