Shares fall on halted TFC deal

Wednesday, 9 May 2012 00:01 - - {{hitsCtrl.values.hits}}

Reuters: Sri Lanka’s stock market fell 1.5 per cent to an 11-week low on Tuesday after the Treasury ordered an investigation of a share sale involving The Finance Company PLC, traders said.

Local media reported that President Mahinda Rajapaksa, who is also the Finance Minister, had ordered the suspension of a Rs. 400 million deal in which State-owned National Savings Banks bought a 13 per cent stake in The Finance Company at Rs. 49.75 per share though it was traded at Rs. 30 in the market.

The deal went through the market on 30 April and settlement was due on 3 May.

The Treasury has already ordered a probe into the deal, traders and local media said.

Shares in The Finance Company fell 1.7 per cent to Rs. 29.50, while the main share index fell 1.49 per cent, or 79.84 points, to 5,295.60, its lowest level since 21 February, extending its losing streak for a sixth straight session.

Securities and Exchange Commission Spokesman Tushara Jayaratne declined to say whether the regulator had begun any probe.

However, a Bourse official said the Colombo Stock Exchange had already begun an investigation to assess how the deal went through it at an off-market price.

The day’s turnover was Rs. 429.8 million ($ 3.36 million), well below this year’s daily average of Rs. 1.2 billion.

Despite the fall, the market saw a foreign inflow of Rs. 62.1 million extending the net foreign inflow so far this year to Rs. 21.5 billion.

The rupee ended flat at 127.80/128.00 versus the dollar in dull trade as mild importer demand for the greenback was offset by exporter dollar sales.

The rupee gained 1.6 per cent last week after the Treasury Secretary warned of resumed market intervention if the currency dropped beyond “tolerable” levels.