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S. Lanka shares at near-record high on economic hopes

[Reuters, Thursday, 1 October 2009 12:41 No Comment]

Hopes of strong post-war economic growth with interest rates and inflation declining pushed Sri Lanka’s stock market .CSE to a near-record high on Thursday with heavy retail buying, analysts and traders said.

The market jumped 2.35 percent to hit 3007.75 points, its highest since Feb. 27, 2007, before closing 2.01 percent or 58.96 points firmer at 2,997.60. Its record high is 3038.48 points, hit on Feb. 19, 2007.

Turnover was 1.13 billion rupees ($9.83 million), more than twice of last year’s daily average of 464 million rupees.

"Investors are optimistic on Sri Lanka’s last quarter economic growth this year," Danushka Samarasinghe, head of research at Asia Securities, told Reuters.

Sri Lankan stock market has been rising since mid-July on declining interest rates, high post-war economic growth expectations, more market liquidity, increased confidence after an IMF loan, an upgraded rating outlook and foreign inflows.

The market is one of the best performing bourses in the world in 2009 with an average return of 99.4 percent so far. It has risen 57 percent since the end of a 25-year war in mid-May.

Yields in the benchmark treasury bills fell 22 basis points to a five-year low of 9.48 percent at a weekly auction on Wednesday, while annual inflation hit a record low of 0.7 percent in September. [ID:nCMB000018] [ID:nCOL479376]

Analysts said falling inflation will further help boost the share market to a record high in next few trading sessions as investors shift their money from fixed income instruments to the bourse with lower interest rate expectations.

The diversified holdings subsector index .CSEDV hit a record high led by gains in market heavyweight John Keells Holdings JKH.CM gaining 1.32 percent to close at 153 rupees a share.

The hotel and travel sub sector index .CSEHT jumped 2.89 percent helped by Asian Hotels and Properties AHPL.CM jumped 11.3 percent on increasing tourist visits to the Indian Ocean island nation after the end of a 25-year war.

No. 1 mobile phone operator Dialog Telekom DIAL.CM closed 3.85 percent firmer at 6.75 rupees a share.

The rupee LKR= closed flat at 114.80/85 a dollar with the central bank buying dollars at 114.80, dealers said.

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