Sri Lanka Stock Picks

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Wednesday, March 30, 2011

S. Lanka stx down; turnover slups to 4-mo low despite strong GDP

* Sri Lanka's 32-yr high growth announcement fails to boost bourse

* Investor woes on rising inflation hurt trading

* Rupee flat for sixth straight session

COLOMBO, March 30 (Reuters) - Sri Lanka's stock market fell on Wednesday for a third session in thin volume as inflation fears and selling to meet a regulatory deadline outweighed a government announcement 2010 GDP growth hit a 32-year high of 8.0 percent. [ID:nL3E7ET29N]

The island's main share index closed 0.21 percent or 15.14 points down at 7,192.72. It had hit a record closing high of 7,811.82 on Feb 14.

Sri Lanka's Securities and Exchange Commission has directed all stockbrokers to stop credit transactions by end-June, and cut their debtors' balances to 50 percent by Thursday. [ID:nSGE6AS0BD]

Analysts said worries over inflation may hurt the market with a possible supply disruption due to ongoing turmoil in the oil-producing Middle East and North Africa. Oil fell by 0.3 percent on Wednesday to below $115. [ID:nL3E7EU0AQ]

Sri Lanka's central bank on Monday revised its end-2011 annual average inflation target to 7 percent by December from an earlier 6 percent, while saying annual inflation may moderate from May after hitting 26-month high of 8 percent this month. [ID:nL3E7ES2HS]

The day's turnover was at 1.2 billion Sri Lanka rupees ($10.8 million), the lowest since Dec. 27 and half of last year's average of 2.4 billion rupees. This year's daily average is 3.2 billion rupees.

Foreign investors were net sellers of 93.5 million rupees worth of shares on Wednesday. They have sold a net 7.8 billion in 2011, and a record 26.4 billion in 2010.

The bourse is still Asia's best performer in 2011 with an 8.4 percent gain, after bringing in the region's best return of 96 percent last year.

Traded volume was 35.6 million, against a five-day average of 68.9 million shares. The 30-day and 90-day average trading volumes were 64.6 million and 70 million, respectively. Last year's daily average volume was 67.9 million.

The bourse is trading at a forward price-to-earnings (P/E)ratio of 15.1, one of the highest among emerging markets, compared with 11.3 in Asian markets and 11.8 for global emerging markets, Thomson Reuters StarMine data showed.

The rupee closed firmer at 110.35/37 a dollar from Tuesday's close of 110.38/40 on exporter dollar conversions, dealers said.

source - www.reuters.com