Friday 8 January 2016

Sri Lankan shares end at 1-1/2-year low; further weakness expected

Reuters: Sri Lankan shares fell for a fifth straight session on Friday to end at their lowest level in nearly 1-1/2 years, led by declines in diversified and banking shares.

Fears over investors shifting to risk-free assets such as government securities due to rising yields in government securities dented sentiment.

The main stock index ended 0.72 percent down at 6,726.28, the lowest close since July 18, 2014. It fell 2.44 percent this week.

The day's turnover was at 487.72 million rupees ($3.4 million), its lowest since Dec. 31.

"The index fell below a psychological barrier of 6,760 today. That means the market could come down further," said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

"The banking sector is the worst affected with the increased taxes from budget," he said, adding that global economic uncertainty also weighed on the market.

Investors are worried of further monetary tightening after the central bank raised commercial banks' statutory reserve ratio last week by 150 basis points with effect from Jan. 16.

Following the central bank's move, the yield on 91-day t-bill rose 14 basis points to an over-two-month high of 6.59 percent at a weekly auction on Wednesday.

Analysts expect more investors to shift from risky assets to fixed assets with higher interest rates and shrinking of global investments in Sri Lanka.

Shares in Distillers Company of Sri Lanka Plc fell 4.16 percent, while Carson Cumberbatch Plc lost 2.86 percent, dragging the overall index.

Conglomerate John Keells Holdings Plc fell 0.46 percent.

Foreign investors were net buyers for the fist time in five sessions on Friday.

They bought a net 17.15 million rupees ($119,263) worth of equities on Friday. But the foreign investors have been net sellers for 1.54 billion rupees worth of equities so far this year, as compared with 4.43 billion rupees outflow in 2015. 


($1 = 143.7000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)

Sri Lankan shares slump to over 17-month closing low

Reuters: Sri Lankan shares fell for a fourth straight session on Thursday to close at their lowest level in over 17 months as continued foreign selling weighed on the market, amid fears over investors shifting to risk-free assets such as government securities.

Local investor appetite for risky assets eroded after the central bank raised commercial banks' statutory reserve ratio last week by 150 basis points with effect from Jan. 16.

The main stock index ended 0.62 percent down at 6,775.27, its lowest close since July 21, 2014. It has fallen 1.7 percent so far this week.

Foreign investors sold a net 251.85 million rupees ($1.75 million) worth of equities on Thursday and a net 1.56 billion rupees worth of equities so far this year, as compared with 4.43 billion rupees in 2015.

"The market is losing ground as foreigners are exiting daily," said Yohan Samarakkody, head of research, SC Securities (Pvt) Ltd.

"This year will be packed with a lot of global uncertainties. So investors want to park their investments at safer locations," he added.

After China witnessed a fall in the yuan, global shares tumbled for a sixth session on Thursday, oil prices fell to near 12-year lows, and Shanghai shares dived 7 percent, igniting fears of competitive devaluations across Asia.

Following the central bank's move, the yield on 91-day t-bill rose 14 basis points to an over-two-month high of 6.59 percent at a weekly auction on Wednesday.

Analysts expect more investors to shift from risky assets to fixed assets with higher interest rates and shrinking of global investments in Sri Lanka.

Shares in conglomerate John Keells Holdings Plc fell 1.76 percent while Sri Lanka Telecom Plc lost 2.4 percent, dragging the overall index. ($1 = 143.8000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips)