COLOMBO Aug 6 Sri Lankan stocks touched a near
three-year closing high on Wednesday led by banks on hopes the
ongoing financial sector consolidation would help boost future
earnings amid low interest rates; continued buying by foreign
investors also helped sentiment.
The main stock index ended 0.26 percent, or 17.84
points, firmer at 6,833.26, its highest close since September
16, 2011. It rose 6.82 percent in July and has been up 15.57
percent so far in the year.
"Retail interest was mainly in the financial sector with
mergers and acquisitions taking place due to the financial
sector consolidation," said Dimantha Mathew, research manager at
First Capital Equities (pvt) Ltd.
"There is an increasing interest on the demand side (for
stocks) simply because people are searching for avenues to
invest with interest rates coming down."
Yields in treasury bills fell 8-13 basis points at a weekly
auction on Wednesday with the one-year T-bill yield falling
below the central bank's repurchase rate or standing deposit
Hopes over strong earnings, declining interest rates and
continued buying by foreign investors have helped boost interest
in risky assets in the $22 billion-worth stock market.
Ceylinco Insurance Plc rose 1.54 percent to
1,360.70 rupees and Union Assurance Plc rose 10.32
percent to 174.20 rupees. Shares in the biggest listed lender
Commercial Bank of Ceylon Plc rose 0.64 percent to
Turnover was 1.39 billion rupees ($10.68 million), more than
this year's daily average of about 1.01 billion rupees.
Foreign investors bought a net 223.3 million rupees worth of
shares on Wednesday, extending the year-to-date net foreign
inflow to 11.26 billion rupees.
The index has been in the overbought region since July 3, as
local investors moved funds from fixed income to riskier assets
because of low interest rates and foreign buying.
Lower interest rates have prompted local investors to buy
shares and move away from unattractive fixed assets.
(1 US dollar = 130.1800 Sri Lankan rupee)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju