CSE falls to 5-month closing low; John Keells declines

Reuters: Sri Lankan shares fell for a fourth straight session yesterday, and posted their lowest close in five months, dragged by conglomerate John Keells Holdings PLC on foreign investor selling.

Foreign investors sold shares of John Keells following reports that the MSCI Frontier Markets 100 Index, which captures large- and mid-cap representation across 29 frontier markets, will remove the stock from its index.

MSCI has yet to respond to a Reuters query if it has decided to remove John Keells from the index, but two analysts said the stock will be removed.

Foreign investors sold net Rs. 475.9 million worth of equities yesterday, extending the year-to-date net foreign outflow to Rs.1.4 billion worth of shares.

The Colombo stock index ended 0.35% weaker at 6,398.44. For the month, it declined 1.9%.

Turnover was Rs. 2.3 billion ($14.54 million), more than twice of this year’s daily average of Rs. 998 million.

“There was foreign selling on JKH (John Keells Holdings). With the dip in the share price, the All Share Price (Index) also came down,” said Softlogic Stockbrokers Deputy CEO Hussain Gani. “There were some month-end settlements also.”

A weaker rupee, political uncertainty and the recent fuel price hike also weighed on sentiment, with local investors mostly keeping to the sidelines awaiting cues about the real impact of the floods that hit the nation over the past week, brokers said.

Analysts said investors are waiting to see the full impact of the floods, which killed 24 people last week.

Shares of John Keells fell 2.3%, Melstacrop PLC ended 3.5% weaker, Richard Pieris & Company PLC lost 4.7% and Lion Brewery (Ceylon) PLC slipped 2.5%.

The rupee hit a fresh low of 158.50 per dollar on 16 May on importer demand for the US currency.

Analysts said market sentiment had been dented by concerns over political instability following President Maithripala Sirisena’s decision to suspend Parliament last month after 16 legislators from his ruling coalition defected.

On 8 May, Sirisena urged his own coalition Government and the Opposition to end a power struggle to achieve ambitious goals including anti-corruption measures.