Stock market closes lower for 3rd day on firms’ ratings downgrade

Thursday, 3 March 2016 00:00 - - {{hitsCtrl.values.hits}}

Reuters - Sri Lankan shares fell for a third straight session on Wednesday as a downgrade by Fitch Ratings of some companies that hold dollar bonds hit investor sentiment, traders said, days after the ratings agency downgraded the country’s sovereign rating.

Fitch downgraded the ratings of listed firms such as Sri Lanka Telecom PLC, DFCC Bank PLC, and People’s Leasing and Finance PLC, while state-owned Bank of Ceylon, National Savings Bank, Sri Lanka Airlines and Sri Lanka Insurance also were brought down by a notch.

The action followed Fitch’s downgrade of Sri Lanka’s sovereign rating to B-plus from BB-minus on Monday citing increased refinancing risks, significant debt maturities, and weaker public finances.

“The downgrading of institutions which hold dollar bonds are more in line with the sovereign ratings revision,” said Shiran Fernando, an analyst at Colombo-based Frontier Research.

“This means foreign investor confidence will be reduced.”

Sri Lanka’s benchmark share index closed 0.57% lower, or down 34.99 points, at 6,078.41, the lowest close since April 10, 2014.

The index remained in oversold territory for the seventh straight session, with the 14-day relative strength index at 19.741 on Wednesday, compared with Tuesday’s 21.663, Thomson Reuters data showed.

A level between 70 and 30 indicates the market is neutral.

Yields on treasury bills rose by 42-54 basis points at a weekly auction on Wednesday to a more than two-year high.

Yields on t-bills have risen after the Central Bank increased key policy rates by 50 basis points last month.

Turnover touched 1.35 billion rupees ($9.34 million) on Wednesday, the highest since Feb. 19 and well above this year’s daily average of 721.5 million rupees.

Foreign investors were net buyers for the fourth straight session, purchasing 114.6 million rupees worth of shares on Wednesday.

Shares in conglomerate John Keells Holdings PLC fell 1.65% while Carson Cumberbatch PLC fell 4.54% and Distilleries Company of Sri Lanka PLC ended 2.27% weaker

Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event including Valentine ’s Day. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Flower Bouquets, Clothing, Watches, Lingerie, Gift Sets and Jewellery. Also if you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.