Sri Lankan shares end lower on rising rates

Jan 16, 2017 (Reuters) – Sri Lankan stocks closed lower on Monday as investors sold financials after rising yields in short-term government securities hit sentiment, brokers said.

The Colombo stock index ended 0.26 percent weaker at 6,201.65, slipping from its highest close since Dec. 30 hit on Friday.

Shares gained on Friday after the European Commission said that it had proposed increased market access or Generalised Scheme of Preferences Plus (GSP+) for Sri Lanka as a reform incentive. “Positive sentiment on the GSP-plus is short-lived. The rising rates are hitting the market,” said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd.

Yields on treasury bill auctions rose 9-19 basis points at a weekly auction last week to a four-month high, after the central bank governor signalled reduced intervention to defend the rupee currency. The day’s turnover stood at 911.9 million rupees ($6.09 million).

Foreign investors net bought 78.7 million rupees worth of equities on Monday, but they have net sold 1.62 billion rupees worth of shares so far this year.

Shares in biggest listed lender Commercial Bank of Ceylon Plc fell 1.41 percent, while Asiri Hospitals Plc fell 2.59 percent.