Sri Lanka stocks drop 1.14 pct on earnings fears

June 4, 2008 (LBO) – Sri Lanka stocks shed over one percent Wednesday with investors taking profits with corporate earnings are seen under pressure from high inflation and interest rates, analysts said. The All Share Price Index (ASPI) closed 1.14 percent (28.75 points) lower at 2,491.68 points while the Milanka Index shed 1.77 percent (53.79 points) to close at 2,990.58 in a day that also saw suspected Tamil Tiger separatists bomb a commuter train injuring 18.

Total turnover was 201.2 million rupees with a trading volume of 8.1 million shares.

“We have seeing corporate earnings coming under pressure from inflation and high interest rates,” Geeth Balasuriya of HNB Stockbrokers said.

“The corporate earnings are not up to expectations and it is worrying the investors so they are cautious.”

Distilleries Company closed down 25 cents at 104.75 following results that showed a six percent drop in annual profits. However, the group’s March quarter profits increased 16.6 percent to 674.2 million rupees.

Aitken Spence dropped nine rupees to close at 550.00.

Kotagala Plantations dropped one rupee to close at 64.00.

Bogawantalawa Tea Estates closed up one rupee at 29.75 while Horana Plantations dropped 1.75 to close at 36.25.

The country’s largest fixed access operator Sri Lanka Telecom closed 1.25 rupees lower at 46.75 rupees with 39,700 shares traded.

Malaysia’s UT group said after its mandatory offer to buy out other shareholders ended on June 2 and its stake in Sri Lanka Telecom was upped to 44.9 percent.

The UT group made the mandatory offer at 50.50 rupees per share after buying out a 35.19 percent stake in Sri Lanka Telecom from Japan’s NTT Communications.

The SLT share price had increased on news of the mandatory offer but now the price will ease off during the week, brokers said.

Dialog Telekom also slipped 50 cents to close at 13.00.

Diversified John Keells Holdings closed 50 cents lower at 114.25 after transactions amounting to 405,700 shares added 46.4 million rupees to the total turnover.

Investor interest was also prevalent on Pan Asia Banking Corporation stocks, where the share closed up 50 cents at 12.75. Over 1.71 million shares changed hands adding over 21.49 million rupees to turnover.