Bill-besieged Bourse closes at one-week low

Reuters: Sri Lanka’s stock market fell to a one-week low on Tuesday, with investor sentiment hit by a proposed government act to acquire underperforming assets, including from two listed firms.

The main share index fell 1.3 percent, or 9.08 points, to 6,322.01.

Sri Lanka’s Supreme Court has decided that proposed legislation to acquire underperforming enterprises and underutilised assets was consistent with the constitution, parliament was told on Tuesday, despite concerns the move amounted to nationalisation.

“This bill has been a catalyst for further hitting institutional long-term sentiments on the Colombo stock market,” Frontier Research economist Amal Sandarathne said.

Traders said investors were confused about a proposed law that will allow the government to take over the properties of 37 firms.

Pelwatte Sugar Industries , one of the listed firms in the proposed act fell 11 per cent. On Friday, it said it would delay a Rs. 305 million rights issue because of the bill.

Another listed firm under the proposed bill Hotel Developers Lanka Plc, which owns five-star Hilton Colombo hotel building in the main commercial heart of Colombo, fell 5.8 per cent.

Analysts said investors were also concerned about future regulation of the market after removal of the Securities and Exchange Commission director general.

Turnover was 707 million Sri Lanka rupees ($6.4 million), compared with last year’s average of 2.4 billion and this year’s 2.5 billion.

The bourse has fallen 6.8 per cent since Oct. 1. It is Asia’s sixth-best performer with a year-to-date loss of 4.7 per cent after being on the top for most of 2011 and in 2009 and 2010.

The bourse saw a net foreign inflow of 77.9 million rupees on Tuesday. Foreign investors bought 718,233 shares in conglomerate John Keells Holdings, which ended 0.5 per cent down at 194.50 rupees.

Losers outnumbered gainers by 165 to 39 on Tuesday, Thomson Reuters data showed. Total volume was 29.8 million shares, against a five-day average of 52.8 million.

The 30-day and 90-day average trading volumes were 65.5 million and 103.8 million. Last year’s daily average was 67.9 million.

 The rupee edged down to 110.195 to the dollar, from Friday’s 110.190, on importer dollar demand, dealers said.

Stock and currency markets were closed on Monday to mark Hajj festival Day.