Shares end lower as investors shun risky assets

REUTERS: Sri Lankan shares edged down for a second straight session yesterday, hovering near a 22-month low, as investors preferred low-risk assets in line with global peers and as an interest rate hike last week continued to dampen sentiment. Shares fell in Europe and Asia yesterday as oil prices dipped after Saudi Arabia effectively ruled out output cuts by major producers, lifting investor appetite for safe-haven assets such as the Japanese yen and gold.

Yields on 182-day and 364-day T-bills rose 50-55 basis points at a weekly auction yesterday to a more-than twoyear high, signalling a further rise in market interest rates. The benchmark share index closed 0.18 percent weaker at 6,217.64, hovering near its lowest close since April 2014 which it hit on Thursday. It has fallen around 10 percent this year through yesterday, amid a rise in market interest rates. “Market is down mainly because of the negative effects of the rate hike,” said SC Securities (Pvt.) Ltd Head of Research Yohan Samarakkody. “It’s not factored in immediately with low liquidity, but it will be factored in slowly.

” The Central Bank raised key policy interest rates by 50 basis points on Friday from a record low, to prevent demanddriven inflationary pressure. Turnover was Rs.384.3 million, well below this year’s daily average of Rs.718.3 million.

Foreign investors sold a net Rs.4.3 million worth of shares yesterday, extending the net foreign outflow to Rs.1.47 billion worth equities so far this year. Shares in Commercial Leasing and Finance PLC fell 7.89 percent, while Sri Lanka Telecom PLC dropped 2.43 percent