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Thursday, October 21, 2010

Sri Lanka shares up 0.3 pct; foreigners exit bourse

* Bourse up 0.3 percent; bank shares boost index

* Foreign investors sell over 1.2 bln rupees in shares

* Rupee up on bank dollar selling ahead of long weekend

COLOMBO, Oct 21 (Reuters) - Sri Lanka's benchmark share index edged up 0.3 percent on Thursday, but foreign investors sold over 1.2 billion rupees' worth of mainly blue chip shares due to high valuations, analysts said.

Sri Lanka's main share index .CSE rose 21.77 points or 0.33 percent to 6685.99. It is still Asia's best performer in 2010 with a 97.5 percent gain as the island's economy rebuilds after the end of a civil war in May 2009. It has shed 7.2 percent since hitting an all-time high of 7,207.75 on Oct 4.

Despite the fact the market has almost doubled this year, foreign investors have so far this year sold a net 22.9 billion rupees' worth of shares.

The bourse is trading at the highest forward price-to-earnings ratio in Asia and global emerging markets at
20.8 times, compared with 13.5 and 12.6 respectively, Thomson Reuters data showed.

The CSE's 14-day relative strength index is at 56.4, between the neutral limits of 30 and 70, Thomson Reuters data showed.

Bank shares which brought down the market in the previous session boosted the market index with a more than 1.7 percent growth in top listed lender Commercial Bank of Ceylon COMB.CM and the second-biggest lender Hatton National Bank HNB.CM.

Turnover was 3.3 billion rupees ($29.7 million), over five times the 2009 daily average and more than this year's daily average of 2.4 billion.

The rupee LKR= closed firmer at 111.76/78 a dollar from Wednesday's 111.82/85 on banks selling dollars amid a lack of importer demand ahead of a long weekend. The markets will be closed on Friday for a Buddhist religious holiday.

FACTORS TO WATCH

Whether the commercial banks will reduce the lending rates as the central bank kept its policy rates steady despite some market concern of higher inflation.