Sri Lanka forced selling drives down stocks

Mar 11, 2011(LBO) – Sri Lankan stocks closed 0.96 percent lower with active retail trading and forced selling due to credit issues, brokers said.

“Forced selling was seen in trading with margin calls coming on several stocks. The credit issue was one of the main reasons,” an analyst said.

In November 2010, the Securities Exchange Commission said it has extended a deadline to cut credit given by brokers to their clients by six months to June 2011, with half the credit to be cut down by March 2011.

The earlier deadline was December and the SEC said it had decided to extend the deadline following representations from market participants.

“The market has lost 351.7 points or ended 4.6 percent lower since last Friday.” Vajirapani Bandaranayake of Bartleet Mallory Stockbrokers said.

However since December 31, 2010 the market has gained 677.15 points or 10.2 percent.

Hotel Developers Lanka which runs the Colombo Hilton closed at 138.90, up 3.10 rupees.

Economic development minister Basil Rajapaksa had told parliament that the state had ‘fully taken over’ the Colombo hotel managed by Hilton, an international chain.

Meanwhile, a media report said, an Indian firm in leisure and gaming has had talks in Sri Lanka over a state-run firm that owns the building in which Colombo’s Hilton hotel is located. The All Share Price Index closed at 7,313.02, down 0.96 percent (70.90 points) while the Milanka Price Index of more liquid stocks closed at 6,822.16, down 0.83 percent (57.08 points), according to stock exchange provisional figures.

Turnover was 951 million rupees. There were 58 gainers and 138 losers.