Colombo Bourse falls on political uncertainty after local polls

Thursday, 15 February 2018 00:30 -     - {{hitsCtrl.values.hits}}

Reuters: Sri Lankan shares fell for a second straight session yesterday, as political uncertainty after a defeat of the two ruling coalition parties in a local poll hurt investor sentiment.

The ruling coalition Government of President Maithripala Sirisena’s centre-left Sri Lanka Freedom Party and Prime Minister Ranil Wickremesinghe’s centre-right United National Party suffered defeats in a local election over the weekend.

The results also raised concerns over the future of the unity government amid pressure from the opposition parties to dissolve Parliament.

The two ruling parties have set up a committee on 13 February to examine the future of the unity government. The Colombo stock index ended 0.16% lower at 6,532.26, further slipping from its highest close since 8 November hit on 9 February. The index gained 0.8% last week, its third straight weekly rise.

Shares in Bukit Dhara PLC fell 7.6% while Hemas Holdings PLC fell 0.3% and Hatton National Bank PLC ended 1.6% weaker. Biggest listed lender, Commercial bank of Ceylon PLC, lost 1.8%.

“The market is negative with the continued political uncertainty,” said First Capital Holdings Research head Dimantha Mathew.

“Delay in settlement is creating more uncertainty,” he said, referring to a decision that could end the political instability.

Investors are waiting for some stability and to see the direction in which both the coalition partners are headed. Turnover stood at Rs. 654.7 million ($ 4.22 million), well below last year’s daily average of Rs. 915.3 million. Foreign investors, however, bought a net Rs. 97.2 million worth of shares yesterday, extending the year-to-date net foreign inflow to Rs. 5.4 billion worth of equities.

Analysts also said the investors were waiting to see the central bank’s key policy rate announcement today, which is widely expected to remain unchanged.