(Colombo) REUTERS: Sri Lankan shares fell over one percent yesterday, the sharpest in nearly 28 months, as continued foreign selling and concerns about lower economic growth hurt sentiment, stockbrokers said.

Foreign investors sold the island nation’s risky assets for an eighth successive session, extending the foreign outflow to Rs.841.4 million.

The Colombo stock index ended 1.07 percent weaker to 6,128.34, its biggest intraday percentage fall since March 9, 2016. The index closed lower for 15 sessions in 17 and marked 
its sixth straight weekly drop last week.

“Foreign selling triggered the market fall. We still do not see government funds actively coming into market and political uncertainty also weighs on sentiment,” said First Capital Equities CEO Jaliya Wijeratne.

Foreign investors net sold equities worth Rs.311.2 million, extending the year-to-date foreign outflows to Rs.1.64 billion this year.

Turnover was Rs.756 million, less than this year’s daily average of Rs.935 million.

Shares in top listed lender Commercial Bank of Ceylon ended 0.2 percent lower, top conglomerate John Keells Holdings closed 1.9 percent lower and Sri Lanka’s leading mobile phone service provider Dialog Axiata closed 1.4 percent weaker.

Finance Minister Mangala Samaraweera said early this 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 on Wednesday 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.