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Sri Lanka shares at 1-wk low on poll concerns

[Reuters, Thursday, 19 November 2009 13:37 No Comment]

Sri Lanka’s shares fell on Thursday for a second straight day to a one-week closing low, as cautious investors sold shares after a delay over announcement of dates for early national polls.

The All-Share Price Index .CSE of the Colombo Stock Exchange closed 0.34 percent or 10.13 points weaker at 2960.77, its lowest since Nov. 12.

"Market is on a negative trend due to uncertainty before the elections," said Harsha Fernando, CEO at SC Securities.

Sri Lankan president on Sunday dodged an expected announcement of dates for early presidential and parliamentary elections due by April without giving a reason. [ID:nCOL305387]

Analysts and traders said investors are concerned over the latest political development with two main opposition parties are in discussions to contest with a common candidate aiming to defeat the incumbent president Mahinda Rajapaksa.

Analysts say, investors are cautious due to expected impacts on their investments due to the on going political discussions between various political parties and the result of the polls.

Those political concerns, traders said, prevented investors of reacting to a key policy rates cut by the central bank on Wednesday, which brought down the rates to multi-year lows to spur faltering economic growth. [ID:nCOL91110]

Investor confidence in the island nation’s bourse, still one of this year’s best-performers in the world with a 97 percent year-to-date return, has been on the decline after the government on Oct. 13 announced it will hold elections by April.

It has fallen over 5.5 percent since then.

Top listed private lender, Commercial Bank of Ceylon COMB.CM closed 0.56 percent weaker at 177 rupees, while market heavyweight John Keells Holdings JKH.CM fell 0.87 percent to 143 rupees.

Turnover was 711 million rupees ($6.2 million), more than last year’s daily average of 464 million rupees.

Analysts say investors are still wary of a likely loss of a European Union trade concession over a rights abuse probe, protests 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 114.25/30 a dollar. It hit a fresh seven month high of 114.25/30 a dollar on Tuesday, from Monday’s close of 114.35/40 as the central bank allowed a controlled rise in the currency. [ID:nCOL63988]

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