Stocks snap 2 days of falls; rupee edges lower

(Colombo) REUTERS: Sri Lankan shares snapped two consecutive sessions of falls yesterday in high turnover, led by Hatton Plantations Plc, while the rupee closed slightly weaker. 
Traders said the Easter day bombings and aftermath violence, and worries over slowing economic growth weighed on investor sentiment. Most investors have shied away from the market since the April 21 bombings that killed more than 250 people. 

Sri Lanka is unlikely to hit its full-year economic growth target of 3-4 percent following the Easter Sunday bombings, junior finance minister Eran Wickremeratne told Reuters last week. A Reuters poll has predicted the growth to slump to its lowest in nearly two decades this year. 

The International Monetary Fund (IMF) on May 14 approved the disbursal of a US$164 million tranche of a loan programme, bringing the total disbursed to more than US$1.16 billion. 

The benchmark stock index ended 0.04 percent firmer yesterday at 5,293.49. It rose 0.67 percent last week, recording its first weekly gain in three. The bourse has fallen 12.5 percent so far this year. 

Shares in Hatton Plantations, which accounted for 55 percent of the day’s turnover, jumped 29.5 percent. 

Turnover was Rs.1.81 billion (US$10.27 million), the highest since April 24 and more than three times this year’s daily average of around Rs.561.9 million. Last year’s daily average was Rs.834 million.  Foreign investors bought a net Rs.63.5 million worth of shares yesterday, but they have been net sellers of Rs.5.6 billion worth of equities so far this year. 

The rupee ended slightly weaker at 176.25/35 per dollar, compared with Monday’s close of 176.20/30, market sources said. Analysts expect the currency to weaken further as money flows out of stocks and government securities. 

The rupee fell 0.23 percent last week but is up 3.6 percent for the year. Exporters had converted dollars as investor confidence stabilised after a US$1 billion sovereign bond was repaid in mid-January. 

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

Foreign investors bought a net Rs.2.1 billion worth of government securities in the week ended May 22, but the island nation saw a net foreign outflow of Rs.19.1 billion so far this year, Central Bank data showed. 

Investor sentiment was damaged at the end of last year when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved parliament. A court later ruled the move unconstitutional, but the political turmoil led to credit rating downgrades and an outflow of foreign funds.