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S.Lanka bourse at 1-mo low on econ woes; union worries

[Reuters, Tuesday, 3 November 2009 20:06 No Comment]

Sri Lanka’s stock index .CSE fell to its lowest in more than a month on Tuesday as state workers across sectors said they would take industrial action for higher pay, hurting investor sentiment.

Sunday’s statement from the trade unions only added to worries of political uncertainty ahead of national polls, likely loss of an EU trade concession , worries of lower-than-expected corporate earnings and the arrest of one of Sri Lanka’s main investors in a U.S. insider trading case in mid October.

The All-Share Price Index of the Colombo Stock Exchange fell 0.43 percent to 2964.19, its third straight fall and its lowest close since Sept. 30.

"Investors are just waiting for directions amid rapidly changing political environment," said Harsha Fernando, CEO at SC Securities. "But we don’t expect the market to fall continuously as it had seen more volatility during the war time."

The government last month said it will hold national elections by April, sending shares sliding.

On Tuesday, the government presented an interim budget in parliament, instead of a full-year budget as it announced last month, citing pending elections early next year. [ID:nCOL434876]

A lending rate cut in state banks on Wednesday is yet to help the bourse to pick up. [ID:nCOL190249]

State sector workers from several sectors on Sunday said they will take industrial action from Nov. 11, up until they meet their demand of post-war salary hikes ahead of national polls due by April 2010 [ID:nCOL119784]

For more political risks, click [ID:nSP539379]

Top listed private lender Commercial Bank of Ceylon COMB.CM closed 1.56 percent weaker at 173.50 rupees.

Market heavyweight John Keells Holdings JKH.CM, which posted 43 percent dip in its net profit in September quarter [ID:nCOL450119] on Thursday, fell 0.53 percent at 141.25 rupees.

The conglomerate accounted for over 68 percent of the day’s turnover of 670.6 million rupees. Last year’s daily average was 464 million rupees.

With around 97 percent return so far this year, the CSE is still one of the best performing bourses in Asia.

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

Currency dealers said the central bank, in its debut currency swap on Tuesday, sold $20 million to mop up excess rupee liquidity in the market a 45 cents premium.

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