COLOMBO, Nov 24, 2014 (EconomyNext) – Sri Lankan stocks closed 2.25 percent lower Monday, the benchmark index seeing the biggest daily drop in over a year, in a sell-off by investors unnerved by a sudden split in the ruling party ahead of a snap presidential poll.
Share prices plunged three percent at the opening but recovered later with the All Share Price Index ending at 7,235.25, down 166.37 points.
The S&P SL20 index, which tracks the top 20 largest and most liquid stocks on the Colombo Stock Exchange, closed at 4,044.94, down 82.32 points or almost two percent.
Turnover was 1.7 billion rupees with foreign investors remaining net buyers, brokers said.
The slump was triggered by political uncertainty after last week’s split in the ruling party ahead of an early presidential poll set for January 8, 2015.
Last Friday Health Minister Maithripala Sirisena quit to announce he would challenge President Mahinda Rajapaksa as the common opposition candidate, a day after Rajapaksa announced a snap presidential poll.
Several other government politicians, including Cabinet ministers, said they will back Sirisena as did the main opposition United National Party and other smaller parties.
The defections exposed deep divisions in the ruling party of Rajapaksa, who till then had seemed unassailable.
Lanka Securities said the political uncertainties caused the ASI to suffer its highest intra-day drop in 15 months.
"With this decline, market PE dropped from 14.7x to 14.1x within last two days."
The index was dragged down by price declines in stocks like John Keells Holdings, Carson Cumberbatch, Dialog Axiata and Nestle Lanka.
Most of the banking sector stocks except Amana Bank declined during Monday’s trading.