Bourse climbs to one-week high with strong turnover
Saturday, 7 February 2015 00:59
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Reuters: Shares ended at a one-week high on Friday with strong turnover despite foreign outflows as investors snapped up beaten down blue-chips like John Keells Holdings Plc and Commercial Bank of Ceylon Plc.
The main stock index ended up 1.64 percent, or 115.44 points, at 7,162.75, its highest close since Jan.30.
“Investors are in a positive mindset with the cabinet deciding to go ahead with Chinese port city project. This means the new government is continuing the projects of the past administration,” said Reshan Wediwardana, research analyst at First Capital Equities Ltd.
On Thursday, the government said it would allow a $ 1.5 billion “port city” deal with China to go ahead, apparently dropping its earlier threats to cancel the project, approved by the last government.
Friday’s turnover was Rs. 2.07 billion ($ 15.6 million), well above last year’s daily average of Rs. 1.42 billion, exchange data showed.
John Keells Holdings gained 3.67%, while Commercial Bank of Ceylon Plc, the country’s biggest listed lender, rose 3.7%.
Foreign investors sold a net Rs. 174.3 million worth of shares, but have net bought Rs. 733.3 million in equities this year. The Bourse had net foreign inflows of Rs. 22.07 billion last year.
The index fell 5.1% in the two sessions through Monday after the new Government announced a Budget that imposed a one-time ‘super gain tax’ of 25% on companies or individuals who made more than Rs. 2 billion in profit in 2013/2014.
Rupee ends weaker as CB allows fall in spot
Reuters: The rupee ended weaker against the dollar as the Central Bank allowed a lower rate for the spot currency and limited forward premiums, aiming to curb depreciation pressure on the local currency.
Dealers said the central bank allowed the spot currency to trade at 132.80 from its previous day’s rate of 132.20 and the central bank asked commercial banks to limit forward premiums by five cents per day, dealers said.
“But the spot was not trading at 132.80 because the effective spot rate is at 133.10/30 per dollar. So at the moment, two-week forwards are actively trading,” a currency dealer said on condition of anonymity.
“The Central Bank also limited forward premiums by five cents per day,” he said adding that the new directive means four-day forwards could be traded only five cents more than three-day forwards.
Some dealers said the central bank warned it would take necessary action if commercial banks do not follow the new directives.
The Central Bank declined to comment on the changes it had made in the exchange rate.
Dealers said the policy uncertainty weighed on the currency as the new Government has given some mixed signals on investments, discouraging exporter dollar sales amid continued importer demand. They expect the pressure on the rupee to ease with some equity-related inflows.
Two-days above one-week forwards, which were actively traded, ended at 133.25/35 per dollar compared to Thursday’s close of 133.45/50.
Two-week forwards ended at 133.45/55 per dollar compared to Thursday’s close of 133.55/60.
Dealers said exporters were reluctant to sell as they expected further depreciation in the currency in the short term, due to the widening trade balance and in line with softer global currencies.
The spot currency has not been trading, while forwards are facing downward pressure, dealers said.
The market had been expecting a flexible exchange rate with more foreign grants under the new Government as opposed to the controlled exchange rate regime earlier.
