Shares at one month low ahead of Budget

Thursday, 11 November 2010 00:40 - - {{hitsCtrl.values.hits}}

Reuters: Sri Lanka’s benchmark share index fell on Wednesday for a sixth straight session as investors waited for the 2011 budget and a liquidity crunch caused by yet-to-be-released initial public offering refunds persisted.

Sri Lanka’s main share index edged down 57.29 points or 0.87 per cent to 6535.09, its lowest close since 12 October. It is Asia’s best performer in 2010 with a 93 per cent gain. It has fallen 9.3 per cent since it hit a record high on 4 October.

Hotel Reefcomber plummeted 65.4 per cent to Rs. 69.2, which analysts attributed to announcements of a 2-for-1 rights issue at Rs. 25 each and expected warrant issues.

The bourse is trading at the highest forward price-to-earnings ratio in Asia and global emerging markets at 20.3 times, compared with 13.9 and 13.1 respectively, Thomson Reuters StarMine data showed. The CSE’s 14-day relative strength index is at 45.1, between the neutral limit of 30-70.

Foreign investors have sold a net Rs. 25.8 billion in shares this year, but on Wednesday bought a net Rs. 7.3 million. Turnover was Rs. 939 million ($ 8.4 million), the lowest since 12 August, but more than the 2009 daily average of Rs. 593.6 million.

The rupee closed weaker at 111.66/70 rupees a dollar from Tuesday’s close of 111.62/64, due to State bank dollar buying for a second day, which dealers attributed to a cash call to pay for the $ 63 million buyback of Royal Dutch Shell’s local arm.

FT factors to watch

Whether foreign funds will start to buy shares after US QE2 stimulus

Whether the Central Bank will maintain T-bill yields at weekly auction as they did on Wednesday

Proposals for reforms in 2011 Budget due on 22 November

Performance shown in September quarter earnings