Sri Lanka stocks slump on profit-taking, political jitters
(EconomyNext) – Sri Lankan stocks ended lower Monday on profit-taking and some uncertainty over the new government’s stability after four days of share price gains, brokers said.
The All Share Price Index fell 0.5 percent (39.09 points) to 7,566.70 while the S&P SL20 index, which tracks the top 20 largest and most liquid stocks on the Colombo Stock Exchange, lost 0.3 percent (10.91 points) to end at 4,261.59
Turnover was 2.6 billion rupees boosted by several crossings or off-market negotiated deals.
Stock prices rose steeply in the first half-hour of trading in what seemed to be continued euphoria over the opposition’s victory in last week’s presidential polls, with the benchmark index gaining about 60 points, but then slumped.
Dimantha Mathew, Manager Research at First Capital Equities said the fall was partly owing to profit taking and partly to political uncertainty.
"There was profit taking after four days of heavy gains. Lots of counters reached 52-week highs," he said.
"There was heavy interest in John Keells Holdings (JKH), Access Engineering and some of the banks like Commercial Bank, Union Bank, Hatton National Bank and Seylan Bank."
Investors were also unnerved by a power struggle in the former ruling party, Sri Lanka Freedom Party (SLFP), which spilt just before the January 8 poll.
Both new President Maithripala Sirisena and the defeated former president Mahinda Rajapaksa are now trying to gain control of the SLFP whose support is needed for a new government to be formed.
Rajapaksa still retains the loyalty of a big chunk of SLFP parliamentarians.
Sirisena on Sunday invited all parties in parliament to join his cabinet, which is expected to be formed by January 19 when parliament re-opens.
Mathew of First Capital Equities said there were seven crossings with the biggest being three deals involving 2.5 million shares of Commercial Bank at 194 rupees each.
Selling pressure was heavy in Access Engineering over concern it might not win as many contracts in the island’s construction boom under the new government as it did under the previous regime.
It was the most actively traded share and ended down almost 10 percent (3.20 rupees) at 30 rupees.
There was some selling in JKH which ended at 241.50 rupees, down 50 cents.
President Sirisena has said his new government was against casino projects approved by Rajapaksa, one of which involves JKH.