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Sri Lankan stocks end weaker on political woes

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

APRIL 2, 2018

COLOMBO, April 2 (Reuters) – Sri Lankan share index ended weaker on Monday, hovering near its nine-week closing low hit last week, as political woes over a no-confidence motion against the prime minister weighed on sentiment, although foreign buying boosted the turnover, brokers said.

The turnover stood at 2.3 billion rupees ($14.82 million), well above this year’s daily average of around 1.2 billion rupees.

The Colombo stock index ended 0.42 percent weaker at 6,449.90, near its lowest closing since Jan. 23 hit on Wednesday. The markets were closed on Friday for a holiday.

The index rose 0.51 percent last week, its first weekly gain in five, but dropped 1.14 percent last month

“Local investors are on the sidelines ahead of the no-confidence motion, but foreign buying boosted the turnover,” said Dimantha Mathew, head of research, First Capital Holdings.

Foreign investors bought a net 1.6 billion rupees worth of shares on Monday, but they have net sold 1 billion rupees worth equities so far this year.

Political uncertainty and worries over a slowing economy weighed on sentiment, brokers said.

Prime Minister Ranil Wickremesinghe is facing a no-confidence motion, which will be debated on April 4 before voting, with analysts saying support from many political parties will be needed for Wickremesinghe to clear the vote.

Cautious investors await the outcome of the rate announcement, said analysts.

Sri Lanka’s central bank is expected to keep key interest rates unchanged on Wednesday after a rate review, but economists in a Reuters poll are not ruling out the possibility of a rate cut to help bolster economic growth that has slipped to a 16-year low.

Shares in Asiri Hospitals Plc ended down 9.1 percent, while LAUGFS Gas Plc closed 22 percent down, Commercial Bank of Ceylon Plc ended 1.9 percent down and Dialog Axiata Plc closed 0.7 percent weaker.

Sri Lanka’s economy grew by 3.1 percent in 2017, the slowest in 16 years and well below the 4.5 percent seen in 2016, revised government data released showed last week.

$1 = 155.2000 Sri Lankan rupees Reporting by Ranga Sirilal and Shihar Aneez, Editing by Sherry Jacob-Phillips