Shares steady at 5-week closing low; foreigners buy amid concerns

Friday, 14 February 2014 01:00 - - {{hitsCtrl.values.hits}}

REUTERS: Sri Lankan shares ended steady on Thursday at their lowest close in five weeks ahead of the Central Bank’s policy rate decision, but foreigners bought the island nation’s risky assets on a net basis after five straight sessions, though stockbrokers said foreign funds’ exit is far from over. Foreign investors bought a net Rs. 118.97 million ($ 909,400) worth of shares on Thursday, after the market suffered a Rs. 4.62 billion outflow in the previous five sessions as some offshore funds exited the market amid broader selloff from emerging markets. The main stock index ended 0.02% down, or 1.09 points, at 6,083.39, its lowest close since 10 January. It has lost over 2.6% in the last eight sessions through Thursday. The bourse has seen Rs. 3.11 billion of foreign outflow so far in 2014, after enjoying a net inflow of Rs. 22.88 billion last year Analysts said the market is still concerned over further foreign outflows, which is largely due to foreign selloff in emerging markets with some offshore funds exiting with profits. “Foreign selling is not completely over. Some of those funds that exit last week are still negotiating to sell some quantity. So the main concern is when this foreign selling would end,” a stockbroker said on condition of anonymity. The broader market expects the Central Bank to hold its key policy rates at multi-year lows at its announcement scheduled for Monday. Analysts said local investors are active in the market after interest rates on treasury bills eased to multi-year lows, making fixed-income assets unattractive. Top conglomerate John Keells Holdings PLC lost 1.46%, pulling the overall index down. The index, however, has risen 2.89% so far this year, following a 4.8% gain in 2013. It fell in the previous two years. The day’s turnover was Rs. 665 million, less than this year’s daily average of about Rs. 1.22 billion. The market has witnessed an average turnover of Rs. 1.71 billion in the seven straight sessions through Tuesday, which analysts attributed to active buying by local investment funds and institutional investors. Both stocks and currency markets will be closed for a Buddhist religious holiday on Friday. Normal trading will resume on Monday.