Stocks fall to 1-week low as political woes weigh

REUTERS: Sri Lankan shares fell yesterday to their lowest in one week as political uncertainty hurt sentiment ahead of a no-confidence vote against Prime Minister Ranil Wickremesinghe, brokers said.
The prime minister faces the vote at around 1600 GMT that could go down to the wire and lead to political instability in the island nation, even if the government manages to scrape a win.

Meanwhile, Sri Lanka’s Central Bank unexpectedly cut its key lending rate by 25 basis points yesterday, as policymakers sought to revitalise an economy growing at its weakest pace in 16 years and facing heightened political uncertainty.

The Colombo stock index ended 0.22 percent down at 6,444.41, its lowest close since March 28.
The index climbed 0.51 percent last week, its first weekly gain in five, but dropped 1.14 percent last month.

“Market is down due to weak buying interest from the local investors as they are waiting for direction after the no-confidence motion,” said First Capital Holdings Research Head Dimantha Mathew.

“The biggest deterrent is the political uncertainty. The rate cut did not have an impact today.” The turnover stood at Rs.1.2 billion, same as this year’s daily average of around Rs.1.2 billion.

Foreign investors sold shares worth net Rs.152.9 million yesterday, extending the year-to-date net foreign outflow to Rs.1.29 billion worth equities.

Shares in Distillers Sri Lanka PLC fell 16.7 percent and Ceylon Cold Stores PLC ended 2.1 percent down.