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Sri Lankan stocks fall to 1-week low as political woes weigh

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

APRIL 5, 2018

COLOMBO, April 4 (Reuters) – Sri Lankan shares fell on Wednesday to their lowest in one week as political uncertainty hurt sentiment ahead of a no-confidence vote against Prime Minister Ranil Wickremesinghe, brokers said.

The prime minister faces the vote at around 1600 GMT that could go down to the wire and lead to political instability in the island nation, even if the government manages to scrape a win.

Meanwhile, Sri Lanka’s central bank unexpectedly cut its key lending rate by 25 basis points on Wednesday, as policy makers sought to revitalise an economy growing at its weakest pace in 16 years and facing heightened political uncertainty.

The Colombo stock index ended 0.22 percent down at 6,444.41, its lowest close since March 28.

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

“Market is down due to weak buying interest from the local investors as they are waiting for direction after the no-confidence motion,” said Dimantha Mathew, head of research, First Capital Holdings.

“The biggest deterrent is the political uncertainty. The rate cut did not have an impact today.”

The turnover stood at 1.2 billion rupees ($7.7 million), same as this year’s daily average of around 1.2 billion rupees.

Foreign investors sold shares worth net 152.9 million rupees on Wednesday, extending the year-to-date net foreign outflow to 1.29 billion rupees worth equities.

Shares in Distillers Sri Lanka Plc fell 16.7 percent and Ceylon Cold Stores Plc ended 2.1 percent down. ($1 = 155.8500 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)