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Sunday June 26th, 2022

Sri Lankan shares end at 8-week low on political uncertainty

COLOMBO, June 10 (Reuters) – Sri Lanka’s stock index fell for a third straight session on Wednesday to close at its lowest level in eight weeks, with turnover slumping to a near three-month low as concerns over political uncertainty dented demand for risky assets.

President Maithripala Sirisena’s government has said it would dissolve parliament once some crucial reforms including an electoral bill are passed, but has yet to fix a date for the election.

The main stock index ended down 0.05 percent at 7,063.45, slipping to its lowest closing level since April 15.

"The market is getting slower day by day as everybody is awaiting to see some kind of a direction amid political instability and confusion," said a stock broker asking not to be named.

Some stockbrokers said investors were waiting for the right moment, and sellers were not ready to dispose of holdings at low prices given the lack of buying interest.

Turnover was 363.6 million rupees ($2.72 million), hovering around its lowest since March 13 and well below this year’s daily average of about 1.1 billion rupees.

Analysts said foreign investors have been selling shares amid expectations the U.S. would hike key interest rates sooner than expected. An upbeat U.S. nonfarm payrolls in May, the largest gain since December, has raised chances for a rate hike as early as September.

Foreign investors bought a net 60.2 million rupees ($449,925.26) worth of shares, but the bourse saw a net foreign outflow to 1.52 billion rupees worth shares in the past 11 sessions through Wednesday.

The bourse has seen net inflows of 4.42 billion rupees in equities so far this year.

Political uncertainty due to the Ranil Wickremesinghe-led coalition government not having a parliament majority has been a drag on the market, though the trend reversed after the central bank cut key monetary policy rates to record lows on April 15.

Stockbrokers said better corporate earnings would help the market gain.

Shares in No.1 fixed telephone operator Sri Lanka Telecom Plc eased 1.94 percent while Lanka ORIX Leasing Company Plc fell 3.37 percent.

Conglomerate John Keells Holdings Plc fell 0.52 percent.

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