Sri Lanka bourse slips ahead of policy rates, IMF

Sri Lanka’s share market fell more than 1 percent on Thursday, erasing 28 billion rupees ($245.83 million) of value, a day ahead of the central bank’s monetary policy announcement and expected International Monetary Fund comments on the economy.

Retail investors, meanwhile, booked profits to settle debts after the regulator suspended trading of warrants in Environmental Resources Investment PLC, which fell 70.91 percent to 1.60 rupees.

The main share index ended 1.35 percent or 76.84 points weaker at 5,605.49, lowest since Jan. 26.

“With the suspension of Environmental Resources Investment, many retail traders had to sell to settle margin calls due to their portfolio coming down sharply,” said a stockbroker on condition of anonymity.

Analysts said institutional investors are worried about a possible rise in interest rates, depreciation in the rupee and Sri Lanka turning down the remaining $800 million in disbursements from a $2.6 billion International Monetary Fund loan.

Foreign investors were net buyers of 116.2 million Sri Lankan rupees on Thursday, extending the net foreign buying to 807.3 million rupees worth of shares so far this year, after net outflows of 19.1 billion last year.

Conglomerate John Keells Holdings PLC, which saw foreign buying of 480,054 shares, fell 1.47 percent to 167.50 rupees. Last week it posted a 56 percent gain in its December quarter earnings.

Sri Lanka’s bourse is the worst performer among Asian markets with a 7.72 percent loss so far this year. It was 10th-best in 2011, after being on top in 2009 and 2010.

The day’s turnover was 970.1 million rupees, well below last year’s average of 2.3 billion. Volume was 47.7 million shares. Last year’s daily average was a record 102.7 million.

The rupee closed flat at 113.89/90 against the dollar for the 49th straight session since a Nov. 21 devaluation, with the central bank selling around $28 million to defend it, dealers said.

The bank has spent more than $1.15 billion keeping the exchange rate steady since Nov. 21. It spent a net $1.79 billion in the first 10 months of last year to keep depreciation at bay. ($1 = 113.9000 Sri Lanka rupees) (Reuters)