Bourse down in thin trade

Reuters: Sri Lanka’s stock market fell in thin volume on Wednesday despite foreign buying, while the Central Bank held the rupee steady against dollar demand from offshore investors cashing in treasury bonds.

The main share index closed 0.73 per cent or 43.67 points weaker at 5,950.99, its lowest close since 25 November.

The day’s turnover was Rs. 498.5 million ($ 4.38 million), far below last year’s average of 2.4 billion and this year’s 2.4 billion.

Analysts said the market was going through a typical year-end bout before the Christmas holidays while investors and brokers awaited direction from the Securities and Exchange Commission under a new Chief.

The market has become attractive after falling 12.3 per cent since 1 October and it is trading at a forward price-to-earnings (P/E) ratio of 10.8, lower than emerging markets like Indonesia (13.1), Malaysia (13.4), and the Philippines (12.4).

 On a net basis, foreign investors bought 290,950 shares in John Keells Holdings PLC, which ended 1.7 per cent weaker at 179 rupees.

The bourse saw a net foreign inflow of 58 million rupees on Wednesday, and foreign investors have sold 18.2 billion thus far in 2011, and a record 26.4 billion in 2010.

Total volume was 26.5 million shares, against a five-day average of 21 million. The 30-day and 90-day average trading volumes were 52.7 million and 95.4 million. Last year’s daily average was 67.9 million.

The Colombo Stock Exchange is Asia’s 12th-best performer with a year-to-date loss of 10.32 per cent after being at the top until June. It delivered Asia’s best returns in 2009 and 2010.

The rupee closed flat at 113.89/90 rupees a dollar for a 16th day despite heavy dollar demand, as the Central Bank spent $50 million defending it, dealers said.

Three traders Reuters spoke with said the dollar demand came from a foreign bank, which had facilitated some offshore clients’ sale of Sri Lankan Treasury securities, without elaborating.

Since the 22 November devaluation, the Central Bank has spent around $375 million to hold the exchange rate steady. It spent almost $2 billion this year until the end of September holding back depreciation pressure.