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Sri Lanka index at 11-wk high on earnings, political stability hopes
May 15, 2015 / 11:58 AM / 3 years ago

Sri Lanka index at 11-wk high on earnings, political stability hopes

COLOMBO, May 15 (Reuters) - Sri Lankan shares rose to an 11-week high on Friday as investors bought risky assets on hopes of better March-quarter earnings and political stability after parliamentary elections.

The main stock index ended up 0.3 percent, or 21.80 points, at 7,258.67, its highest close since Feb. 27.

“The market seems to have been driven by increased local investor confidence backed by strong corporate earnings,” said Danushka Samarasinghe, head of research at Softlogic stockbrokers.

“There is also the expectation of an early parliamentary election with a higher possibility of the ruling United National Party (UNP) winning with a majority.”

Political uncertainty due to Prime Minister Ranil Wickremesinghe-led UNP not having a parliament majority had been a drag on the market. The trend reversed after the central bank cut key monetary policy rates to record lows on April 15.

Investors had been waiting for direction on the political front, analysts said, with the prime minister saying he would invite the main opposition to join government when he wins the parliamentary polls, which is yet to be scheduled.

Analysts, however, still expect the index to move sideways until the situation becomes clearer.

President Maithripala Sirisena has promised to dissolve the parliament after passing some key reforms next week.

Friday’s turnover was 1.09 billion rupees ($8.17 million), around this year’s daily average of around 1.11 billion rupees.

Foreign investors net bought 115 million rupees of shares, extending the year-to-date net inflows to 5.76 billion rupees in equities.

Ceylinco Insurance Plc, which boosted foreign buying to a one-year high on Thursday, jumped 6.24 percent, while Carson Cumberbatch Plc rose 3 percent.

The bourse has gained about 5.2 percent since the central bank cut key rates on April 15, while yields on t-bills have fallen 46-61 basis points since then.

As of Friday, earnings of 57 listed companies have on average showed a rise of 26.1 percent year-on-year in the first quarter, said an analyst. ($1 = 133.4000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)

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