Sri Lankan shares end higher on foreign buying

FIRST CAPITAL’S HEAD OF RESEARCH, DIMANTHA MATHEW, SPEAKS TO REUTERS.

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Sri Lankan stocks closed higher on Friday led by financials, after hitting a more than one-week closing low in the previous session, on increased appetite for risky assets by foreign investors.  The Colombo stock index ended up 0.08 percent at 6,169.57, edging up from its lowest close since Jan. 10 hit on Thursday.

The index hit a two-week high on Jan.13 after the European Commission proposed increased market access for Sri Lanka as a reform incentive.

Foreign investors net bought 433.4 million rupees ($2.89 million) worth equities on Friday, the highest net inflow since Dec. 8, although they have net sold 1.35 billion rupees worth of shares so far this year. Turnover stood at 731.3 million rupees.

Shares in biggest listed lender Commercial Bank of Ceylon Plc rose 1.50 percent, while market heavyweight John Keells Holdings rose 0.57 percent.

“We have seen a foreign inflow after a while and that boosted the turnover and the bulk of the trades were from the foreign trading. Rest of the market was silent,” said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd.

“Because the sentiment is not that great, many investors are on a wait and see approach.”

Rising market interest rates, which move in tandem with t-bill yields, have been a cause for concern, brokers said.  Yields on treasury bills rose 1-16 basis points at a weekly auction on Wednesday to a four-month high after the central bank governor signalled reduced intervention to defend the rupee currency.

Investors are also concerned about possible political uncertainty as the main coalition partners in government are contesting local polls separately, analysts said.

($1 = 149.8000 Sri Lankan rupees)

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)

The comments on this report are provided by the Capital Markets Research Unit of First Capital Holdings PLC an investment bank in Sri Lanka.

The company operates in the capital markets of Sri Lanka in government securities – treasury bills and bonds, stock brokering and share market investments, asset management, private wealth management,  retirement planning, personal financial planning, unit trust, margin trading, capital market research, trustee services, corporate finance advisory services including corporate debt structuring (debentures, trust certificates, commercial papers), valuations, restructuring, mergers and acquisitions, initial public offerings (IPOs) and project advisory. 

The First Capital Group consists of First Capital Treasuries PLC, First Capital Limited, First Capital Markets Limited, First Capital Asset Management Limited and First Capital Equities (Private) Limited covering Colombo, Negombo, Matara, Kandy and Kurunegala.