Monday, December 31, 2012

Sri Lanka stocks end 2012 down 7.1-pct

Dec 31, 2012 (LBO) - Sri Lanka's stocks closed up 0.6 percent Monday, down 7.1 percent for the year, on top of an 8.5 percent loss in 2010, though the market has gained from mid 2012, brokers said.

 The Colombo All Share Price Index closed at 5,643.00 up 36 points and the S&P SL20 index closed up 16.3 points at 3,085.33 up 0.5 percent.

 Turnover was 289 million rupees with interest seen in John Keells Holdings, which closed at 219.90 up 50 cents, Nestle Lanka which closed up 93.50 rupees at 1,593.50 and Ceylon Tobacco which closed up 10.90 rupees at 830.00 brokers said.

Though the market ended the year down, there has been strong foreign investor interest with valuations coming to more realistic levels.

Sri Lanka has seen a net 280 million US dollars flowing into equity markets by the end of December 2012.

NDB stockbrokers said the benchmark index had gained 13.6 percent during the second half of the year.

Data from Bloomberg newswires showed that Sri Lanka was the 11th worst performing market coming in just ahead of Mauritius stock which fell 8.28 percent.

The worst performing index was the General Market Index in Cypress which had fallen 60 percent.

The best performing market tracked by Bloomberg was Venezuela which had so far risen 302 percent amid high inflation. Turkey was a distant second with a 53 percent gain.

 In 2012 Venezuela had recorded official inflation of 19.9 percent down from 27.6 percent in 2011 as the country's authoritarian president Hugo Chavez upped election related spending supported by loose monetary policy.

The oil exporting nation's Central Bank had sold 40 billion US dollars of foreign exchange up to November to defend a soft dollar peg, Governor Nelson Merentes said in a statement on December 29.

A steep devaluation of the Bolivar of up to 60 percent is expected in the first quarter of 2013 to bring the currency close to an unofficial 'black market' rate.

Sri Lanka's Central Bank has better monetary policy though the country registered inflation close to Venezuela up to 2007.

Sri Lanka's stocks rose 125 percent in 2009 after the end of a 30 year war. In 2010 the market rose another 96 percent partly helped by loose monetary policy and margin credit which fired an asset price bubble.

The credit bubble broke in 2011 amid a balance of payments crisis and rising interest rates. Rates are now falling.

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