Shares close at more than 1-week high

REUTERS: Sri Lankan shares closed at a more than one-week high yesterday as investor sentiment remained upbeat following approval of a key loan by the International Monetary Fund (IMF), but concerns over rising interest r a tes and foreign fund outflows capped gains. The IMF’s executive board approved a three-year, US $ 1.5 billion loan to support Sri Lanka’s economic reform agenda, the global lender said on June 4.

Treasury bill yields have risen between 16 and 36 basis points to near three-year highs in the last three weekly auctions through Wednesday despite the Central Bank leaving key policy rates steady for a third straight month on May 20. Stockbrokers said a rise in interest rates could be detrimental to risky assets if they jumped beyond 12 percent.

The average prime lending rate edged up 8 basis points to 10.23 percent in the week ended June 3. The benchmark Colombo stock index ended 0.12 percent higher at 6,538.25, its highest close since June 1. The bourse gained 0.17 percent last week, snapping a threeweek losing streak. “Slow upward trend is continuing with the positive sentiment created after the IMF deal, but high interest rates are impacting the investor confidence,” said First Capital Equities (Pvt.) Ltd Head of Research Dimantha Mathew.

“Today, the turnover was pushed up by some block deals.” Turnover stood at Rs.608.3 million, the highest since June 3, but still less than this year’s daily average of around Rs.771.6 million. Overseas funds offloaded a net Rs.111.1 million worth of shares yesterday, extending the year to date net foreign investor outflow to Rs.5.84 billion worth of equities. P r i m e M i n i s t e r R a n i l Wickremesinghe told parliament last week that the government would take measures to abolish the Exchange Control Act and introduce a capital gains tax soon, without giving any time frame. Shares in Carson Cumberbatch PLC jumped 5.34 percent, while Ceylon Cold Stores PLC rose 2.50 percent and Asiri Hospital Holdings PLC climbed 1.97 percent. Conglomerate John Keel ls Holdings PLC was up 0.82 percent.