Stock market slips amid foreign fund outflows

Thursday, 24 March 2016 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Shares ended weaker on Wednesday, slipping from a near three-week high hit in the previous session, as foreign investors exited risk assets amid concerns over the country's economic growth and rising bond yields.

Sri Lanka's economy is expected to grow 5.3% in 2016, but analysts say tight monetary and fiscal policies may curb growth. The $82.2-billion economy expanded at a sluggish 2.5% in the December quarter.

The benchmark share index, which gained 0.3% in early trade, ended down 0.25%, or 15.07 points, at 6,073.50.

The index closed at its highest since 1 March on Monday. Markets were closed on Tuesday for a public holiday.

Foreign investors sold a net Rs. 305.5 million ($2.10 million) worth of shares on Wednesday, extending the net foreign outflow so far this year to Rs. 2.09 billion worth shares.

Investors preferred fixed interest-rate bearing assets over shares due to a rise in yields on treasury bills, which are hovering at more than two-year highs, and on an unexpected interest rate hike by the Central Bank in mid-February, dealers said.

Yields on T-bills jumped by 62-90 basis points at a weekly auction on Monday to hit 29-month highs.

"The slow downward trend is continuing. A block deal pushed up the turnover," said Dimantha Mathew, Head of Research, First Capital Equities Ltd.

Turnover stood at Rs. 1.27 billion on Wednesday, well above this year's daily average of Rs. 796.9 million.

Shares in Carson CumberbatchPlc fell 10.87%, while Commercial Leasing and Finance Plc fell 7.69%. Distilleries Company of Sri Lanka Plc climbed 1.61%.