Colombo bourse slide on credit; rupee flat

• Market down for sixth session near three-wk low; awaits for SEC credit easing rules
• Foreigners buys Keells; net inflow at Rs. 13.1 m
• CB sells around $ 15 m to defend rupee

Reuters: Sri Lanka’s share market fell on Tuesday extending the losses for a sixth session as retail investors cashed in, ahead of an expected boost from the anticipated relaxation of credit restrictions by the Securities and Exchange Commission (SEC).

The main share index ended 0.23 per cent, or 13.27 points, weaker at 5,859.67, lowest since 21 December.

It has fallen 3.54 per cent in the last six sessions, the second worst performer among Asian countries in the New Year after Pakistan’s bourse.

The new head of the SEC, Tilak Karunaratne, is expected shortly to announce a relaxation of lending restrictions on brokers, which they in turn blamed for sluggish market performance last year.

Foreign investors were net buyers of Rs. 13.1 million worth of shares, but foreign investors have sold 184.9 million so far for this year, after 19.1 billion in 2011.

Shares in John Keells Holdings PLC fell 1.2 per cent to 165 rupees a share despite foreign buying of 194,300 shares.

Shares in Environmental Resources Investment PLC fell 9.03 per cent as investors converted 33.9 million warrants to shares and the company postponed the issue of another two warrants until September 2013.

The days turnover was Rs. 534.3 million ($ 4.69 million), far below last year’s average of 2.3 billion rupees while the volume was 20.6 million shares. Last year’s daily average was a record 102.7 million.

The index lost 8.5 per cent in 2011 and was Asia’s 10th-best performer after being top in the region until June. It was Asia’s best in 2009 and 2010.

The rupee closed flat at 113.89/90 to the dollar for a 34th straight session since a three per cent devaluation effective 21 November, with the Central Bank selling around $15 million to defend it, dealers said.

On Tuesday, the Central Bank Governor said the rupee can be “flexible” in future given pressure on Sri Lanka’s balance of payments and declining reserves, but added the bank would not allow “volatile” moves.

The bank has spent more than $ 835 million on keeping the exchange rate steady since 21 November. It spent a net $1.79 billion in the first 10 months of last year to keep depreciation pressure at bay.