Sri Lankan stocks battered by war, high rates

Jan 18, 2008 (LBO) – Sri Lankan stocks edged slightly higher in thin trading Friday with brokers saying intensifying violence and high interest rates were keeping investors away. Margin traders were under pressure to reduce their exposure owing to sky high interest rates.

Stocks were battered this week because of stepped up attacks by Tamil Tigers who blew up a bus killing 27 people and later killed nine farmers in southern Sri Lanka this week.

The All Share Price Index gained 3.45 points or 0.15 percent to close at 2,382.33, while the more liquid Milanka index rose 8.59 points or 0.28 percent to 3,061.22.

Turnover was 131.5 million rupees.

“Retail investors are waiting on the sidelines,” said Harsha Fernando, chief executive of SC Securities.

“There’s hardly any incentive for anyone to come to the stock market. Interest rates are very high and have not come down so people won’t borrow and invest money. They also have alternative investment vehicles with interest rates at 20 percent.”

Lanka IOC, which accounted for the largest turnover with over a million shares changing hands in two large blocks, closed 50 cents lower at 19 rupees on the volume weighted average price.

Environmental Resources Investment plc, formerly Walker & Grieg, rose five rupees to 18.25 with 993,800 shares being traded while 1.5 million shares of Kshatriya Holdings were done with the stock ending flat at nine rupees.

Dialog Telekom was flat at 18.25 rupees with 203,300 shares changing hands. .