Bourse slumps on takeover law

15 November 2011 01:39 pm - 0 - {{hitsCtrl.values.hits}}

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Sri Lanka's stock market hit a 14-month low on Tuesday, falling 2.4 percent led by blue chips although state funds bought shares to boost confidence, which was dented due to an assets acquisition bill ahead of next week's budget presentation.

The main share index fell 2.36 percent or 147.22 points weaker at 6,092.30 , the lowest since Sep 9, 2010. It saw its highest percentage fall since Feb. 15.

The day's turnover was 808.8 million Sri Lanka rupees ($7.3 million), highest since Nov. 3 but well below last year's average of 2.4 billion and this year's 2.5 billion.

"Market turnover increased...which can be attributed to government institutions buying in as an attempt to instill investor confidence in the market," TKS securities said in an investor note.

The bourse on Tuesday suspended the dealings of Pelwatte Sugar Industries and Hotel Developers Lanka Plc, which were listed in the takeover bill.

Shares in Pelwatte Sugar have fallen 15.5 percent and those of Hotel Developers Lanka have dropped 27.1 percent since the market first got wind of the proposed bill on Nov. 1.

Analysts said investors were confused about the legislation which they said would further hurt long-term institutional investor sentiment. Moody's Investors Service on Monday said the law was potentially credit-negative.

Total volume was 47.7 million shares, against a five-day average of 31.4 million. The 30-day and 90-day average trading volumes were 60.4 million and 102 million. Last year's daily average was 67.9 million.

The bourse has fallen 10.2 percent since Oct. 1. It has fallen to Asia's 11th-best performer with a year-to-date loss of 8.2 percent after being on the top for most of 2011 and in 2009

and 2010.

The bourse saw a net foreign outflow of 16.6 million rupees on Tuesday, but thus far in 2011, offshore investors have sold 16.6 billion, and a record 26.4 billion in 2010.

Losers outnumbered gainers by 188 to 29 on Tuesday, Thomson Reuters data showed.

The rupee closed flat at 110.18/20 per dollar as a state bank sold dollars at 110.20 rupees despite importer demand for dollars, dealers said. (Reuters)

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Bourse slumps on takeover law

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