Trading Friday - Reuters Update - Sri Lanka shares dip on credit woes, foreign outflow

Sri Lanka stocks end down 0.5-pct
Dec 09, 2011 (LBO) - Sri Lankan stocks closed weaker Friday, sinking below the 6,000 point mark in thin trade with an investor continuing to accumulate shares of Distilleries Company, brokers said.

The main All Share Price Index fell 0.51 percent (30.75 points) to 5,996.44, while the more liquid Milanka index fell 0.34 percent (17.85 points) to close at 5,231.12.
Turnover fell to 464 million rupees Friday from 517 million rupees the day before, according to stock exchange provisional figures.

The sole crossing or off-market private deal for the day was 202,234 Distilleries Company shares at 150 rupees each, the latest in several deals in recent days. Distilleries trades accounted for the day's highest turnover. It closed flat at 150.

Index heavyweight John Keells Holdings closed a rupee lower at 172.60.

Orient Garments was the most actively traded stock, closing at 33.40 rupees, down three, after hitting a high of 35.80, with 533,300 shares traded.

Expolanka Holdings was also actively traded, closing up 10 cents at 8.70 rupees, and hitting a high of nine rupees, with 4.77 million shares changing hands.

HVA Foods was also heavily traded, closing 80 cents lower at 38.30 rupees.

First Capital Holdings and Dunamis Capital which revealed losses from a fraud Thursday, weakened further.


First Capital Holdings fell 40 cents to 15.10 rupees while Dunamis Capital lost 30 cents to end at 14.70 rupees.

First Capital Holdings said a fraud committed by a senior employee in a subsidiary had resulted in an estimated loss of 160 million rupees.

Dunamis Capital, a related firm, said in a stock exchange filing that preliminary inquiries show the impact on its balance sheet will be 105 million rupees.

SC Securities said in a report the market is likely to remain bearish until price and credit rules are relaxed as demanded by stock brokers.

“The market, as stated in our previous issues needs more foreign investments. Net foreign buying needs to improve along with solid buying in blue chip counters," they said.

"The market could continue to look bearish until the scheduled meeting between the Securities & Exchange Commission (SEC) and the Colombo Stock Brokers Association takes place and results in certain trading rules being relaxed.

"We believe, the growth in indices and healthy activity levels will be sustainable only if confidence and vitality is provided by way of foreign investments, governmental and private institutional buying.”
http://lbo.lk/fullstory.php?nid=68589229

I am unable to understand as to how the authorities plan to attract Foreign Investers with relaxation of curent regulations!

Of course, local buyers who pressed for relaxations might come in, but is that enough to move the market forward? I doubt.

How about orderly regulations fair by all concerned to prop-up the investor confidence including foreign buyers?

Fri Dec 9, 2011 1:33pm GMT
* Turnover, volumes near 1-month low
* Foreign outflow of 27.6 million rupees for week
* Rupee steady; cenbank sells $20 mln to defend it

COLOMBO, Dec 9 (Reuters) - Sri Lanka's stock market ended weaker on Friday with volume and turnover slumping to the lowest in almost a month, as investors awaited the first moves by the new head of the Securities and Exchange Commission (SEC).

The island nation's main share index closed 0.51 percent or 30.75 points down at 5,996.44.

Analysts said investors were awaiting the direction after the appointment of Tilak Karunaratne, an industrialist and former parliamentarian, as the new chief for the SEC a week after the former chairperson quit to "uphold her principles".


The bourse suffered a net foreign outflow of 126.5 million rupees on Friday, extending net foreign selling to 527.6 million for the week and 924.7 million in the last seven sessions.

Foreign investors have sold 18.3 billion thus far in 2011, and a record 26.4 billion in 2010.

The day's turnover was 464 million Sri Lanka rupees ($4.07 million), lowest since Nov.11 and well below last year's average of 2.4 billion and this year's 2.4 billion.

Total volume was 19.2 million shares, against a five-day average of 26.2 million. The 30-day and 90-day average trading volumes were 55.3 million and 98.2 million. Last year's daily average was 67.9 million.

On a net basis, foreign investors sold 59,640 shares in John Keells Holdings PLC, which ended 0.58 percent weaker at 172.60 rupees.

The bourse has fallen 11.6 percent since Oct. 1 after the introduction of a law that allowed the government to expropriate state assets leased to private companies, the exits of top SEC officials, and a 3 percent rupee devaluation.

It is Asia's 12th-best performer with a year-to-date loss of 9.64 percent after being at the top until June. It gave Asia's best returns in 2009 and 2010.

The rupee closed flat at 113.89/90 rupees a dollar for a 13th straight day as the central bank defended it by selling $20 million, dealers said.

The banks has so far sold around $280 million since the 3 percent devaluation on Nov. 22.

FACTORS TO WATCH:
- Changes from the SEC on credit and trading controls
- The potential for imported inflation post-devaluation
- The reserve cost of defending the new rupee rate

DATA Colombo Stock Exchange:
Stock Market Volume (Shares)
Current Volume-----------Average Volume 30 Days
19,188,371----------------------------19,188,371

Yield and Price of Sri Lanka's sovereign bonds:
Maturing year----Tenure------Amount-----------Reuters yield
2012-------------5-yr--------$500 mln----------5.904-5.608
2014-------------5-yr--------$500 mln----------5.427-5.087
2020------------10-yr--------$1,000 mln--------6.1368-5.9898
2021------------10-yr--------$1,000 mln--------6.2819-6.1425

($1 = 113.9000 Sri Lanka rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Bryson Hull)
http://uk.reuters.com/article/2011/12/09/markets-srilanka-idUKL3E7N94U020111209

thanks