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Shares end steady; rising interest rates weigh

7 June 2016 09:59 am - 0     - {{hitsCtrl.values.hits}}

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REUTERS: Sri Lankan shares ended steady yesterday as concerns over rising interest rates and foreign outflows erased early gains from positive sentiment after an International Monetary Fund (IMF) loan approval. Turnover was very low at Rs.476.2 million, well below this year’s daily average of around Rs.788 million. IMF’s executive board has approved a threeyear US $ 1.5 billion loan to support Sri Lanka’s economic reform agenda, the global lender said on Saturday. The benchmark Colombo stock index, which gained 0.46 percent in early trade, ended flat at 6,518.98. It declined 0.8 percent last week, losing for the third straight week after gaining six consecutive weeks.

Treasury bill yields rose between four and 35 basis points to near three-year highs in the last two weekly auctions through Wednesday despite the Central Bank leaving key policy rates steady for a third straight month on May 20. “Market was up in the morning due to the IMF news,” said First Capital Equities (Pvt.) Ltd Head of Research Dimantha Mathew.

“With high interest rates, investors are still on a wait and see approach and the biggest issue is the foreign outflow.” Investors are concerned about foreign outflows, with overseas investors offloading a net Rs.92.3 million worth of shares yesterday, extending the year-to-date net foreign outflow to Rs.5.64 billion. Stockbrokers said a rise in interest rates could be detrimental to risky assets if they jumped beyond 12 percent. The average prime lending rate (AWPR) edged up eight basis points to 10.23 percent in the week ended June 3. Shares of Lion Brewery PLC fell 5.85 percent while shares of John Keells Holding PLC fell 0.19, dragging the overall index.

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See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.

 

 

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