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Wednesday July 6th, 2022

Sri Lankan shares slip to over 7-week low

COLOMBO, June 8 (Reuters) – Sri Lanka’s stock index closed at its lowest in more than seven weeks on Monday led by market heavyweight John Keells Holdings Plc, with concerns over political uncertainty before elections to parliament denting sentiment.

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

The main stock index ended down 0.62 percent at 7,078.66, slipping to its lowest close since April 15.

"If they dissolve the parliament, there would be a bit more certainty regarding the elections, whereas now it seems lot weighs on passing electoral reforms with the current minority parliament," said Danushka Samarasinghe, head of research at Softlogic Stockbrokers.

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

Analysts said foreign investors have been selling shares amid expectations the U.S. would hike key interest rates sooner than later. 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, however, bought a net 40.1 million rupees ($299,477.22) worth of shares after offloading a net 1.51 billion rupees worth of shares in the past nine sessions.

The bourse, however, 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.

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

Turnover was 659.7 million rupees ($4.93 million), less than this year’s daily average of about 1.12 billion rupees.

Conglomerate John Keells Holdings fell 2.56 percent while Good hope Plc fell 11.42 percent. Shares in Ceylon Tobacco Company Plc eased 0.69 percent.

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