Stock market ends lower on interest rate, foreign outflow worries

Wednesday, 15 June 2016 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Shares closed lower on Tuesday, slipping from a more than one-week high hit in the previous session, on concerns over rising interest rates and foreign fund outflows.

Treasury bill yields have risen between 16 and 36 basis points to near three-year highs in the last three weekly auctions through Wednesday despite the Central Bank leaving key policy rates steady for a third straight month on 20 May.

Stockbrokers said a rise in interest rates could be detrimental to risky assets if they jumped beyond 12%. The average prime lending rate edged up eight basis points to 10.23% in the week ended 3 June.

Overseas funds have offloaded a net Rs. 5.76 billion worth of equities so far this year, but they net bought Rs. 73.8 million worth of shares on Tuesday.

The benchmark Colombo stock index ended 0.31% lower at 6,518.08, its lowest close since 29 April and slipping from its highest close since 1 June hit on Monday.

The index gained 0.17% last week, snapping a three-week losing streak.

Turnover stood at Rs. 825.4 million ($5.70 million), the highest since 27 May, and more than this year’s daily average of around Rs. 772.1 million.

Shares in Nestle Lanka Plc fell 1.40%, while Dialog Axiata Plc fell 1.82%.

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