Shares end steady; turnover slumps to over two-and-a-half-month low

Reuters: Shares closed steady on Wednesday as positive sentiment after an IMF loan approval was offset by concerns over rising interest rates and foreign fund outflows.

Turnover was Rs. 390.8 million ($2.68 million), the lowest since 19 March, and nearly half of this year’s daily average of around Rs. 782.5 million.

The benchmark Colombo stock index ended 0.03% higher at 6,526.12.

“We don’t expect a lot until the interest rates are down,” said Dimantha Mathew, Head of Research at First Capital Equities Ltd.

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.

The International Monetary Fund’s (IMF) Executive Board approved a three-year $1.5 billion loan to support Sri Lanka’s economic reform agenda, the global lender said on Saturday.

Investors are concerned about foreign outflows, with overseas investors offloading a net Rs. 38.2 million worth of shares on Wednesday, extending the year-to-date net foreign outflow to Rs. 5.7 billion.

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

Ceylon Cold Stores Plc rose 1.90%, Ceylon Tobacco Company Plc gained 0.91%, Sri Lanka Telecom Plc added 0.76%, while conglomerate John Keells Holdings Plc increased 0.32%.