Sri Lanka shares fall 0.5% on low liquidity; rupee down

Reuters: Sri Lanka’s share market dropped further to a more than two-month low on Friday on a credit crunch as stockbrokers have stopped credit trading, while the rupee edged down on importer dollar demand.

The main share index fell 32.25 points or 0.5 per cent to 6,381.07 – its lowest since 16 September. Asia’s best performer in 2010, with a 88.5 per cent gain, has fallen 11.5 per cent since hitting a record high on 4 October, mainly due to a lack of credit in the market.

The bourse is trading at a forward price-to-earnings ratio of 20.1 compared with all-Asia’s 13.2 and global emerging market’s 12.3, Thomson Reuters StarMine data showed. The CSE’s 14-day relative strength index is at 37.9, towards the lower neutral limit of 30.

The bourse saw trading volume of 94.6 million shares on Friday, higher than average trading volume of 59.4 million and 45.4 million in the past five days and 30 days respectively. The 90-day average volume of bourse was at 71 million.

 

Foreign investors have sold a net Rs. 27.3 billion in shares this year, but on Friday bought a net Rs. 740 million. Turnover was Rs. 1.7 billion ($15.2 million), around three times the 2009 daily average of Rs. 593.6 million.

The rupee closed weaker at 111.50/52 a dollar from Thursday’s 111.35/38 on importer dollar demand, currency dealers said. It hit a 23-month high on Wednesday, a day after the Central Bank announced plans to relax strict foreign exchange controls.