The Sunday Leader

Post Geneva Fears Haunt Bourse

Source:Sri Lanka Brief

Like the proverbial sword of Damocles, investors are worried about what would happen to Sri Lanka post Geneva, a stock market source told this reporter on Thursday.

He was referring to the successful anti Sri Lanka vote passed by the UN  Human Rights Council (UNHRC) in consecutive years on alleged HR abuse during the Government’s war against the LTTE, with the last resolution having had been passed by a majority vote  in Geneva earlier during this month.

“No sanctions have had been imposed on the island thus far, but there is a fear as to what would happen if in the event the USA imposes unilateral import sanctions on Sri Lanka,”? he said.
USA is Sri Lanka’s biggest export market, it was also the country which successfully got UNHRC member countries to vote against Sri Lanka by a majority vote on both occasions.

“The recent ban on Sri Lanka cricketers from participating in IPL tourneys imposed by Tamil Nadu when playing there is a classic case of such fears dominating the market,” the source said.As a result locals are on the selling side, they want to exit, the source said.

The bright spot however being foreign interest in some selected blue chips, he said. Sanctions have not come to pass,  thus they are buying, with interest evinced around a  few blue chip banks and one blue chip conglomerate, he said.

The source identified those stocks as being Sampath Bank, Hatton National Bank, NDB Bank and Commercial Bank, as well as John Keells Holdings.

There is still quite a bit of foreign interest evinced on those stocks, he said.

Net foreign inflows recorded for the calendar year to date has had been Rs. 4.9 billion. Market capitalization (shareholder wealth) in the review period has had grown by 1.7% to Rs. 2,205.05 billion, the ASPI by 1.6% to 5,735.68 points and the S&P SL 20 Index by 6.7% to 3,293.57 points.

In other developments, the exchange rate (ER) marginally weakened to Rs. 126/75/85 in two way quotes to the US dollar in interbank spot trading last week, after closing the previous week at the Rs. 126/70/85 levels.

Import pressure bore upon the ER last week, a source said.

It’s the middle rate in two way quotes that is generally considered as the rate at which trades are done.

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