Sri Lankan shares end at 7-month high on stability hopes
COLOMBO, Aug 18 (Reuters) – Sri Lankan shares ended at seven-month high on Tuesday on hopes that political stability after this week’s parliamentary polls would boost sentiment, but lack of an absolute majority for any party capped the gains.
Monday’s poll results showed the ruling United National Party (UNP)-led coalition was poised to win most of the seats, but could fall short of a majority in a 225-member legislature.
The main stock index ended up 0.09 percent, or 6.66 points, at 7,498.70, its highest close since Jan. 16.
The day’s turnover stood at 1.57 billion rupees ($11.7 million), above this year’s daily average of 1.13 billion rupees.
Foreign investors were net sellers of a net 149.7 million rupees worth of equities on Tuesday, extending the net foreign outflow to 1.23 billion rupees so far this year.
"The market went up initially on election hopes, but short-term profit-taking slowed down the market," said Dimantha Mathew, a research manager at First Capital Equities (Pvt) Ltd.
"Investors will wait to see how the government will be formed and whether the ruling party could form a stable government or will it be a hung parliament," Mathew said.
A strong result for the UNP would likely help Ranil Wickremesinghe to continue as the prime minister of a centre-right government that would seek to revive stalled reforms to make the government more open and accountable.
Aides to President Maithripala Sirisena say he wants to form a broad-based national unity government, with his own loyalists from the Sri Lanka Freedom Party, that would be able to muster a two-thirds majority in parliament to pass crucial constitutional reforms.
Shares in Cargills (Ceylon) Plc rose 6.7 percent, while Asian Hotels and Properties Plc rose 5.19 percent, pushing the index higher.