Shares end at 7-month high on stability hopes after polls


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Sri Lankan shares closed at their highest level in seven months in a truncated session yesterday on hopes that political stability after the August 17 parliamentary elections would help boost investor sentiment, brokers said.

Sri Lankans went to the polls yesterday to elect a new parliament in what amounts to a referendum on ex-President Mahinda Rajapaksa’s comeback bid, with the reformist alliance that swept him from power seeking a stronger mandate.

The trading time was reduced to half from the usual five hours due to the election.

The main stock index ended up 0.4 percent at 7,492.04, the highest close since January 16.

The day’s turnover stood at Rs.1.17 billion yesterday, in line with this year’s daily average of Rs.1.13 billion.

Foreign investors were net buyers of a net Rs.4.79 million worth of equities yesterday. But they have offloaded a net Rs.1.08 billion worth of shares so far this year.

“Heavy retail interest was there. The whole market was dominated by retail investors on the hopes of strong earnings and a stable government after the elections,” said First Capital Equities (Pvt.) Ltd Research Manager Dimantha Mathew.

“We expect the market to be very positive after the elections.”

Shares in Sri Lanka Telecom PLC jumped 3.59 percent, while Ceylon Theaters PLC rose 7.80 percent, pushing the index higher.
REUTERS



Rupee falls as state bank raises dollar peg
REUTERS: The Sri Lankan rupee fell yesterday, declining for a third session in four, as a state-run bank raised the currency’s peg against the dollar by 10 cents to allow the exchange rate to depreciate to 134.00, dealers said.

They expect the Central Bank, which has so far this year directed the market through the state-run bank, to let the currency remain weaker after yesterday’s parliament elections due to importer dollar demand and global trend.

Sri Lankans went to the polls yesterday to elect a new parliament in what amounts to a referendum on ex-President Mahinda Rajapaksa’s comeback bid, with the reformist alliance that swept him from power seeking a stronger mandate.

Analysts said the rupee may fall to 137 levels in the short term if the Central Bank allows it to depreciate, in line with the weakening seen in other global currencies against the dollar.

Dealers said there was heavy importer dollar demand with some booking forwards. Exporters also expect the rupee to depreciate further, they added.
“There was huge importer demand and no exporter (dollar) sales,” a currency dealer said, asking not to be named.

Central Bank officials were not immediately available for comment.

The currency has fallen 0.37 percent since August 5 as the state-owned bank raised the currency’s peg against the dollar by 50 cents on four occasions, allowing the exchange rate to fall.

 



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