Shares hit 5-wk closing low on rate hike fears

Reuters: Shares hit a five-week closing low on Monday on worries the country’s Central Bank would raise interest rates at a meeting next week after the International Monetary Fund urged it to tighten monetary policy, brokers said.

The Colombo stock index closed 0.23% down at 6,070.80, its lowest since 6 February. The index shed 0.27% last week, posting its third straight weekly decline.

The IMF last week urged Sri Lanka’s central bank to be ready to tighten monetary policy if credit growth or inflation does not abate.

The banking regulator is expected to unveil its second monetary policy of the year on 24 March.

“The IMF statement on urging the central bank for a possible rate hike has weighed on sentiment,” said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

Shares of conglomerate John Keells Holding Plc fell 1%, while biggest listed lender Commercial Bank of Ceylon Plc ended 1.09% weaker.

Foreign investors net bought shares worth Rs. 61 million (about $ 403,041), a ninth straight session of purchases, extending the year-to-date net foreign inflow to Rs. 2.18 billion worth of equities.

Turnover stood at Rs. 183.3 million, the lowest since 1 February and well below this year’s daily average turnover of Rs. 679.6 million.

Yields on treasury bills have risen to a more-than-four-year high since October despite the Central Bank keeping key policy rates steady.