Stock market ends flat; LOLC helps erase early losses

Reuters :  Shares ended steady on Monday, with big gains in Lanka Orix Leasing Company Plc erasing early losses as concerns over macroeconomic stability continued to weigh on sentiment, dealers said.

The benchmark stock index ended unchanged at 6,275.62, at its highest close since 12 February hit on Friday.

“We are passing through a very uncertain period and there were retail activities in the market,” said First Capital Equities  Ltd Head of Research Dimantha Mathew.”Still, investors are worried over rising interest rates with high borrowing pressure.” A move by Prime Minister Ranil Wickremesinghe to reduce the country’s debt burden by swapping some borrowings from China for equity in Chinese-funded infrastructure projects did not help the market, dealers said.

Sri Lanka has asked China to swap some of the $8 billion it owes Beijing for equity in infrastructure projects and offered to sell stakes in its companies to Chinese ones, Colombo officials said on Saturday.

Turnover stood at Rs. 764.9 million, just below this year’s daily average of Rs. 790.7 million.

Foreign investors were net buyers for the first time in eight sessions. They have been net buyers of Rs. 75.98 million ($525,086) worth equities, but have net sold Rs. 3.22 billion worth of shares so far this year.

Sri Lanka on 1 April  postponed a plan to reintroduce capital gains tax by six months after the move threatened to dent foreign investor sentiment.

Rising interest rates and higher borrowing by the island nation facing a balance-of-payments crisis have also weighed on investor appetite, dealers said.

Analysts and economists worry slower growth could reduce corporate earnings of some listed firms.

Lanka Orix Leasing Company Plc climbed 7%, while Nestle Lanka Plc rose 1%, helping offset the 0.5% loss in conglomerate John Keells Holding Plc and a 0.2% fall in Ceylinco Insurance Plc .

The market will see subdued trade in the coming days due to the Sinhala-Tamil New Year 13 and 14 April, traders said.