Banks drag down Bourse after S&P’s report

Reuters: Sri Lankan shares fell on Thursday after Standard & Poor's ranked the island nation's banks at "very high risk" in an assessment the central bank said was incorrect and contradictory.

The Colombo Stock Exchange's main index lost 0.71%, or 35.99 points, to 5,042.07, slipping from its highest since May 22. It had gained 5.6% in the six sessions through Wednesday.

The finance sector index fell 1.75 percent to a one-week low with top lender Commercial Bank of Ceylon and second largest lender Hatton National Bank losing 0.4% and 2% respectively.

"The fall in the banking shares was totally due to the S&P report," said an analyst on condition of anonymity.

The central bank hit back at S&P and said the facts used for the analysis were illogically analysed, incorrect and highly contradictory.

Turnover was 529.5 million rupees ($3.99 million), below the daily average of around 925 million rupees this year.

The rupee fell for a fourth straight session, edging down to 132.80/90 against the dollar from Wednesday's close of 132.70/80 on importer dollar demand amid intervention by a state bank, dealers said. It hit a record low of 133.60 on June 12.

Last week, Treasury Secretary P.B. Jayasundera told Reuters the rupee had hit its low and would stabilise around 125 per dollar in the medium term.