Sri Lankan stocks soar

Sri Lankan share index ended firmer on Tuesday, edging up from its nine-week closing low hit last week, as investors picked up illiquid shares of Distilleries Company of Sri Lanka Plc, but political woes over a no-confidence motion against the prime minister weighed on sentiment, brokers said. The Colombo stock index ended 0.13 percent firmer at 6,458.33, edging up from its lowest close since January 23 hit on Wednesday.
The index climbed 0.51 percent last week, its first weekly gain in five, but dropped 1.14 percent last month. The turnover stood at 530.1 million rupees ($3.40 million), less than this year's daily average of around 1.2 billion rupees. Foreign investors sold shares worth net 128.2 million rupees on Tuesday, extending the year-to-date net foreign outflow to 1.14 billion rupees worth equities.
Shares in conglomerate John Keells Holdings Plc ended 0.25 percent higher, while Overseas Realty Ceylon Plc ended 6.1 percent up and Distillers Sri Lanka Plc closed 5 percent higher. "The overall investor sentiment was on a wait-and-watch mode ahead of the no-confidence motion. There were some activities on illiquid distilleries, which moved the market up today," said Dimantha Mathew, head of research, First Capital Holdings.
Political uncertainty and worries over a slowing economy weighed on sentiment, brokers said. Prime Minister Ranil Wickremesinghe is facing a no-confidence motion, which will be debated on Wednesday before voting, with analysts saying support from many political parties will be needed for Wickremesinghe to clear the vote. Cautious investors await the outcome of the rate announcement, said analysts.
Sri Lanka's central bank is expected to keep key interest rates unchanged on Wednesday after a rate review, but economists in a Reuters poll are not ruling out the possibility of a rate cut to help bolster economic growth that has slipped to a 16-year low. Sri Lanka's economy grew by 3.1 percent in 2017, the slowest in 16 years and well below the 4.5 percent seen in 2016, revised government data released showed last week.