Sri Lankan stocks fall sharply

EconomyNext – Sri Lankan stocks fell for the fourth straight trading day Monday in across the board selling that stock brokers said could be because of political uncertainty following the election of a new government.

The benchmark All Share Price Index (ASPI) was down over 100 points (1.4 percent by mid-morning, dragged down by losses in Commercial Bank, Hemas Holdings, Access Engineering and John Keells Holdings.

"It’s an across-the-board drop," said Amali Perera, Assistant Manager, Research at Asia Securities.

"Investors are being very cautious because of the political uncertainty and taking a wait-and-see approach. Foreign investors have been active although there was a bit of an outflow last week."

Sri Lanka’s government changed following the January 8 presidential poll in which incumbent strongman Mahinda Rajapaksa was defeated by Maithripala Sirisena representing a coalition of opposition parties.

The new government has promised probes against corruption allegations against the former regime and also a 100-day programme of urgent reforms to restore the independence of public institutions like the judiciary and police ahead of parliamentary polls by April.

Stock brokers declined comment on speculation that the stock market selling was caused by ‘black money’ associated with the former regime leaving the market.

The across-the-board selling which included retail investors, with turnover and volumes  also weak, pointed to profit-taking by investors, brokers said.

The market had risen about 22 percent in 2014 amid falling inflation and interest rates and improving corporate profits.

Access Engineering, which had been falling for several days, was down nine percent Monday morning.

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Analysts said investors were worried the company might not win as many deals in the island’s construction boom under the new government as it did previously.

JKH was down one percent. The group is unlikely to get approval for a casino project, included in a big property development project, as the new government has said they will oppose investments that go against the country’s traditional culture and religious beliefs.