S.Lanka stx up on low rates, earnings recovery view
By Ranga Sirilal
COLOMBO, Nov 13 - Sri Lanka's shares hit a two-week high on Friday, as investors snapped up blue chips on declining interest rate and recovery in earnings, analysts said.
The retirement of a top military officer, who may run in next year for president, is also seen as a positive development as analysts said the move had given a direction to the market on the political front and elections.
The All-Share Price Index <.CSE> of the Colombo Stock Exchange rose 1.77 percent or 51.85 points to 2979.41, its highest close since Oct. 28.
The "recent reduction in treasury bill yields is an indication of further sliding down interest rates helped the market," said Harsha Fernando, CEO at SC Securities.
Sri Lanka's top military officer, General Sarath Fonseka, who led the defeat of Tamil Tiger rebels after a 25-year war, resigned from his post and now speculated to run in the next presidency. The government accepted the letter on Friday. [ID:nCOL68950]
Analysts also said investors hope for a recovery in company earnings after top mobile phone operator Dialog Telekom <DIAL.CM> showed signs of recovery.
Leading mobile phone operator Dialog Telekom <DIAL.CM>, which, on Wednesday which posted a better-than-expected net loss of 438.9 million rupees in the September quarter [ID:nSP492082], ended 3.45 percent firmer at 7.50 rupees.
The benchmark 91-day treasury bill yield fell to an over five-year low of 7.73 percent on Wednesday. [ID:nCOL370198] Shares in conglomerate John Keells Holdings <JKH.CM> ended 2.8 percent firmer at 145 rupees a share.
Turnover was 576.46 million rupees , more than the last year's daily average of 464 million rupees.
With 98.2 percent return so far this year, the CSE is still one of the best performing bourses in Asia.
Analysts say investors are still wary of a likely loss of a European Union trade concession over a rights abuse probe, rotests and trade actions and the arrest of one of Sri Lanka's main investors in a U.S. insider trading case in mid-October.
For more political risks, click [ID:nSP478539]
Sri Lanka rupee <LKR=> closed flat at 114.45/50 a dollar. It hit a six month high on Tuesday as the central bank allowed a cautiously flexible exchange rate in managing the rupee against the U.S dollar. [ID:nCOL117183]
On Monday, the rupee appreciated for the first time since Aug. 17, as the central bank allowed depreciation.
Sri Lanka will be able to achieve the budget deficit target of 7 percent set by International Monetary Fund due to savings from declining interest rates and growth in revenue, the central bank governor said on Friday. [ID:nCOL28330]
The interbank lending rate or call money rate <CLIBOR> edged up to 9.091 percent from Thursday's 9.091 percent.
For secondary market rates, please see <0#LKBMK=>. (Additional reporting by Shihar Aneez; Editing by Ramya Venugopal)