Shares fall for 3rd straight day on rising interest rates

Thursday, 2 June 2016 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Shares edged down on Wednesday for a third straight session as rising interest rates weighed on risky assets, while lack of new catalysts and concerns over foreign outflows also dented sentiment.

Treasury bill yields rose between four and 35 basis points to near three-year highs in two weekly auctions through Wednesday despite the Central Bank leaving key policy rates steady for a third straight month on May 20.

Foreign investors were net sellers of Rs. 35.4 million ($239,189.19) worth of shares on Wednesday, extending their year-to-date net equities selling to Rs. 5.62 billion.

The benchmark Colombo stock index ended 0.12%, or 7.76 points, weaker at 6,542.75, its lowest close since 29 April. The index declined 0.94% during last week.

“The market is moving sideways. All are waiting for something to happen to boost sentiment. Still there is no positive sentiment for investors to come in,” said a stock broker asking not to be named.

Another broker 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 15 basis points to 10.15% in the week ended 27 May.

Analysts said market sentiment remained weak as investors were waiting for catalysts such as a big Foreign Direct Investment or initial public offering or inflows from the International Monetary Fund (IMF).

Turnover stood at Rs. 618.1 million, well below this year’s daily average of around Rs. 793.1 million.

Shares in Dialog Axiata Plc fell 2.68% while those in Lanka ORIX Leasing Company Plc dropped 2.93%, dragging the index down.

Top conglomerate John Keells Holdings’ shares ended 0.06% weaker and accounted for 41% of the day’s turnover.