Sri Lankan plantations stocks sought after on earnings outlook

Feb 18, 2008 (LBO) – Sri Lankan shares ended higher Monday driven by keen interest in plantations stocks by domestic retail investors anticipating higher earnings on the back of strong commodity prices, brokers said. In the bond market, all bids received at the auctions were rejected by the central bank.

The All Share Price Index gained 12.05 points or 0.48 percent to end at 2,497.10 while the more liquid Milanka index rose 12.83 points or 0.41 percent to close at 3,145.53 with turnover 222.3 million rupees.

Madulsima Plantations was the main attraction of the day’s trading, shooting up 4.75 rupees or 42 percent to 16.75 rupees on the volume weighted average price.

The share contributed almost 48 million rupees to the day’s turnover with 3.3 million shares changing hands.

Geeth Balasuriya of HNB Stockbrokers said early fears that plantation company earnings could be badly hit by last year’s wage hike had not materialised and they had done better than expected.

“Plantations stocks are moving on the healthy earnings outlook. This is a positive sign.”

Domestic retail investors looking to earn quick profits are seen continuing to chase plantations stocks.

Other plantations stocks that were heavily traded were Balangoda, Maskeliya, Kotagala, Talawakelle, and Agalawatte.

Bartleet Mallory Stockbrokers said the day’s activity was moderate with mostly the domestic retailers actively trading in the market.

“Heavy interest was witnessed on the plantation stocks on anticipation of healthy
corporate earnings from this sector, backed by the high commodity prices.”

Foreigners were more towards the buying side bringing the net inflow to 22.3 million rupees, they said..

Dankotuwa Porcelain rose two rupees or 10 percent to 22 rupees and accounted for the second highest turnover of the day, adding 22.3 million rupees, with one million shares traded.

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