(Corrects the spelling of analyst's name in fourth paragraph)
COLOMBO Aug 21 Sri Lanka stocks hovered around
three-year highs on Thursday, led by financials due to lower
interest rates, but analysts said increasing speculative trading
in fundamentally weak shares could impede the healthy growth the
index has had this year.
The main stock index ended up 0.07 percent, or 4.78
points, at 7,004.75, its highest close since Aug. 18, 2011.
The index has gained 18.4 percent so far this year.
"Shares with weak fundamentals are also moving up from this
week. If this set of stocks gathers momentum, it could be
attractive for retail investors," Danushka Samarasinghe, the COO
at Softlogic Stockbrokers, told Reuters.
"It could sharply increase the market risk as in the past,"
he said, referring to the index plummeting more than 20 percent
after it hit a record peak in February 2011.
Shares of investment firm and broker Taprobane Holdings
jumped 66.7 percent to 4.50 rupees in heavy volume
which stockbrokers cited as a speculative move, while market
heavyweight John Keells Holdings gained 1.51 percent to
Thursday's turnover was 1.47 billion rupees ($11.3 million),
higher than this year's daily average of 1.19 billion rupees.
The bourse saw net foreign inflows of 88.1 million rupees on
Thursday, extending the year-to-date inflows to 7.57 billion
(1 US dollar = 130.2000 Sri Lanka rupee)
(Reporting By Shihar Aneez; Editing by Prateek Chatterjee)