S.Lankan shares slide to 1-year closing low

Sri Lankan shares fell 1.19 percent to a one-year low on Tuesday as concerns about the impact of high interest rates and inflation on corporate earnings added to worries about the long-running civil war.

The Colombo All-Share index .CSE closed 28.67 points weaker at 2,372.50, a 10th consecutive fall that took it to its lowest close since July 19, 2007. The market has fallen 11.8 percent from an 11-month high on April 23.

"Investor sentiment is very weak, mainly on earning fears," said Geeth Balasuriya, assistant research manager at HNB Stockbrokers.

"High inflation and high interest rates are pressurising profit margins of the companies due to high costs, while some companies are discouraged to go for new investments due to high borrowing cost."

Later this month, companies are due to start releasing their results for the quarter ended on June 30.

Sentiment on the corporate sector has been hit by poor economic data. Annual consumer price inflation rose to a 5-year high of 28.2 percent in June, while annual economic growth in the March quarter slowed to 6.2 percent from 7.6 percent in the previous quarter. See [ID:nCOL109662].

Market heavyweight Dailog Telekom DIAL.CM fell 1.82 percent at 13.50 rupees a share calculated on a weighted average, and leading fixed-line telephone operator Sri Lanka Telecom SLTL.CM fell 2.38 percent to 41 rupees.

Top conglomerate by market capitalisation, John Keells Holdings JKH.CM closed 0.69 percent weaker at 107.25 rupees, and private lender Hatton National Bank HNB.CM fell 1.23 percent to 100 rupees.

Conglomerate Hayleys HAYL.CM closed 0.73 percent firmer at 137.75 rupees. Traders said four block deals in the stock were seen during trade.

Hayleys accounted for more than 32 percent of total turnover of 270.55 million rupees ($2.5 million), which was two-thirds of last year's daily average of 400 million rupees.

The rupee edged up to 107.65/67 per dollar from Monday's close of 107.66/68 on dollar sales by exporters.

The interbank lending rate CLIBOR rose to 14.906 percent, up from Monday's 13.650 percent. ($1=107.65 rupees)

Source: Reuters