Saturday, September 19, 2009

Sri Lanka's stock market (CSE) slip on retail profit taking

CSE slipped from its over 30-month high on Friday as investors booked profits on retail shares amid heavy buying of market heavyweight John Keells Holdings (JKH.CM), traders and analysts said.

The market fell over 0.5 percent to 2,926.79 points in intra-day trade before closing down 0.16 percent or 4.61 points weaker at 2,939.44.

The bourse, on its website, said the market capitalisation hit a record high of 942.6 billion rupees on Thursday, surpassing the previous peak of 938.6 billion rupees on Feb. 13, 2007.

The bourse rose 3.5 percent this week, after the central bank cut its key policy rates by 50 basis points last week and the central bank governor on Thursday said he wanted commercial banks to reduce lending rates further.

The Sri Lankan stock index has been rising since mid July on declining interest rates, high growth expectations, more market liquidity, increased confidence after an IMF loan, an upgraded rating outlook and foreign inflows.

The market is still one of the best performing stock markets in the world in 2009 with an average return of over 95 percent so far. It has risen 54 percent since the end of the war in mid-May.

Leading fixed-line phone operator Sri Lanka Telecom closed 2.1 percent weaker at 46 rupees a share, while Asian Hotels and Properties fell 1.96 percent to 75 rupees.

The rupee was unchanged for a fifth straight week at 114.80/85 a dollar as the central bank intervened to mop up dollars to prevent appreciation and build up its reserves. The central bank on Friday said it had bought $1.96 billion from the market since end-March, while the trade deficit for the first seven months of 2009 narrowed 57.2 percent. [ID:nCOL449635]

The central bank on Friday named J.P. Morgan Chase (JPM.N), HSBC (0005.HK) and Royal Bank of Scotland as lead managers of the Sri Lankan government's planned $500 million sovereign bond issue.

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