Sri Lankan share prices sink as security concerns loom

July 08, 2008 (LBO) – Sri Lankan shares sank Tuesday with the indices dragged down by losses in heavyweight stocks as security fears added to investor concerns about deteriorating economic conditions, brokers said. The All Share Price Index lost 1.19 percent (28.67 points) to end at 2,372.50 while the more liquid Milanka was down 1.40 percent (40.39 points) to 2,849.62. Turnover was 272 million rupees.

Dialog Telekom lost 24 cents to end at 13.50 rupees while Sri Lanka Telecom shed one rupee to close at 41 rupees.

Brokers said they expect sentiment to remain dull and the market to stagnate for the time being.

“We lost quite a lot of points on the All Share. The main concern is the security conditions and economic conditions. Investor confidence is low as it has been for the last few weeks.”

A general strike threatened by opposition parties on July 10 could worsen worries about the economy already battered by record inflation and high interest rates.

The approaching anniversary on July 23 of anti-Tamil riots that sparked off the ethnic war is another concern coupled with a south Asian heads of state summit in Colombo later in the month.

Over 3.6 million shares of Ceylon Hotels Corporation changed hands with market speculation having it that the owners were divesting part of their stake.

The stock fell 18.09 percent or 4.25 rupees to 19.25 after hitting a high of 23.50.

Hayleys gained 1.25 rupees with 647,817 shares traded, mainly strategic buying believed to be by businessmen Dhammika Perera who recently raised his stake in the group to over 15 percent and is seeking two board seats.

John Keells Holdings lost a rupee to end at 107 with 257,900 shares traded, largely buying by institutional and high net-worth individual investors, brokers said.

These three stocks accounted for the bulk of the day’s turnover.