Sri Lanka stock market slide deepens

May 28, 2008 (LBO) – The slide in Sri Lankan share prices gathered momentum Wednesday, with the main index down one and a half percent amid disappointing corporate earnings. The All Share Price Index fell 1.49 percent (38.12 points) to 2,520.77 while the more liquid Milanka fell 1.85 percent (56.73 points) to close the day at 3,008.71. Turnover was 218 million rupees.

Market heavyweight Dialog Telekom, the dominant mobile phone operator, fell 5.56 percent or 75 cents to end at 12.75 rupees with 727,100 shares traded.

Sri Lanka Telecom, the main fixed line operator, was unchanged at 48.75 rupees with 137,200 shares changing hands.

Both telcos have reported a downturn in quarterly earnings as tariff cuts and rising costs take their toll.

John Keells lost one rupee to 94 while Lanka IOC fell 75 cents to 18.25 rupees.

Brokers say investors are worried about intensifying violence with Tamil Tiger rebels blamed for two bomb attacks in the capital this month that killed two dozen people.

Investors are also concerned that persistently high inflation levels – now 25 percent – and high interest rates could dampen consumer demand and reduce company margins as costs soar, hitting the bottom line.