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Sunday, March 27, 2011

Stock market at 1-week high amid heavy foreign outflow

    * Retailers push the market; but sentiment negative

    * Foreign investors exit; highest weekly outflow in 2011

    * Rupee flat after rising in early trade

Sri Lanka’s stock market gained on Friday to a one-week high as retail investors snapped up select shares offsetting foreign investors’ exit from Asia’s best performing market throughout the week amid fears over higher inflation due to instability in oil-producing regions.

Foreign investors were net sellers of 303 million rupees worth of shares on Friday, extending the week’s outflow to 2.02 billion rupees, the highest so far this year. Offshore investors have sold a net 6.5 billion in 2011, after selling a record 26.4 billion in 2010.

The island’s main share index closed 0.33 percent, or 23.52 points, firmer at 7,240.27, highest since 17 March.

It hit a record closing high of 7,811.82 on 14 February.

Analysts said investor sentiment has turned negative on move by Sri Lanka’s Securities and Exchange Commission to end credit transactions by end-June and turmoil in oil-producing Middle Eastern and North African countries.

Oil was steady on Friday after heading for a third straight weekly gain. Brent crude for May shed 15 cents to $115.57 a barrel at 0837 GMT, about $4 from a 2-1/2-year high near $120 a month ago, while U.S. crude fell 20 cents to $105.40.

Sri Lanka imports all its oil, so the crises in Libya and the Middle East mean the island nation’s economy could get hit by soaring inflation and a loss of earnings from Sri Lankan expatriate workers and lower tea demand from the region.

The day’s turnover was 2.3 billion Sri Lanka rupees ($20.8 million), lower than last year’s average of 2.4 billion rupees and well below this year’s daily average of 3.3 billion.

The bourse is still Asia’s best performer so far in 2011 with a 9.1 percent gain, after bringing in the region’s best return with 96 percent last year.

Traded volume was 112.8 million, against a five-day average of 64.8 million shares. The 30-day and 90-day average trading volumes were 70.4 million and 68.7 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 14.9, one of the highest among emerging markets, compared with 12.2 in Asian markets and 11.5 in global emerging markets, Thomson Reuters StarMine data showed.

The rupee closed steady for a fourth straight day at 110.38/40 a dollar after appreciating to 110.25/30 due to banks’ dollar selling before oil importers bought them, dealers said.

source - www.ft.lk