(Colombo) REUTERS: Sri Lankan shares extended losses yesterday to hit their lowest close in more than 15 months as continued foreign selling in blue-chip stocks dampened sentiment.
Concerns about lower economic growth also dented sentiment, analysts said.

The Colombo stock index declined for a 17th session in 19 and closed 0.61 percent weaker at 6,044.03, its lowest close since March 30, 2017. On Monday, the index fell the most in intraday trade in nearly 28 months.

Foreign investors sold for the tenth consecutive session, extending the foreign outflow to Rs.1.1 billion worth of equities.

Foreign selling has continued, and this is mainly due to foreign investors’ exit from emerging markets,” said First Capital Holdings Research Head Dimantha Mathew.

Foreign investors net sold equities worth Rs.82.1 million, extending the year-to-date foreign outflows to Rs.1.82 billion.

Turnover was Rs.261.6 million, less than a third of this year’s daily average of Rs.926.2 million.
Top conglomerate John Keells Holdings closed 1.3 percent lower, Distillers Co of Sri Lanka PLC ended 1.5 percent lower, leading fixed line telephone operator Sri Lanka Telecom PLC ended down 3.2 percent and Lanka ORIX Leasing Co PLC closed 3.1 percent lower.

Investors are waiting for some positive news both on the economic and political fronts, said analysts, adding that the government’s policy implementation had been sluggish since both main parties in the ruling coalition suffered local polls in February.

Finance Minister Mangala Samaraweera said last month that the economy was likely to grow about 4.5 percent this year, below a central bank estimate of 5 percent.

The International Monetary Fund (IMF) said on June 20 that Sri Lanka’s economy remained vulnerable to adverse shocks because of sizable public debt and large refinancing needs.

Ratings agency Moody’s said yesterday a strengthening US dollar since mid-April has increased the credit risk of several emerging markets, including Sri Lanka, due to currency depreciation.

Moody’s said a strong US dollar would also lead to a drop in foreign exchange reserves of countries such as Argentina, Ghana, Mongolia, Pakistan, Sri Lanka, Turkey, and Zambia.