Bourse falls to over 3-week closing low; floods weigh on market

Wednesday, 31 May 2017 00:10 - - {{hitsCtrl.values.hits}}

Reuters: Shares fell for a third straight session on Tuesday, posting their lowest close in more than three weeks, as floods and landslides that killed over 190 people weighed on sentiment.

The extent of the damage due to the floods is yet to be assessed, with the country’s main agricultural exports - tea and rubber - hit by the worst torrential rains in 14 years.

Authorities also warned on Tuesday of more rains and landslides as a cyclone formed in the Bay of Bengal.

“Short-term disruptions in rubber tapping and distribution difficulties with tea could lead to dwindling production. However, it is too early to comment since the actual extent of economic damage is not known,” Softlogic Stockbrokers Chief Operating Officer Danushka Samarasinghe told Reuters.

“Retail trade would get affected,” he said, adding that demand for FMCG would rise on humanitarian support for flood and landslide victims while the construction sector is also likely to see higher activities in the coming period.

Inflation could rise in the short term, especially due to crop damages and distribution difficulties with regard to fresh food produce and staple food items, he added.

“The impact on the insurance sector could be too early to ascertain, though based on news reports it may not be as damaging as last year,” Samarasinghe said.

The Colombo stock index ended 0.36% weaker at 6,655.25, its lowest close since 5 May. It fell 0.47% last week, recording its first weekly fall in nine. Turnover was Rs. 1.72 billion ($ 11.28 million) on Tuesday, more than this year’s daily average of Rs. 904.3 million. Commercial Bank of Ceylon, the country’s top lender, edged up 0.1% and accounted for over 84% of the day’s turnover.

Foreign investors bought shares worth Rs. 2.27 million on a net basis, extending the year-to-date net foreign inflow to Rs. 19.46 billion worth of equities.

Dialog Axiata Plc fell 1.7%, Lanka ORIX Leasing Co Plc dropped 2.3%, Hatton National Bank Plc slipped 0.8% and Hemas Holdings Plc closed 0.8% lower.