Sri Lanka stocks end weaker on inflation concerns

CEAT Kelani Holdings Managing Director Ravi Dadlani (right) and Lanka Ashok Leyland CEO Umesh Gautham exchange the OEM agreement

June 16, 2008 (LBO) – Sri Lanka stocks closed marginally lower on thin trading with high inflation and interest rates driving investors away from the market, brokers said. The All Share Price Index fell 0.43 percent (10.46 points) to end at 2,444.91 while the more liquid Milanka was down 0.62 percent (18.35 points) to end at 2,924.40.

Total turnover was 161 million rupees with 9.3 million shares traded.

“There is no breaking news coming in and people have no extra money to put in,” Susil Fernando, senior investment advisor, DFCC Stockbrokers, told LBO.

The stock market in recent months have been on a downward slide, owing to high borrowing costs and better yields from fixed income securities which have made investors lose interest in shares, brokers said.

Investors who pursued day-to-day gains by borrowing money have now become reluctant to get into debt as rates have increased owing to high inflation.

Fixed income securities have become more popular due to the lower risk factor, compared to shares.

The Colombo Stock Exchange was dragged lower Monday by falls in index-heavy stocks, brokers said.

Bukit Darah fell 34.25 rupees to 1,615.75 rupees, Sri Lanka Telecom dropped one rupee to close at 46.00 while Dialog Telekom closed flat at 12.75 rupees.

Hayleys closed three rupees higher at 128.00 on speculation of the sale of its 28 percent stake in DIMO.

John Keells Holdings share closed flat at 112.00 on retail trade.

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