Sri Lanka's main share index closed steady on Monday, with trading volume hitting a 21-month low as investors waited on the sidelines for an expected easing of credit limits from the island nation's Securities and Exchange Commission. The main share index ended up 0.01 percent or 0.45 points at 6,074.87. It lost 8.5 percent in 2011 and was ranked Asia's 10th-best performer after being top in the region until June. It was Asia's best in 2009 and 2010.
The day's volume was at 13.02 million shares, the lowest since April 1, 2010, while turnover was 419.5 million Sri Lanka rupees ($3.68 million), far below last year's average of 2.3 billion rupees.
Local buying offset continued foreign investor sales of shares in Commercial Bank of Ceylon, which have fallen near a one-year low of 97 rupees after the recent resignation of its chairman MJC Amarasuriya. The Bank rose 1.0 percent as local investors more than absorbed foreign sales of over 540,900 shares. Commercial Bank in a statement to the bourse said its board of directors has unanimously decided to appoint private sector businessman Dinesh Weerakkody as its chairman and former Central Bank Deputy Governor Dharma Dheerasinghe as his deputy.
Foreign investors were net sellers of 57.95 million shares on Monday. Offshore outflow in the last five sessions through Monday was 1.32 billion rupees, with more than 90 percent of that generated by Commercial Bank, traders said.
Net offshore selling in 2011 had been 19.1 billion rupees. Foreigners sold a record 26.4 billion rupees in stocks in 2010. The market has been looking for an easing of credit limits imposed by the SEC, which along with the resignation of the regulator's head and deputy, and a 3 percent currency devaluation, have dampened the market. New direction from the new SEC head on credit limits is expected in early January, brokers said.
Brokers in November, complaining that tougher regulation was hurting stock market prices, met President Mahinda Rajapaksa to urge him to intervene in his capacity as finance minister to revive the slumping bourse.
The rupee closed flat at 113.89/90 to the dollar for a 28th straight session since a 3 percent devaluation effective from November 21, with the central bank selling around $20 million to defend it, dealers said. Dealers said importers were buying dollars to settle import bills while exporters were holding on as local media on Monday reported that there may be further rupee devaluation, on top of the 3 percent, implemented from November 21.
But the central bank governor Ajith Nivard Cabraal told Reuters that the bank is not contemplating a fresh move to devalue its rupee currency for this year. The bank has spent around $710 million to keep the exchange rate steady since November 21. It spent a net $1.36 billion in the first nine months of the year to keep depreciation pressure at bay.
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