Bourse up on better policy hopes after vote

Friday, 9 January 2015 03:59 - - {{hitsCtrl.values.hits}}

Reuters: The Sri Lankan index ended at a more than six-week high on Thursday, led by financials on hopes of new investor-friendly policies after the presidential election. The main stock index rose 0.79%, or 59.08 points, to end at 7,497.60, its highest since 20 November. “People are optimistic over new investor-friendly policies after the election,” said a stockbroker asking not to be named. “Whether it is going to be the current President or the Opposition candidate, investors see opportunities.” President Mahinda Rajapaksa’s bid for a third term hung in the balance as Sri Lanka went to the polls on Thursday, with voters split between the “devil they know” and an upstart who has promised to root out corruption and political decay. There were no reliable opinion polls ahead of the vote, but many believe Opposition candidate Maithripala Sirisena will benefit from a popular yearning for change after a decade under Rajapaksa. The economy has flourished in recent years, and many voters, especially ethnic Sinhalese Buddhists who represent 70% of the population – believe that sticking with Rajapaksa will keep living standards on an upward path. The Central Bank said last week the economy would grow annually at 8% between 2015 and 2020 after achieving an estimated growth of 7.8% in 2014. Thursday’s turnover was Rs. 1.45 billion ($11 million), more than last year’s daily average of Rs. 1.42 billion, stock exchange data showed. Rupee forwards traded weaker on Thursday on importer dollar demand, while exporters stayed away hoping for further weakening of the currency, dealers said. Four-day forwards, which were actively traded, closed slightly weaker at 132.80/90 per dollar compared with Wednesday’s close of 132.75/85, dealers said. “There was slight importer dollar demand, but the market was dull,” a currency dealer said. Dealers expect the fixed and controlled exchange rate regime to continue amid more foreign borrowing if Rajapaksa gets re-elected, while hoping for a flexible exchange rate with more foreign grants if Sirisena wins. Rupee forwards were maintained around 132 in December as the Central Bank defended the currency through moral suasion. The spot currency was not traded on Thursday. Dealers said unusually high imports towards the end of 2014, amid lower interest rates and a stable exchange rate pressured the rupee.

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