Bourse down on liquidity shortage

Reuters: Sri Lanka’s benchmark share index fell on Tuesday for a fifth straight session as over Rs. 60 billion stayed locked up in initial public offerings and hampered liquidity.

Sri Lanka’s main share index edged down 47.81 points or 0.72 per cent to 6592.38, its lowest close since 28 October. It is Asia’s best performer in 2010 with a 94.7 per cent gain.

Analysts said liquidity was also hampered by a lack of credit trading from brokers, ahead of the 1 January imposition of a ban on it by the Securities and Exchange Commission ruling.

The bourse is trading at the highest forward price-to-earnings ratio in Asia and global emerging markets at 20.4 times, compared with 13.8 and 13 respectively, Thomson Reuters StarMine data showed. The CSE’s 14-day relative strength index is at 48.7, between the neutral limit of 30-70.

Foreign investors have sold a net Rs. 25.8 billion this year, but on Monday bought a net Rs. 89.8 million worth’ of shares. Turnover was Rs. 1 billion ($9.4 million), more than the 2009 daily average of Rs. 593.6 million, but less than half this year’s daily average of 2.5 billion.

The rupee closed weaker at Rs. 111.62/64 a dollar from Monday’s close of 111.47/52, due to State bank dollar buying, which dealers attributed to a cash call to pay for the $ 63 million buyback of Royal Dutch Shell’s local arm Shell Gas Lanka.      



FT factors to watch

Whether T-bill yields rise further at Wednesday’s weekly auction

If US QE2 stimulus will bring inflows into portfolio investments and its impacts

Proposals for reforms in 2011 Budget due on 22 Nov.

Performance shown in September quarter earnings