Sri Lanka shares mark over-2-wk closing low on foreign selling

September, 16, 2018

Reuters - Sri Lankan shares fell to a more-than-two-week closing low on Friday as investors sold beverage and banking shares, even as foreign investors continued to trim their equity exposure for a third straight day.

Analysts said foreign investors sold a net 340.7 million rupees worth of equities on Friday, extending the year-to-date net foreign outflow to 4.8 billion rupees worth of shares.

Sentiment was also weighed down by the local currency hitting a fresh low for the third straight session.

The Colombo stock index ended 0.49 percent weaker at 6,031.26, its lowest close since Aug. 28. It lost 1.4 percent this week, falling for the fist time in four weeks.

The day’s turnover was 786.1 million rupees ($4.81 million), less than this year’s daily average of 799.1 million rupees.

“Market is down dominated by foreign selling, fear of rupee depreciation and also fuelled by the Nomura report,” said Reshan Kurukulasuriya, chief operating officer, Richard Pieris Securities (Pvt) Ltd.

Japanese bank Nomura Holdings ranked Sri Lanka among seven emerging market economies that were at risk of an exchange rate crisis. However, the Central Bank in a statement said Nomura Holdings has made a serious computational error with regard to Sri Lanka’s external vulnerability and its short-term external debt is nowhere near the $160 billion figure that Nomura analysts quoted.

Nomura later corrected the figure to $7.5 billion, but said its analysts have used the same figure to calculate the country’s Damocles score for the analysis and thus it is unchanged.

Investors have been raising concerns over consistency in the government’s policy after it changed some budget policies announced last year.

Analysts said the fuel price increase also hurt investor confidence as it could hurt earnings of companies.

Sri Lankan fuel retailers raised gasoline and diesel prices for a third time in four months on Tuesday due to higher global oil prices and a weaker rupee.

Investors are also awaiting cues from the national budget which the government is set to unveil in November.

Shares of market heavy weight Ceylon Tobacco Company Plc fell 5.7 percent while top mobile phone operator Dialog Axiata ended 1.6 percent weaker, Sampath Bank Plc closed 1.8 percent down and biggest listed lender Commercial Bank of Ceylon Plc lost 0.9 percent.