Stocks down on asset takeover bill

(Reuters) - Sri Lanka’s stock market edged down on Wednesday to a one-week low, as cautious investors stayed on the sidelines over concerns over a proposed government act to acquire underperforming assets, including from two listed firms.

After the market closed Sri Lanka’s parliament began to debate the proposed legislation to acquire underperforming enterprises and underutilised assets, despite concerns the move amounted to nationalisation.

Analysts said the bill will further hurt the institutional long-term investor sentiments and investors were confused about a proposed law that will allow the government to take over the properties of 37 firms including listed Pelwatte Sugar Industries and Hotel Developers Lanka Plc.

The main share index ended 0.1 per cent, or 5.14 points weaker at 6,316.87.

Shares in Pelwatte Sugar fell 2.1 per cent to Rs.  23.50 on Wednesday and Hotel Developers Lanka, which owns the five-star Hilton Colombo hotel building in the commercial heart of Colombo, plummeted 22.6 per cent to Rs. 94.80.

Analysts said investors were also concerned about future regulation of the market after removal of the Securities and Exchange Commission director general.

Turnover was Rs. 619 million ($5.6 million), compared with last year’s average of Rs. 2.4 billion and this year’s Rs. 2.5 billion.

The bourse has fallen 6.9 per cent since 1 October. It is Asia’s sixth-best performer with a year-to-date loss of 4.8 per cent after being on the top for most of 2011 and in 2009 and 2010.

The bourse saw a net foreign inflow of Rs.  151.5 million on Wednesday, but thus far in 2011, offshore investors have sold 16.6 billion, and a record 26.4 billion in 2010.

Foreign investors bought 500,032 shares in conglomerate John Keells Holdings, which ended 0.7 per cent down at Rs. 193.10.  

Losers outnumbered gainers by 110 to 88 on Wednesday, Thomson Reuters data showed. Total volume was 22.6 million shares, against a five-day average of 50.1 million. The 30-day and 90-day average trading volumes were 64.7 million and 103.2 million. Last year’s daily average was 67.9 million.

The rupee closed flat at 110.18/20 per dollar as importer demand for dollars was offset by banks’ dollar sales on short covering, dealers said.

Stock and currency markets will be closed on Thursday to mark a Buddhist religious holiday and normal trading will resume on Friday.