Colombo Bourse ends two years of losses with a 4.8% gain in 2013
Wednesday, 1 January 2014 07:55
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REUTERS: Sri Lankan stocks gained for a fourth straight session on Tuesday, hitting an eight-week high, helping the index end 4.8% up for the year, snapping losses in the previous two years.
The main stock index gained 0.23%, or 13.58 points, to 5,912.78, its highest close since 5 November. The index has given a return of 2.18% for the year measured in dollar terms.
“The market will see a boom next year because of interest rates coming down,” said a stockbroker on condition of anonymity. “Investors need to invest them somewhere and the best option for them to get a higher return is the share market.”
However, during the year, many investors locked their funds in risk-free debentures instead of risky assets due to a sluggish bourse amid falling interest rates.
This year, 28 debentures were listed to raise a total of Rs. 68.2 billion compared to a total of Rs. 12.5 billion from three debentures last year.
“Next year also, we will see more interest in debt than stocks and that will have an adverse impact on the stock market because the same money will shift from stocks to debt,” a top Securities and Exchange Commission official told Reuters on condition of anonymity.
The Central Bank’s key policy rates are at multi-year lows and yields on treasury bills are at more-than-two-year lows. The market expects interest rates to fall further in 2014.
Foreign investors bought a net Rs. 22.88 billion ($ 174.89 million) worth of stocks this year compared with a record Rs. 38.68 billion net foreign inflow last year.
On Tuesday, a 21.2% gain in Ceylinco Insurance PLC and a 12.65% rise in Aitken Spence Hotel Holdings helped boost the index with foreign investors buying a net Rs. 163.2 million worth of shares.
The day’s turnover was Rs. 565.3 million, less than this year’s daily average of around Rs. 828.4 million. Last year’s daily average turnover was Rs. 883.6 million.
Analysts said many investors were not in the market due to the holiday mood, while large institutional funds were waiting for the New Year to resume active trading.
