Colombo Bourse ends higher on illiquid shares; no-confidence vote weighs

Wednesday, 4 April 2018 00:00 -     - {{hitsCtrl.values.hits}}

Reuters: Share index ended firmer on Tuesday, edging up from its nine-week closing low hit last week, as investors picked up illiquid shares of Distilleries Company of Sri Lanka Plc, but political woes over a no-confidence motion against the prime minister weighed on sentiment, brokers said.

The Colombo stock index ended 0.13% firmer at 6,458.33, edging up from its lowest close since 23 January hit on Wednesday.

The index climbed 0.51% last week, its first weekly gain in five, but dropped 1.14% last month.

“The overall investor sentiment was on a wait-and-watch mode ahead of the no-confidence motion. There were some activities on illiquid distilleries, which moved the market up today,” said Dimantha Mathew, head of research, First Capital Holdings.

The turnover stood at Rs. 530.1 million ($ 3.40 million), less than this year’s daily average of around Rs. 1.2 billion.

Foreign investors sold shares worth net Rs. 128.2 million on Tuesday, extending the year-to-date net foreign outflow to Rs. 1.14 billion worth equities.Political uncertainty and worries over a slowing economy weighed on sentiment, brokers said.

Prime Minister Ranil Wickremesinghe is facing a no-confidence motion, which will be debated on Wednesday before voting, with analysts saying support from many political parties will be needed for Wickremesinghe to clear the vote.

Cautious investors await the outcome of the rate announcement, said analysts.

The Central Bank is expected to keep key interest rates unchanged on Wednesday after a rate review, but economists in a Reuters poll are not ruling out the possibility of a rate cut to help bolster economic growth that has slipped to a 16-year low.

Shares in conglomerate John Keells Holdings Plc ended 0.25% higher, while Overseas Realty Ceylon Plc ended 6.1% up and Distillers Sri Lanka Plc closed 5% higher.

Sri Lanka’s economy grew by 3.1% in 2017, the slowest in 16 years and well below the 4.5% seen in 2016, revised government data released showed last week.