Sri Lanka shares head down, Seylan Bank draws interest

Jan 08, 2009 (LBO) – Sri Lankan shares ended marginally weaker Thursday in thin trade and sentiment remaining gloomy with active, albeit low volume, trading in Seylan Bank, the subject of takeover interest, brokers said.

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The All Share Price Index edged down 0.49 percent (7.67 points) to end at 1,542.40 while the more liquid Milanka shed 1.46 percent (24.46 points) to close at 1,648.48.

Turnover was 93 million rupees.

Seylan Bank, the second most actively traded stock, went up five percent or 1.50 rupees to 31.50 rupees.

Seylan Bank has drawn interest after the Ceylinco group said it would sell its controlling stake in the bank to raise funds to pay off depositors in a failed, unlisted credit card company.

The bank has attracted five buyers, local and foreign.

Chinthana Hatangala of Lanka Securities said investors may be drawn to the prospect of the bank’s performance being improved by new owners.

The bank had been trading at comparatively low price earnings multiples as it was not as sound as its peers.

“But if a new investor can improve the bank’s performance, then its potential earnings could be higher,” Hatangala said.

But he said minority investors cannot expect a mandatory offer because of central bank individual ownership limits on commercial banks.

In Thursday’s trade, John KeellsHoldings was the most actively traded stock and most active in volume terms.

The share ended down 25 cents at 50 rupees, according to the volume weighted average.

Dialog Telekom shed 25 cents to 5.75 rupees.

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