Sri Lankan shares becalmed, investors wary

June 30, 2009 (LBO) – Sri Lankan stocks closed almost flat Tuesday as retail investors took defensive positions on mid cap shares and some selected blue chip counters, brokers said.

The benchmark Colombo All Share Price Index closed down 0.32 percent (7.72 points) to end at 2,432.15, while the Milanka index of liquid stocks gained 0.51 percent (13.85 points) to close at 2,721.64, according to provisional stock exchange data.

Turnover was 567.7 million rupees.

There was net foreign selling worth 78.9 million rupees, with foreign investors buying 112.1 million worth shares and selling shares valued at 191.0 million rupees, brokers said.

Thakshila Hulangamuwa, vice president, business development at Asha Phillip Securities, said trading appeared to be cautious.

“The main contributors to the day’s activity were the retailers, while corporate and high net worth activity remained mediocre.”

Hotels stock prices were mostly weaker after rising in recent days.

A foreign market analyst said that the slow down in European economies, particularly in UK, France and Germany, will dampen a quick recovery of the tourism sector in the short term.

“We are not expecting a major rebound in tourism,” Prakriti Sofat, an economist from HSBC Singapore, told a forum.

Adding the sector’s woes, the US government state department issued a travel warning, urging travelers to avoid visiting Sri Lanka.

“Most of the high spending tourists come from Europe and the investors who are taking positions in the hotel sector with a long term vision will be duly rewarded after the first quarter of 2010,” said Hulangamuwa.

“The expectations of arrivals from the US market have not been significant even in the past, so a travel advisory will have a minimal effect.”

North American arrivals accounted only 5.3 percent of total arrivals from January to April 2009.

Aitken Spence Hotels closed at 145.00 rupees, down 4.75, while Browns Beach Hotels closed at 41.25 rupees, down 75 cents, on slim volumes.

Eden Hotels closed at 21.50 rupees, down 50 cents, while city hotel, Galadari closed at 12.50 rupees, down 25 cents.

Hotel Services closed flat at 17.00 rupees.

Hunas Falls Hotel closed at 42.00 rupees, down 1.00, while John Keells Hotels closed at 12.25 rupees, down 50 cents, on thin volumes.

Kandy Hotels closed at 92.00 rupees, down 6.75, while Nuwara Eliya Hotels closed at 375.00 rupees, down 35.00.

Tangerine Beach Hotel closed at 45.50 rupees, down 1.25, on small volumes, while Fortress at 11.00 rupees, was down 25 cents.

Conglomerate John Keells Holdings closed at 136.75 rupees, down 25 cents.

Distilleries Company of Sri Lanka, a unit if the Stassens Group controlled by tycoon Harry Jayawardena, closed at 87.75 rupees, up 75 cents, while Commercial Bank at 134.00 rupees, was down 2.00.

Dialog Telekom, a unit of Telekom Malaysia, closed at 5.25 rupees, up 25 cents, while index heavy Sri Lanka Telecom, closed at 48.75 rupees, down 75 cents.

The Finance Company, a former unit of troubled Ceylinco Group closed at 26.00 rupees, down 1.25, with 1.5 million shares changing hands, brokers said.

Hatton National Bank closed at 119.00 rupees, down 1.00, while diversified Hayleys closed at 132.00 rupees, up 1.00

The spot dollar remained unchanged at 114.95/115.00 rupees in late afternoon trade, dealers said.