COLOMBO, Nov 14 (Reuters) - Sri Lanka's stock market
fell to a 14-month low on Monday led by blue chips due
to negative sentiment created by a controversial assets
acquisition bill, and investor hesitation ahead of next week's
budget presentation.
The main share index ended 1.47 percent, or 92.95
points weaker at 6,239.52 , lowest since Sep 15, 2010.
Sri Lanka's parliament on Wednesday passed
legislation that will allow the government to acquire properties
of 37 enterprises, including from two listed firms, it deems
underperforming or underutilised.
Analysts said investors were confused about the legislation
which they said would further hurt long-term institutional
investor sentiment. Moody's Investors Service on Monday said the
law would hit sentiment and was potentially credit-negative.
The bourse halted trading for a second day in shares of
Properties of Pelwatte Sugar Industries and Hotel
Developers Lanka Plc, both of which were listed in the
bill.
Hotel Developers informed the bourse in a statement the
assets of the company are now vested in the government of Sri
Lanka and all shares are being held by the treasury secretary.
"At this moment, we are not in a position to comment on the
impact of the said legislation on the company and its
shareholders, as we await instructions from the secretary to the
treasury," it said.
On Friday, Pelwatta said they are unable to comment on the
implications. Shares in Pelwatte Sugar have fallen 15.5 percent
and those of Hotel Developers Lanka have dropped 27.1 percent
since the market first got wind of the proposed bill on Nov. 1.
The day's turnover was 518.7 million Sri Lanka rupees ($4.7
million), well below last year's average of 2.4 billion and this
year's 2.5 billion.
Total volume was 43.1 million shares, highest since Nov. 3,
against a five-day average of 27.2 million. The 30-day and
90-day average trading volumes were 61.1 million and 102
million. Last year's daily average was 67.9 million.
Analysts said investors were also concerned about future
regulation of the market after removal of the Securities and
Exchange Commission director general.
The bourse has fallen 8 percent since Oct. 1. It fell to
Asia's eight-best performer with a year-to-date loss of 6
percent after being on the top for most of 2011 and in 2009 and
2010.
The bourse saw a net foreign outflow of 29.4 million rupees
on Monday, but thus far in 2011, offshore investors have sold
16.5 billion, and a record 26.4 billion in 2010.
Losers outnumbered gainers by 175 to 34 on Monday, Thomson
Reuters data showed.
The rupee closed flat at 110.18/20 per dollar as a
state bank sold dollars at 110.20 rupees despite importer demand
for dollars, dealers said.
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