June 14, 2019 / 11:12 AM / 2 months ago

Sri Lanka stocks snaps 5-day rally on foreign outflows; rupee falls

COLOMBO, June 14 (Reuters) - Sri Lankan shares snapped a five-day rally to end a tad weaker on Friday, slipping from a near six-week high hit in the last session, as foreign fund outflows from equities continued, while the rupee fell on persistent dollar demand from importers. ** The benchmark stock index ended 0.07% weaker at 5,383.72, edging down from its highest close since May 3 hit on Thursday. But it rose 1.61% for the week. The bourse fell 11.05% this year so far. ** The central bank cut its key interest rates on May 31 to support a faltering economy as overall business and consumer confidence slumped following deadly bomb attacks in April.

** Sri Lanka is unlikely to hit its full-year economic growth target of 3-4% following the bombings, junior finance minister Eran Wickremeratne told Reuters last month. A Reuters poll has forecast growth to slump to its lowest in nearly two decades this year. ** The government’s pension fund has resumed investing in risky assets as the stock market is “extremely undervalued at the moment and is considered a good time to go in”, the central bank governor said last month at its monetary policy meet. ** Friday’s stock market turnover was 1.14 billion Sri Lankan rupees ($6.45 million), more than twice this year’s daily average of about 530.3 million rupees. Last year’s daily average was 834 million rupees. ** Foreign investors sold a net 61.4 million rupees worth of shares on Friday extending the net foreign outflow for the past five days to 388.4 million rupees. The year-to-date net foreign outflow was at 5.91 billion rupees. ** The rupee ended at 176.70/90 per dollar, compared with Thursday’s close of 176.60/70, market sources said. ** Analysts expect the rupee to weaken further as money flows out of stocks and government securities. ** The rupee fell 0.14% for the week but is up 3.34% for the year. Exporters had converted dollars as investors’ confidence stabilised after a $1 billion sovereign bond was repaid in mid-January. ** The rupee dropped 16% in 2018 and was one of the worst-performing currencies in Asia. ** Foreign investors bought a net 311 million rupees worth of government securities in the week ended June 12, but the island nation’s net foreign outflow was at 21.6 billion rupees so far this year, central bank data showed. ** For a report on global markets, click ** For a report on major currencies, click ($1 = 176.7000 Sri Lankan rupees) (Reporting by Ranga Sirilal; Editing by Rashmi Aich)

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