Credit woes pulls Sri Lanka bourse down; rupee steady

Friday, 16 December 2011 01:13 -     - {{hitsCtrl.values.hits}}

  • SEC’s unchanged policy fails to boost market
  • Stx at 3-wk low; lack of credit weighs
  • Foreigner buy Keells; inflow at 94 mln rupees
  • CB sells $35 mln to keep rupee steady

COLOMBO (Reuters):Sri Lanka’s stock market extended losses in thin volume on Thursday although foreign buying continued in market heavyweight John Keells Holdings, while the central bank held the rupee steady against continued dollar demand from offshore investors cashing in treasury bonds.

The island nation’s main share index lost 0.16 percent or 9.67 points to 5,941.32, its lowest since Nov. 25.

The day’s turnover was 468.7 million Sri Lanka rupees ($4.11 million), far below last year’s average of 2.4 billion and this year’s 2.4 billion.    The market, which is going through a typical year-end bout before the Christmas holidays, has been waiting for the Securities and Exchange Commission to come up with some new measures to increase credit under a new regulator chief.

On Wednesday, the SEC in a statement said under new Chairman  Tilak Karunaratne, it will continue measures to maintain a fair and efficient market and the new head has not been pressurized in any way either by investors or any other stakeholders.

Analysts said the SEC’s statement failed to stimulate the market.

Dialog Axiata, which entered into a $34 million share purchase agreement with wireless fixed line operator Suntel, closed 1.3 percent up at 7.90 rupees.

On a net basis, foreign investors bought 457,700 shares in John Keells Holdings PLC, which ended 1.95 percent weaker at 176.30 rupees.

The bourse saw a net foreign inflow of 94 million rupees on Thursday, and foreign investors have sold 18.2 billion thus far in 2011, and a record 26.4 billion in 2010.

Total volume was 22.4 million shares, against a five-day average of 21.9 million. The 30-day and 90-day average trading volumes were 52.3 million and 94.8 million. Last year’s daily average was 67.9 million. The Colombo Stock Exchange is Asia’s 11th-best performer with a year-to-date loss of 10.47 percent after being at the top until June. It delivered Asia’s best returns in 2009 and 2010.

The rupee closed flat at 113.89/90 rupees a dollar for a 17th day despite heavy dollar demand, as the central bank spent $35 million defending it, dealers said.

Two traders Reuters spoke with said the dollar demand came from a foreign bank, which had facilitated some offshore clients’ sale of Sri Lankan treasury securities, but they declined to comment further.

Since the Nov. 22 devaluation, the central bank has spent around $410 million to hold the exchange rate steady. It spent almost $2 billion this year until the end of September holding back depreciation pressure.