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Sunday June 26th, 2022

Sri Lankan shares fall for 4th session on political woes, foreign selling

COLOMBO, June 4 (Reuters) – Sri Lankan shares fell for a fourth straight session on Thursday and closed at their lowest in six weeks, led by conglomerate John Keells Holdings Plc as concerns over political uncertainty before parliament elections dented sentiment.

Continued foreign selling also dragged the index lower.

The main stock index fell 0.4 percent to 7,120.91, its lowest finish since April 23, erasing 12.08 billion rupees ($90.22 million) worth of market capitalisation.

"Political uncertainty has shaken small-time investors", who account for the majority number of the transactions, said Reshan Kurukulasuriya, chief operating officer of Richard Pieris Securities (Pvt) Ltd.

Analysts said foreign investors were selling amid expectations of U.S. interest rate hike.

Foreign investors were net sellers of 52.5 million rupees worth of shares on Thursday, extending the net foreign outflow in the past seven sessions to 1.58 billion rupees. The bourse, however, has seen net inflows of 4.36 billion rupees in equities so far this year.

Despite political uncertainty, stockbrokers said better corporate earnings would help the market gain.

Turnover was 713.5 million rupees, well below this year’s daily average of about 1.13 billion rupees.

Political uncertainty 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.

The index has gained 3.2 percent since the rate cut.

Shares in conglomerate John Keells Holdings fell 1.34 percent, while Ceylon Tobacco Company Plc dropped 0.48 percent.

President Maithripala Sirisena’s government has said it would dissolve parliament once some crucial reform bills are passed. But it has not fixed a date for the election.

Analysts say investors are hoping a stable government after the election coupled with strong economic measures would boost confidence.

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