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Sri Lanka shares hit 30-month low on weak rupee, foreign selling

DIMANTHA MATHEW, HEAD OF RESEARCH AT FIRST CAPITAL HOLDINGS PLC, SPEAKS TO REUTERS

SEPTEMBER 21, 2018

COLOMBO, Sept 20 (Reuters) – Sri Lankan shares dropped to their lowest close in 30 months on Thursday as foreign investors sold market heavyweight John Keells Holdings, while a weak rupee dented sentiment.

The Colombo stock index ended 0.88 percent weaker at 5,922.18, its lowest close since March 9, 2016. It lost 1.4 percent last week, its first weekly drop in four.

“Uncertainty in the rupee currency is having an impact on the local investor sentiment. It has created a significant negative sentiment,” said Dimantha Mathew, head of research at broker First Capital Holdings.

“We saw a bit of foreign selling pressure also. Big caps started to fall again and with that the overall market saw a significant decline.”

Analyst said they expect a minor support at 5,900 levels, while stronger support at 5,800 levels.

Turnover was 547.6 million rupees ($3.25 million) on Thursday, less than this year’s daily average of 795.3 million rupees.

Foreign investors sold a net 137 million rupees worth of shares extending the year-to-date net foreign outflow to 5.2 billion rupees worth of equities.

Earlier in the session, the Sri Lankan rupee dropped 0.6 percent and hit an all-time low of 168.15 per dollar, pulled down by importer demand for scarce U.S. currency, market sources said.

Analysts said the fuel price hike also hurt investor confidence as it could hit corporate earnings. Fuel retailers raised gasoline and diesel prices in September for a third time in four months due to higher global oil prices and a weaker rupee.

Investors are awaiting cues from the national budget in November.

Shares of Conglomerate John Keells Holdings Plc, which touched its 30-month close during the trade, ended 3.4 percent weaker, Nestle Lanka Plc closed down 2.8 percent, Sampath Bank Plc ended 2.2 percent weaker, and Melstacorp Ltd closed 2.7 percent down.

First Capital is an investment bank offering independent advice and transaction execution relating to capital raising and other strategic needs including mergers and acquisitions for investment in Sri Lanka. The Company’s industry leading transactions are reflective of the ingenuity in enabling the most opportune financing processes for our clients. First Capital’s services for investment in Sri Lanka include a total service for public offers of corporate debt, acting in the capacity of managers/ financial advisors and placement agents, in addition to due diligence, pre-offer preparation, offer management, distribution strategy and after-market advisory services, initial public offerings, secondary offerings such as rights issues, corporate actions including mandatory and voluntary offers, private placements and at-market placements of listed securities.