Reuters Update - Presidential hopes boost Sri Lanka bourse to 1-wk high

Sri Lanka stocks up 1.0-pct on credit speculation
Turnover tops two billion rupees, JKH contributes 481 million rupees to day's turnover
LBO,Wednesday 30 November 2011

Sri Lanka's stocks closed 1.1 percent up on speculation that the regulator may relax credit rule following a meeting with brokers with President Mahinda Rajapaksa earlier in the week.

The Colombo All Share Index closed up 67 points at 6,087.40 and the Milanka Index of liquid stocks rose at a slower 0.5 percent to close 26 points up at 5,273 according to stock exchange provisional data.

Turnover topped 2.0 billion, picking up from lower levels seen earlier, giving exit opportunities for cautious players, brokers said.

John Keells Holdings contributed 481 million rupees to the day's turnover falling 4.30 to 170 rupees.

Other top contributors were HVA Foods with 153 million rupees in turnover closing up 2.40 at 41.60 rupees. Environmental Resources Inc had turnover of 114.6 million rupees closing up 2.60 at 42.60 rupees.

Colombo Land generated 88.9 million in turnover closing at 54.80 up 3.20 rupees.

A delegation representing Colombo's stock brokers met President Mahinda Rajapaksa asking for relaxation of credit rules imposed by the securities and regulator and the central bank.

The President had promised to help but had also chided the delegation mentioning that some stocks were apparently pushed up and dumped on the Employees Provident Fund, a pension fund of private sector workers managed by the state, broker said.

Market participants sometimes refer to the EPF as the 'buyer of last resort' after some controversial stock purchases.
http://www.lbr.lk/fullstory.php?nid=201111301545335154

The President had promised to help but had also chided the delegation mentioning that some stocks were apparently pushed up and dumped on the Employees Provident Fund, a pension fund of private sector workers managed by the state, broker said.

Market participants sometimes refer to the EPF as the 'buyer of last resort' after some controversial stock purchases.

* Early losses set off as investors snapped up retail favourite shares
* Investors expects implementation of key requests' made to president at a meeting on Monday- brokers
* Foreign investors buy Keells; net inflow at 107.3 million rupees
* Rupee flat for 6th session; Cenbank sold $200 mln to defend rupee since devaluation- dealers

COLOMBO, Nov 30 (Reuters) - Sri Lanka's stock market rose 1.12 percent to a one-week high on Wednesday on retail buying amid expectations President Mahinda Rajapaksa will accede to broker requests to help increase trading and liquidity in the bourse.

The island nation's main share index fell 0.74 percent in early trade surged 1.12 or 67.32 points firmer to 6,087.40, its highest since Nov. 22.

The bourse surged 4.14 percent on Monday from a 14-month low after Rajapaksa met the heads of stock brokerages after last week's currency devaluation and continued pushback over increased regulation by the Securities and Exchange Commission (SEC).

"The bourse went up expecting a positive announcement from the SEC," a market analyst said on condition of anonymity.

Brokers have complained investor sentiment has turned negative due to firmer regulation by the SEC, which has looked into price manipulation and decreased the amount of credit available in the market.

Shares in retail favourite Hva Foods Ltd closed 6.12 percent firmer at 41.60 rupees a share and shares in Environmental Resources Investment PLC surged 21 percent to 54.70 rupees.

Market heavyweight John Keells Holdings PLC, which saw foreign buying of 859,500 shares, ended 2.47 percent weaker at 170 rupees.

The day's turnover was 2.07 billion Sri Lanka rupees ($18.17 million), highest since Oct. 31 but less than last year's average of 2.4 billion and this year's 2.4 billion.

Total volume was 74.2 million shares, against a five-day average of 89.3 million. The 30-day and 90-day average trading volumes were 58.8 million and 101.5 million. Last year's daily average was 67.9 million.

The bourse has fallen 10.3 percent since Oct. 1 and it rose to Asia's ninth-best performer with a year-to-date loss of 8.27 percent. It gave Asia's best returns in 2009 and 2010.

The bourse saw a net foreign inflow of 107.3 million rupees on Wednesday, but thus far in 2011, offshore investors have sold 17.4 billion, and a record 26.4 billion in 2010.

On Wednesday, the bourse was in the neutral territory with the 14-day relative strength index at 43.6, above the lower neutral range of 30.

Gainers outnumbered losers by 167 to 37 on Wednesday, Thomson Reuters data showed.

The rupee closed flat at 113.89/90 rupees a dollar for the sixth straight session, dealers said.

On Wednesday the central bank raised its benchmark 91-day T-bill rate by 25 basis points to an 18-month high and it had risen 69-140 basis points in the last two auctions.

Sri Lanka's annual inflation slowed to a 16-month low of 4.7 percent in November from a year earlier, government data showed on Wednesday.

FACTORS TO WATCH:
- Investors' moods after the devaluation
- The potential for imported inflation post-devaluation
- Reserve cost of defending the new rupee rate

DATA
Colombo Stock Exchange:
Stock Market Volume (Shares)
Current Volume-----------Average Volume 30 Days
74,190,274 ----------------------------58,824,792

Yield and Price of Sri Lanka's sovereign bonds:
Maturing year----Tenure------Amount-----------Reuters yield
2012-------------5-yr--------$500 mln----------6.100-5.814
2014-------------5-yr--------$500 mln----------5.632-5.292
2020------------10-yr--------$1,000 mln--------6.2857-6.1373
2021------------10-yr--------$1,000 mln--------6.3911-6.2507

($1 = 113.9000 Sri Lanka rupees)

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Bryson Hull)
http://uk.reuters.com/article/2011/11/30/markets-srilanka-idUKL4E7MU1EN20111130