Wednesday, October 28, 2009

CSE gained in thin trade as lending rate cut by state banks

Source- ReutersIndia(By Shihar Aneez)

Sri Lanka's stock market .CSE gained in thin trade on Wednesday, as a lending rate cut by state banks offset concerns of a U.S. insider trading case and a threat to a EU trade concession, dealers said.

The All-Share Price Index of the Colombo Stock Exchange rose 1.02 percent or 30.78 points, but closed 0.3 percent firmer at 3005.72 in thin volume of 318.2 million rupees ($2.77 million). Last year's daily average turnover was 464 million rupees.

Sri Lanka's president on Tuesday ordered state banks to slash lending rates by almost half, after repeated cuts by the central bank failed to bring down the lending rates. [ID:nCOL190249] In line with the rate cut, the benchmark 91-day treasury bill yield fell 60 basis points to an over five-year low of 8.50 percent on Wednesday [ID:nCOL486920].

But, investors continued to stay cautious. The arrest of Sri Lankan-born Raj Rajaratnam, founder of the Galleon Group hedge fund, in New York on Oct. 16, fuelled a 5 percent drop in the first two days of trading last week, given he or Galleon hold large stakes in several blue chip firms.

Also worrying investors is an EU probe that last week found Sri Lanka in breach of human rights laws, which threatens a trade concession from the EU, but the central bank on Wednesday said the move will not hurt exports.

The EU on Tuesday urged Sri Lanka to end impunity over human rights violations and help war displaced people.

Market heavyweight John Keells Holdings JKH.CM rose 1.59 percent to 144 rupees a share.

But, with a 100 percent return so far this year, the CSE is still one of the best performing bourses in Asia.

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