June 29, 2018 / 11:40 AM / 5 months ago

Sri Lankan shares recover from 15-month closing low on bargain hunting

COLOMBO, June 29 (Reuters) - Sri Lankan shares closed firmer on Friday, recovering from four consecutive sessions of decline to a near 15-month closing low, as investors picked up battered stocks.

However, foreign investors continued to offload the island nation’s risky assets, limiting the gains.

The Colombo stock index ended 0.21 percent higher at 6,194.63, but posted a fall of 0.5 percent for the week in its sixth straight weekly drop. For the month, it shed 3.2 percent, the biggest since August 2017.

“Buyers were chipping in where they saw values,” said Hussain Gani, deputy chief executive at Softlogic Stockbrokers.

“If this buying momentum can be backed up, market will recover faster.”

Foreign investors net sold equities worth 151.7 million rupees ($958,912.77), extending the year-to-date foreign outflows to 1.3 billion rupees this year.

Turnover was 946.9 million rupees, more than this year’s daily average of 935 million rupees.

Shares of Distilleries Company of Sri Lanka Plc rose 2.5 percent, Cargills (Ceylon) Plc ended 4.4 percent firmer and Ceylon Tobacco Company Plc climbed 0.2 percent.

Finance Minister Mangala Samaraweera said last week the economy was likely to grow about 4.5 percent this year, below a central bank estimate of 5 percent.

The International Monetary Fund (IMF) said on June 20 Sri Lanka’s economy remained vulnerable to adverse shocks because of sizable public debt and large refinancing needs.

Ratings agency Moody’s said on Wednesday a strengthening U.S. dollar since mid-April has increased the credit risk of several emerging markets, including Sri Lanka, due to currency depreciation.

Moody’s said a strong dollar would also lead to a drop in foreign exchange reserves of countries such as Argentina, Ghana, Mongolia, Pakistan, Sri Lanka, Turkey, and Zambia. ($1 = 158.2000 Sri Lankan rupees) (Reporting by Ranga Sirilal; Editing by Subhranshu Sahu)

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