Thursday, November 26, 2009

S.Lanka shares extend losses on political woes

By Shihar Aneez - Sri Lankan shares closed 0.29 percent weaker to an over two-week low on Thursday as pre-poll political uncertainty weighed on the investor confidence.

The All-Share Price Index of the Colombo Stock Exchange closed 8.31 points down at 2850.23, its seventh straight fall and lowest since Nov. 10.

'Still investors are on a 'wait and see' approach due to political uncertainty,' Hussain Gani, associate director at Asia Securities, told Reuters.

Sri Lanka's main opposition said on Thursday it will support former army chief Sarath Fonseka's candidature for presidential poll in mid-January, in the most serious challenge to President Mahinda Rajapaksa's bid for re-election.

Fonseka is yet to make a formal announcement on entering politics and challenge his ex-commander-in-chief.

Analysts and traders said investors were concerned over the latest political developments and uncertainty as Fonseka was now seen as a candidate who could challenge Rajapaksa in the poll, which was earlier expected to be won easily by the incumbent.

Investor confidence in the island nation's bourse, still one of this year's best-performers in the world with a 89.6 percent year-to-date return, has been on the decline after the government on Oct. 13 announced it will hold elections by April.

The bourse has fallen over 9 percent since then.

Analysts also said investors were waiting to see the impact of divestment by Galleon hedge fund after its founder was last month charged with insider trading in the U.S.

The island nation's Securities and Exchange Commission on Wednesday said investors should not be worried about political uncertainty ahead of the 2010 elections or hedge fund Galleon's divestment of assets in the island nation.

Sri Lanka should come 'very close' to meeting 2009 revenue and budget deficit targets agreed with the International Monetary Fund (IMF) in return for a $2.6 billion loan, a central bank official said on Thursday.

Sri Lanka's top private lender Commercial Bank of Ceylon , which has been divested by Galleon Fund, fell 1.61 percent to 168.25 rupees.

Total turnover was 267.4 million rupees ($2.33 million), well below last year's daily average of 464 million rupees.

The Sri Lankan rupee closed flat at 114.40/50. It fell to a near two-week low on Monday due to importer demand for dollars.

Sri Lanka's Deputy Finance Minister Sarath Amunugama said on Thursday the local currency had stabilised and aimed to maintain it at 114 to 115 to the U.S. dollar.

The interbank lending rate or call money rate edged up to 8.882 percent from Wednesday's 8.859 percent.

© Forbes

Related Links:
Sri Lankan government calls early presidential poll - World Socialist Web Site
Joint Opposition Of Sri Lanka To Back General Fonseka - Ground Report
Sri Lanka opposition endorses ex-general for president - Reuters

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