S.Lanka stx at 2-wk low as poll call spurs uncertainty
By Shihar Aneez
COLOMBO, Nov 24 - Sri Lanka's stocks <.CSE> dipped 1.9 percent to a near two-week low on declining investor confidence due to uncertainty, a day after the island nation's president called for an early presidential poll in mid-January.
Sri Lanka President Mahinda Rajapaksa called a presidential poll for mid-January, government sources said on Monday, amid speculation that General Sarath Fonseka, who oversaw the end of a 25-year war, may challenge him. [ID:nSP498096]
The All-Share Price Index <.CSE> of the Colombo Stock Exchange closed 55.68 points weaker, at 2875.39, its fifth straight fall and lowest since Nov. 11.
"It's a fragile market," Hussain Gani, associate director at Asia Securities, told Reuters. "Political uncertainty drove the market down. Local investors were in a 'wait and see' approach, while foreigners bought some select blue chips."
Fonseka, who stepped down last week, is being considered as the common candidate by two main opposition parties, though he is yet to make a formal announcement on entering politics and challenge his former commander-in-chief. [ID:nCOL362269]
Analysts and traders said investors were concerned over the latest political developments and uncertainty as Fonseka was now seen as a candidate who could challenge Rajapaksa in the poll, which was earlier expected to be won easily by the incumbent.
These political concerns prevented investors from borrowing funds at cheaper rates after the central bank cut its key policy rates to multi-year lows last week 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 91.3 percent year-to-date return, has been on the decline after the government on Oct. 13 announced it will hold elections by April.
The bourse has fallen over 8.2 percent since then.
For more political risks, click [ID:nSP478539]
Sri Lanka's top mobile phone operator Dialog Telekom <DIAL.CM> fell 3.45 percent to 7 rupees, while market heavyweight and top conglomerate John Keells Holdings <JKH.CM> closed 2.29 percent weaker at 138.75 rupees a share.
Total turnover was 253.4 million rupees , well below last year's daily average of 464 million rupees.
The rupee currency <LKR=> closed flat at 114.40/50 on Tuesday, after falling to a near two-week low a day before due to importer demand for dollars.
Dealers said a state bank, through which the central bank controls the market, bought dollars at 114.25 rupees and sold them at 114.50, giving a direction to the rupee exchange rate against dollar to be between 114.25/50.
The central bank has been cautiously flexible in the rupee exchange rate against the dollar since Nov. 9 [ID:nCOL63988]
The interbank lending rate or call money rate <CLIBOR> edged up to 8.758 percent from Monday's 8.682 percent.
For secondary market rates, please see <0#LKBMK=>. ((shihar.aneez@thomsonreuters.com; +94-11-237-5903; Reuters Messaging; shihar.aneez.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))