Tuesday, October 20, 2009

Sri Lanka's stock market(CSE) lost more than 2.8 percent in this tuesday

Today(Oct 20) Sri Lanka's stock market (CSE) lost more than 2.8 percent in early trade, on weak investor confidence after a US insider trading case and economic woes over potential loss of a lucrative EU trade scheme.

The All-Share Price Index of the Colombo Stock Exchange fell 3 percent or 92.53 points to hit a three-week low of 2990.38 at 0641 GMT. It was the fifth straight fall since hitting a record high of 3157.11 points on Thursday.

"Both the potential loss of trade concession from EU and an insider trading scam are heavily weighing on investor confidence," an analyst told Reuters on condition of anonymity.

The European Union on Monday published the findings of an investigation, which has found Sri Lanka in breach of global human rights laws and EU sources said the country is likely to lose concessions worth more than $100 million for its top exports to Europe. [ID:nLJ731429]

Billionaire Galleon Group hedge fund founder Raj Rajaratnam and executives from other U.S. companies were charged on Friday with the largest hedge fund insider-trading scheme ever in the United States. [ID:nN16545101]

Rajaratnam is one of the biggest single investors on the Colombo Stock Exchange (.CSE) and has large stakes in some of Sri Lanka's blue chip shares. On Monday, shares plunged 3.8 percent, before recovering to close 1.56 percent weaker.

Market heavyweight John Keells Holdings (JKH.CM), in which Rajaratnam has an 8.6 percent stake, fell as high as 5.8 percent to 140 rupees a share. It fell 3.26 percent on Monday.

Analysts said the trend would be temporary and the market should recover after another two sessions as the prices of blue chips may fall to an attractive level.

Higher economic growth hopes, more market liquidity, a $2.6 billion IMF loan, an upgraded rating outlook and foreign inflows have overall boosted investor confidence since the end of a 25-year war against the Tamil Tiger rebels in May.

With a return of over 99 percent so far this year, the CSE is still the second-best performing bourse in the world after Peru's Lima's stock market (.IGRA).

Source - Reuters - Tuesday, October 20

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