Shares rise most in 7-1/2 months on bargain hunting

6 July 2018 10:02 am - 0     - {{hitsCtrl.values.hits}}

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(Colombo) REUTERS: Sri Lankan shares rose 1.2 percent yesterday, the most in seven-and-a-half months, as investors bought into blue chips such as Ceylon Tobacco Co Plc and John Keells Holdings Plc after three straight sessions of sharp fall.


However, continued foreign investor selling and concerns about lower economic growth limited the gains, analysts said.


The Colombo stock index ended 1.22 percent higher at 6,117.86, in its sharpest daily gain since Nov. 21, after declining 1.5 percent earlier in the session. It hit its lowest close since March 30, 2017 on Wednesday, and has declined for a 17th session in 20 through yesterday.


“Market bounced backed as stocks were attractive and investors must have seen the value in those blue-chip counters,” said Hussain Gani, deputy chief executive at Softlogic Stockbrokers. “It looks like 6,100 is the resistance level and we might see market holding on at these levels.” Meanwhile, the central bank is likely to keep key interest rates unchanged at its policy review on Friday, but a rate hike cannot be ruled out as the authorities struggle to ease depreciation pressure on the rupee.

Foreign investors sold Sri Lankan equities for an 11th consecutive session, extending the foreign outflow to Rs.1.3 billion (US$8.19 million).
They net sold equities worth Rs.163.3 million, extending the year-to-date foreign outflows to Rs.2.07 billion.


Turnover was Rs.512.2 million, less than this year’s daily average of Rs.922.8 million.


John Keells closed 1.5 percent higher, Ceylon Tobacco rose 1.2 percent, Distillers Co of Sri Lanka Plc ended 10.4 percent firmer, and leading fixed line telephone operator Sri Lanka Telecom Plc gained 3.8 percent. Investors are waiting for some positive news both on the economic and political fronts, said analysts, adding that the government’s policy implementation had been sluggish since both main parties in the ruling coalition lost local polls in February.


Finance Minister Mangala Samaraweera said last month that the economy was likely to grow about 4.5 percent this year, below a Central Bank estimate of 5 percent.
The International Monetary Fund (IMF) said on June 20 that Sri Lanka’s economy remained vulnerable to adverse shocks because of sizable public debt and large refinancing needs.


Ratings agency Moody’s said last week a strengthening U.S. dollar since mid-April has increased the credit risk of several emerging markets, including Sri Lanka, due to currency depreciation.


Moody’s said a strong U.S. dollar would also lead to a drop in foreign exchange reserves of countries such as Argentina, Ghana, Mongolia, Pakistan, Sri Lanka, Turkey, and Zambia.

 

 

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