Investor woes continue; Stock market dips by 3%

Wednesday, 6 June 2012 01:12 - - {{hitsCtrl.values.hits}}

The Colombo stock market fell 2.8 per cent yesterday wiping out Rs. 20 billion in value to hit a 23-month low as domestic and foreign investors sold on both worry global gloom and a weak rupee and the outlook for interest rates.

The main index ASI fell 136.58 points to 4,748.60, its lowest since July 19, 2010, extending its fall to 9.1 per cent in the last 11 sessions.

Shares in market heavyweight and top conglomerate John Keells Holdings PLC, which saw foreign selling of 324,672 shares, fell 5.7 per cent to 173.60 rupees.

Two brokers said foreign outflows were led by risk-averse offshore investors and funds in the face of the debt crisis in Europe and a weaker global economic outlook.

“When the market is coming down like this, foreign investors are also stepping back and watching,” said one of the brokers, who declined to be identified. European shares and the euro fell as finance chiefs from the world’s major nations prepared to push Europe for faster action on its growing debt crisis and Spain said the euro zone’s fourth biggest economy was shut out of the credit markets.

Foreign investors were net sellers of 43 million rupees worth of Sri Lankan shares on Tuesday but still, the bourse has seen 22.57 billion rupees worth of net foreign inflows this year. The day’s turnover was 286.6 million rupees.

A falling currency and rising interest rate outlook contributed to the grim mood, analysts said.

Yields in Sri Lanka’s 364- day and 91-day T-bills have risen 330 basis points and 233 basis points since the central bank raised policy rates for the first time since 2007 on Feb. 3.