Stock market ends weaker on political woes

Reuters: Sri Lankan share index ended weaker yesterday (2 April), hovering near its nine-week closing low hit last week, as political woes over a no-confidence motion against the prime minister weighed on sentiment, although foreign buying boosted the turnover, brokers said.

The turnover stood at Rs. 2.3 billion ($14.82 million), well above this year’s daily average of around Rs. 1.2 billion.

The Colombo stock index ended 0.42% weaker at 6,449.90, near its lowest closing since 23 January hit on Wednesday (28 March). The markets were closed on Friday (30 March) for a holiday.

The index rose 0.51% last week, its first weekly gain in five, but dropped 1.14% last month.

“Local investors are on the sidelines ahead of the no-confidence motion, but foreign buying boosted the turnover,” First Capital Holdings Research Head Dimantha Mathew said.

Foreign investors bought a net Rs. 1.6 billion worth of shares yesterday, but they have net sold Rs. 1 billion worth equities so far this year.

Political uncertainty and worries over a slowing economy weighed on sentiment, brokers said.

Prime Minister Ranil Wickremesinghe is facing a no-confidence motion, which will be debated on 4 April before voting, with analysts saying support from many political parties will be needed for Wickremesinghe to clear the vote.

Cautious investors await the outcome of the rate announcement, said analysts.

Sri Lanka’s Central Bank is expected to keep key interest rates unchanged tomorrow (4 April) after a rate review, but economists in a Reuters poll are not ruling out the possibility of a rate cut to help bolster economic growth that has slipped to a 16-year low.

Shares in Asiri Hospitals PLC ended down 9.1%, while LAUGFS Gas PLC closed 22% down, Commercial Bank of Ceylon PLC ended 1.9% down and Dialog Axiata PLC closed 0.7% weaker.

Sri Lanka’s economy grew by 3.1% in 2017, the slowest in 16 years and well below the 4.5% seen in 2016, revised Government data released showed last week.