Sri Lanka shares break slide

July 10, 2009 (LBO) – Sri Lankan shares ended slightly firmer Friday, ending eight consecutive trading days of losses, with local investors said to be disappointed by lack of foreign interest, brokers said.

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The All Share Price Index rose 0.63 percent (14.83 points) to end at 2,363.09 while the more liquid Milanka rose 0.31 percent (8.08 points) to close at 2,640.67, according to provisional stock exchange figures.

Turnover was 159.9 million rupees.

“Except for a few large parcels of shares traded today, turnover levels in the retail market were very low as was seen throughout the week,” said Srimal Liyanage, head of research at Lanka Securities.

Most local investors who bought after the ethnic war ended in May and drove the market up were staying away given the lack of foreign interest, brokers said.

Those who lack holding power were forced to sell, resulting in falling prices.

Net foreign buying this week amounted to only 120.7 million rupees.

The market has largely been stagnant in recent days, although there was some volatility Friday.

Liyanage said the company earnings outlook was likely to be disappointing in the next quarter and throughout much of the year given the economic slowdown.

But he said there was potential for growth in the longer-term as the war that had deterred investment and economic activity had ended.

“This is a challenging year – very difficult to record positive earnings.”

Investors were also disappointed by delays in the government getting foreign funds, especially a 1.9 billion dollar International Monetary Fund loan.

“When the government clears these issues and gets the funds it might be positive for the market,” Liyanage said.

Dialog Telekom closed at five rupees, down 25 cents according to the volume weighted average price.

John Keells Holdings closed at 128 rupees, down 1.75.

The ASI ended the week down 1.5 percent (35.9 points) and Milanka down two percent (54.47 points).