Shares fall; turnover hits near 3-month low

Tuesday, 10 July 2018 00:41 - - {{hitsCtrl.values.hits}}

Reuters: Sri Lankan shares fell yesterday and turnover slumped to a near three-month low, as many investors stayed away from the market after confusion over fuel price hike and lower economic growth outlook hurt sentiment, stockbrokers said.

Turnover stood at Rs. 154.9 million, its lowest since 16 April and less than a sixth of this year’s daily average of Rs. 921 million.

Sri Lankan state-run fuel retailer, Ceylon Petroleum Corporation (CPC), on 6 July reversed an earlier decision to increase petrol and diesel prices at its fuel stations, hours after the Finance Ministry demanded a hike to stem losses.

“The investor confidence is low. The fuel price decision could not be implemented with mixed signals and investors are also confused,” said Prashan Fernando, CEO at Acuity Stockbrokers.

Another analyst said lower economic growth outlook also has hit the sentiment, after the Central Bank cut its estimate.

Economic growth in 2018 is likely to be between 4% and 4.5%, falling short of an earlier estimate of 5%, Central Bank Governor Indrajit Coomaraswamy told reporters on 6 July, adding that the earlier estimate was “ambitious”.

Foreign investors are selling and concerns about lower economic growth weighed on sentiment, analysts said.

The Colombo stock index ended 0.51% weaker at 6,077.32. It hit its lowest close since March 30 2017 on 4 July and has declined for a 19th session in 22 through yesterday.

The index fell 1.4% last week, sliding for a seventh straight week.

They net sold equities worth Rs. 22.9 million yesterday, extending the year-to-date foreign outflows to Rs. 2.25 billion.

Ceylinco Insurance PLC fell 5.3%, while Lanka Orix Leasing Company slipped 3.3%.

Investors are waiting for some positive news both on the economic and political fronts, said analysts, adding that the Government’s policy implementation had been sluggish since both main parties in the ruling coalition lost local polls in February.

The International Monetary Fund (IMF) said on 20 June that Sri Lanka’s economy remained vulnerable to adverse shocks because of sizable public debt and large refinancing needs.