Sri Lanka stocks close up 1.67-pct

Sept 02, 2010 (LBO) – Sri Lankan stocks closed sharply higher Thursday, with the main index driven up almost 100 points amid heavy trading in certain shares of the finance sector which is recovering from a downturn, brokers said. The firm, which owns Amaya Reef on the southwest coast, closed at 6.70 rupees, up 60 cents or 9.84 percent, on the back of a 50 cents gain Wednesday. The All Share Price Index closed at 5,785.17, up 1.67 percent 94.88 points) while the more liquid Milanka index rose 0.88 percent (52.20 points) to close at 5,961.52, according to stock exchange provisional figures.

Turnover was 3.36 billion rupees.

The market is now up 70 percent this year with a continuing outflow of foreign funds.

Merchant Bank of Sri Lanka, the most actively traded stock and third most active in volumes, closed at 40.30 rupees, up 3.60 or 9.81 percent, with over 3.2 million shares traded.

SMB Leasing was heavily traded for the second day, the most active in terms of volume, closing flat at 2.70 rupees with almost 8.5 million shares traded

Vallibel Finance closed at 60.10 rupees, down 60 cents, with 1.1 million shares done.

Nation Lanka Finance closed at 21.50 rupees, up 1.90 or 9.69 percent with 2.2 million shares traded.

The Finance Company closed at 58.70 rupees, up 5.30 or 9.93 percent, with over a million shares traded.

SC Securities stock brokers said in a report the listed finance companies had bounced back significantly from the economic slowdown of the two previous years.

“We are of the view that reduction in the import duties of motor vehicles will impact positively on the top line of the sector as a whole,” they said.

“The sector margins and profitability levels have been under somewhat pressure over the last two years, but we believe the combined positivity of the top line growth, decline in borrowing rates and an improvement in asset quality could bode well to the capital along with improved deposit growth.”

SC Securitie said that in the Registered Finance Companies sector there had been a significant fall in asset quality over the 2008/09 period.

But the brokers said they were optimistic of a recovery “given the high demand for motor vehicles, higher disposable income and profitability in the Sri Lankan macroeconomic picture.”

In other trading Thurdsday, retailer Odel was also heavily traded, closing at 33.20, up 2.90 or 9.57 percent, with over 2.6 million shares traded.

Hotel Reefcomber, which announced a share consolidation followed by a split with attached warrants, was heavily traded for the second day.