Sri Lanka shares head down

Nov 18, 2008 (LBO) – Sri Lankan stocks resumed their downward march Tuesday after a brief halt the day before but with trading volumes drying up and the bearish trend likely to continue, brokers said.

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The All Share Price Index fell 1.86 percent (33.16 points) to end at 1,753.93 while the more liquid Milanka was down 1.88 percent (37.70 points) to 1,965.24. Turnover was 87 million rupees.

“The market could not sustain Monday’s marginal gains,” said Chinthana Hatangala of Lanka Securities.

The indices were brought down by falls in Sri Lanka Telecom, John Keells Holdings and Commercial Bank.

“Compared with yesterday, we saw some improvement in activity but more selling came in to the market towards the latter part of the day.”

Among the shares actively traded were Vallibel Power, Maskeliya Plantatins and Nawaloka.

“Most Sri Lankan investors come to the share market for short-term returns,” said Hatangala.

“So when there’s a continuous bear run it is not possible to have short term returns as dividends yields are not so attractive compared with interest rates.

“Investors need both dividends and capital gains to compare favourably with treasury bill rates.”

Investment funds also preferred to wait and to buy fundamentally sound counters when they fall to the cheapest levels although some improvement in their participation ws observed albeit at low levels.