Down to 10 from 1

n Colombo bourse ends 2011 sans Asia’s best tag but at No. 10

n After 125% and 96% returns in 2009 and 2010 market finishes third year down 8.5%; MPI dips sharply by 26%

n Market capitalisation up 0.15% to Rs. 2.2 trillion

n Foreign outflow tops Rs. 19 b though lower from Rs. 26.4 b in 2010

The Colombo stock market yesterday ended 2011 sans Asia’s best performer tag, which it enjoyed for two successive years.

Whilst the best performer tag was long lost – at least by mid-year – most analysts expected the market to at least close the last day of 2011 on a positive note. However, disappointing almost all stakeholders, the market failed on that score too as the ASI ended yesterday down by 0.2% and the MPI by 0.6%.

The fall was a bit sharper mid-day, but late buying interest propped the indices, though failing to move to positive territory.

The Colombo bourse eventually finished 2011 down by 8.46% in terms of the ASI and by a hefty 26% on the basis of the MPI. Last year the ASI gained by 96% on top of 125% in 2009, which made Colombo not only Asia’s best performer but also the world’s most consistent best market.

Despite the 8.46% dip, Colombo remained Asia’s 10th best performer thanks to other regional markets plunging much sharply.

The ASI hit an all-time high in February, but since then it had dipped by near 23% due to various yet conflicting reasons, such as much-needed correction and overregulation as well as volatility in global markets.

The year also saw net foreign outflow topping the Rs. 19 billion mark, though lower in comparison to the record Rs. 26.4 billion in 2010. The last four sessions of the year had seen a net outflow of Rs. 1.2 billion, largely on deals involving Commercial Bank.

Turnover at Rs. 525.7 million too was disappointing, though in line with recent levels but far below the 2011 average of Rs. 2.3 billion.

“The market closed 2011 with mixed feelings for the dawning 2012 as the indices moved, creating foul patterns fluctuating between red and green. Month-end settlements also weighed on indices whilst signs of a re-emergence of a speculative rally too were reflected on the abrupt behaviour of the indices,” Arrenga Capital said.

The Banks, Finance and Insurance sector continued to be the highest contributor to the market turnover (due to Commercial Bank) and the sector index came down by 0.38%. The share price of Commercial Bank gained Rs. 0.10 (0.10%) to close at Rs. 100. A total of 550,000 shares of Commercial Bank exchanged hands at Rs. 100.

Following the new appointments to its Board, Sampath Bank also secured some interest, however closed flat at Rs. 195.0. Another banking sector player, which has been quite active recently, National Development Bank continued momentum closing with an appreciation of 3.1% at Rs. 138.1.

The Trading sector also contributed heavily to the market turnover (due to Tess Agro) and the sector index decreased by 0.21%. The share price of Tess Agro dipped by Rs. 0.30 (6.25%) to close at Rs. 4.50.

Environmental Resources and HVA Foods were among the highest contributors to market turnover. The share price of Environmental Resources increased by Rs. 0.50 (1.23%) to close at Rs. 40, while HVA Foods share price moved up by Rs. 0.20 (0.52%) to close at Rs 39.

Heavyweights John Keells Holdings and Distilleries Company of Sri Lanka both witnessed some activity, however closed dipping by 1.1% and 1.3% respectively. Furthermore, another heavy relatively illiquid index, Nestle Lanka, grabbed some buying interest as it advanced 0.7%, closing at Rs. 877.0.

Meanwhile, the rupee closed flat at 113.89/90 to the dollar for a 27th straight session, with the Central Bank selling around $ 25 million to defend it, dealers said.

Reuters said the bank has spent around $ 690 million to keep the exchange rate steady since a three per cent devaluation on 21 November. It spent a net $ 1.36 billion in the first nine months of the year to keep depreciation pressure at bay.

Asia stocks end 2011 sharply lower