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Sri Lanka shares up on foreign buying of blue-chips

[Reuters, Thursday, 6 August 2009 12:22 No Comment]

Sri Lankan stocks .CSE rose 0.4 percent on Thursday after foreign buyers bought blue chips, with caution over the full impact of an IMF loan ebbing.

The all-share index closed 10.11 points firmer at 2,527.62. It hit a near 14-month closing high on July 27, soon after the International Monetary Fund (IMF) approved a $2.6 billion loan for Sri Lanka.

"Foreign buying on blue chips helped the market to rise," said Shivantha Meepage, a research analyst at Acuity Stockbrokers.

Foreign buyers accounted for over 28 percent of the day’s turnover of 347.5 million rupees ($3 million). The total turnover was around three-fourths of the 2008 daily average of 464 million.

Analysts said foreign buying will be the main factor that could boost the market further, after the end of a 25-year war and the IMF loan surged retail investor participation.

The bourse is up 68.2 percent in 2009 and is one of Asia’s best-performing markets. It has surged 32.5 percent since the government declared victory in the war on May 18.

However, traders said there are still worries about poor earnings, while foreigners are not convinced the central bank’s steady exchange rate against the dollar will remain under the terms of the loan.

Some traders said foreign funds were waiting to see the government’s approach in attracting investors from western countries. Sri Lanka’s relations with the West took a hit in the closing months of the war and immediately afterward.

John Keells Holdings JKH.CM, which last week posted a 22 percent drop in its net profit for the first quarter, rose 0.75 percent to 135 rupees. [ID:nCOL428071]

Conglomerate Aitken Spence SPEN.CM, which closed flat at 649.75 rupees a share, after the market closed posted a 24.1 percent loss in its net profit for the first quarter ended on June 30.

The rupee ended flat at 114.90/95 a dollar as a state bank, which the central bank uses to direct the market, bought the dollar at 114.90 for the eleventh straight week.

Sri Lanka plans to raise $150 million through the sale of two-year, dollar-denominated development bonds to repay investors holding similar instruments due to mature this month, the central bank said on Monday. [ID:nCOL480675]

Dealers said the central bank on Thursday sold 2 billion rupees worth 21-day Treasury bills at 9.75 percent, 2 billion rupees worth 28-day T-bills at 10.00 percent and 4 billion rupees worth 42-day T-bills at 10.25 percent to mop up excess liquidity.

Sri Lanka is considering a $500 million sovereign bond issue among possible fundraising options and expects to make a decision in the next few weeks, central bank Governor Ajith Nivard Cabraal said on Friday. [ID:nSP417837]

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