Sri Lanka shares weaken, trading dries up

Standing left to right – Mr. Dinesh Jebamani (Chief Manager Liability Product Management and New Age Media – Seylan Bank), Mr.Sudesh Peiris (Senior Manager – Digital Banking Channels – Seylan Bank), Ms. S.Senevirathne (Representative of the Revenue Department – Western Province), Mr. Tilan Wijeyesekera (Deputy General Manager – Retail Banking – Seylan Bank) and Mr. Malik Wickremanayaka (Deputy General Manager – Operations – Seylan Bank)

Nov 11, 2008 (LBO) – Sri Lankan shares ended marginally lower Tuesday after swinging both ways with trading drying up as wary investors remained on the sidelines, brokers said. The slow withdrawal of funds by foreign investors, pulling out because of the downturn in their own economies, could continue.

“There are shares with earnings potential and which are undervalued but investors have no confidence to invest because of domestic and global reasons and also uncertainty about the war,” said Hatangala.

Analysts said investors were worried about the future corporate earnings outlook given fears of recession in advanced economies and slower growth locally.

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Turnover slumped to a 12-month low of 57 million rupees with the All Share Price Index losing 0.42 percent (7.74 points) to 1,849.08 while the Milanka was down 0.64 percent (13.34 points) to 2,060.02.

“Weak market sentiment dominated throughout the day,” said Chinthana Hatangala of Lanka Securities. “We have not seen active trading on any counter.”

Sri Lanka Telecom fell 50 cents to 37.75 rupees while John Keells Holdings traded flat at 68.50 and Dialog Telekom ended unchanged at seven rupees.

Brokers said that investors remain cautious despite the reduction in energy costs in the government budget for 2009 that should reduce corporate costs.

“The problem is that investors do not enough confidence to come to the market,” said Hatangala.

“They have adopted a wait-and-see policy. We need corporate investors to come to the market as retail investors do not have enough capacity to revive the market.”