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S.Lankan shares at near 4-yr low, Comm Bank tumbles

[Reuters, Friday, 5 December 2008 17:36 No Comment]

Sri Lankan shares shed 2.3 percent on Friday to their lowest close in almost four years as economic troubles worsened, with Commercial Bank of Ceylon sliding to a more than 3-½ year low on a possible hedging loss.

 

Commercial Bank said its total risk would be $8.93 million if Sri Lanka’s top court permanently suspends an oil hedging contract.

 

The news sent its shares down 6.4 percent to 69.50 rupees, their lowest close since March 2005, on a weighted average.

 

The Colombo All-Share index ended down 2.28 percent, or 36.64 points at 1,567.17, its lowest close since Jan. 11, 2005. The index has lost 38.3 percent so far this year.

 

The market has been falling since early September following poor corporate earnings, high borrowing costs, a cash crunch and the global downturn.

 

Geeth Balasuriya, assistant research manager at HNB Stockbrokers, said investors were moving away from the equity market to less risky assets.

 

‘They are concerned over gloomy economy and poor corporate outlook,’ he said.

 

Analysts and traders said foreigners were not buying shares, rattled by fragile emerging markets and discouraged by central bank efforts to shore up the rupee.

 

Market heavyweight and the country’s top fixed-line phone operator Sri Lanka Telecom shed 0.8 percent to a 10-month low of 32 rupees.

 

Sri Lanka’s top conglomerate by market capitalisation John Keells Holdings dropped 2.05 percent to 59.75 rupees, its lowest close since June 2004.

 

Market turnover was 56.5 million rupees ($0.5 million), a fraction of last year’s daily average of 400 million rupees, but better than Thursday’s seven-year low of 13.1 million rupees.

 

The rupee closed at 110.00/10 per dollar, barely changed from Thursday’s 110.05/15, and traders said the central bank supported the local unit at 110.

 

Currency dealers and traders said foreign investors in both stocks and securities market are concerned about the central bank’s moves to protect the rupee.

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