Shares slip from 11-week closing high; rupee edges higher

(Colombo) REUTERS: Sri Lankan shares inched lower yesterday, retreating after six straight sessions of gains to a near 11-week closing high, as investors sold diversified stocks such as John Keells Holdings PLC. 

The bourse hit its highest close since April 18 on Friday, buoyed by the government’s decision to launch a US $ 2.2 billion Japan-funded Light Railway Transit (LRT) project and some other stalled infrastructure projects, brokers said.

The benchmark stock index ended 0.2 percent down at 5,504.60. The index rose 2.67 percent last week, notching its second consecutive weekly gain. However, the bourse is down 8.87 percent so far this year. 

Shares in conglomerate John Keells Holdings fell 1.8 percent, while Ceylon Tobacco Company PLC ended 1.5 percent weaker and Commercial Bank of Ceylon PLC, the country’s biggest listed lender, lost 1.8 percent. 

Stock market turnover was Rs.136.3 million, well below this year’s daily average of about Rs.542.2 million. Last year’s daily average came in at Rs.834 million.
Foreigners bought on a net basis for the second time in 13 sessions, purchasing a net Rs.15.1 million worth of shares, but the bourse has seen net foreign outflows of Rs.6.91 billion so far this year, the index data showed. 

The government’s launch of central highway and light railway projects helped lift hopes that the country’s transformation would result in a faster economic growth rate, stockbrokers said. Sri Lanka is unlikely to hit its full-year economic growth target of 3-4 percent following Easter Sunday bombings and a Reuters poll has forecast growth to slump to its lowest in nearly two decades this year. 

Meanwhile, the currency closed slightly firmer at 176.05/15 per dollar, compared with Friday’s close of 176.10/15, as exporter dollar sales surpassed importer greenback demand. The rupee rose 0.17 percent last week and is up 3.72 percent so far this year. 

The rupee dropped 16 percent in 2018 and was one of the worst-performing currencies in Asia. 

The island nation raised US $ 2 billion via five-year and 10-year sovereign bond sales last month, tapping global capital markets for the second time in three months.
Foreign investors sold a net Rs.3.93 billion worth of government securities in the week ended July 3, extending the year-to-date net foreign outflow to 22.4 billion rupees, the Central Bank data showed. 
The central bank cut its key interest rates on May 31 to support a faltering economy as overall business and consumer confidence slumped following deadly bomb attacks in April.