Sri Lanka stocks weaken, Distilleries in focus ahead of court verdict

Aug 22, 2008 (LBO) – Sri Lankan stocks weakened further Friday with anticipation mounting over a court verdict on the privatization of Sri Lanka Insurance Corporation (SLIC), part of the Distilleries group. The All Share Price Index fell 0.43 percent (10.34 points) to 2,414.37 while the Milanka dropped 0.59 percent (16.78 points) to 2,811.96. Turnover was 136 million rupees.

The indices were pulled down by Dialog Telekom, which fell 2.13 percent (25 cents) to 11.50 with 334,500 shares traded.

Brokers said trading by retail investors accounted for most of the activity during the week except for a few big trades in blue chips by foreign players.

Danushka Samarasinghe of Asia Securities said the outcome of provincial council polls on Saturday are unlikely to affect the market but that investors were more concerned with the anticipated court ruling on SLIC.

“Second liners, not the key stocks, accounted for the bulk of revenue. In the entire week that was the case, other than a couple of trades in conglomerates.

“I don’t think the elections would have any significant impact on the market. So next week the market will probably remain the same and move sideways. But gradually turnover levels should improve,” he said.

“The focus is on the Distilleries court case.”

The case is with regard to the privatization of Sri Lanka Insurance Corporation (SLIC), which has been challenged on grounds that there were irregularities. The judgement is expected soon.

SLIC is controlled by the Distilleries conglomerate.

Last month, in a similar case, the supreme court ruled that there had been serious flaws in the privatization of a bunkering firm Lanka Marine Service (LMS).

LMS had become one of the main sources of profits for another conglomerate, John Keells Holdings.

The court ordered LMS to return land with storage tanks to the port and cancelled its tax holiday.

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