July 9, 2018 / 1:39 PM / 5 months ago

Sri Lankan shares fall; turnover hits near 3-month low

COLOMBO, July 9 (Reuters) - Sri Lankan shares fell on Monday and turnover slumped to a near three-month low as many investors stayed away from the market after confusion over fuel price hike and lower economic growth outlook hurt sentiment, stockbrokers said.

Turnover stood at 154.9 million rupees, its lowest since April 16 and less than a sixth of this year’s daily average of 921 million rupees.

Sri Lankan state-run fuel retailer, Ceylon Petroleum Corp (CPC), on Friday reversed an earlier decision to increase petrol and diesel prices at its fuel stations hours after the finance ministry demanded a hike to stem losses.

“The investor confidence is low. The fuel price decision could not be implemented with mixed signals and investors are also confused,” said Prashan Fernando, CEO at Acuity Stockbrokers.

Another analyst said lower economic growth outlook also has hit the sentiment, after the central bank cut its estimate.

Economic growth in 2018 is likely to be between 4 percent and 4.5 percent, falling short of an earlier estimate of 5 percent, Central Bank Governor Indrajit Coomaraswamy told reporters on Friday, adding that the earlier estimate was “ambitious”.

Foreign investor are selling and concerns about lower economic growth weighed on sentiment, analysts said.

The Colombo stock index ended 0.51 percent weaker at 6,077.32. It hit its lowest close since March 30, 2017 on Wednesday and has declined for a 19th session in 22 through Monday.

The index fell 1.4 percent last week, sliding for a seventh straight week.

They net sold equities worth 22.9 million rupees on Monday, extending the year-to-date foreign outflows to 2.25 billion rupees.

Ceylinco Insurance Plc fell 5.3 percent, while Lanka Orix Leasing Company slipped 3.3 percent.

Investors are waiting for some positive news both on the economic and political fronts, said analysts, adding that the government’s policy implementation had been sluggish since both main parties in the ruling coalition lost local polls in February.

The International Monetary Fund (IMF) said on June 20 that Sri Lanka’s economy remained vulnerable to adverse shocks because of sizable public debt and large refinancing needs.

$1 = 159.2500 Sri Lankan rupees Reporting by Shihar Aneez; Editing by Vyas Mohan

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