COLOMBO, Nov 11 (Reuters) - Sri Lanka's stock market edged up on Friday but uncertainty surrounding the impact of a
new government takeover law saw turnover and volume slump to multi-month lows. Trading resumed for the first time
since Sri Lanka's parliament on Wednesday passed the controversial legislation that will allow the government to
acquire enterprises or assets it deems underperforming or underutilised, despite concerns the
bill could hit investment in the country.
Markets were closed for a holiday on Thursday. The new law will allow the government to take over 37 properties,
including from two listed firms.The main share index ended 0.17 percent, or 10.46 points firmer at 6,332.47, led by 7
percent gain in large cap Ceylon Tobacco Company.
Analysts said investors were confused about the legislation which they said would further hurt long-term institutional
investor sentiment.Under the law, the government will take over the properties of Pelwatte Sugar Industries and Hotel
Developers Lanka Plc, which owns the five-star Hilton Colombo hotel building in the commercial heart of Colombo.
The bourse halted the trading in the shares of both firms."Nobody knows what they are taking over, whether it's just
the land or the shares of the company," said a bourse official on condition of anonymity.
"Because of that, we halted the trading. We are awaiting for the confirmation either from the companies or the state. We are awaiting something substantial on what is really happening." 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.
Pelwatte Sugar informed the bourse after the trading was halted saying "at this moment we are unable to comment on
the implications on the ruling as we await instructions by the Secretary to the Treasury." The day's turnover was 393.7 million Sri Lanka rupees ($3.6million), lowest since Dec. 14, 2009, and fraction of last year's average of 2.4 billion and
this year's 2.5 billion.
Total volume was 13.6 million shares, lowest since April. 1, 2010, against a five-day average of 28.3 million. The 30-day and 90-day average trading volumes were 62.2 million and 102.4 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 6.7 percent since Oct. 1. It is Asia's sixth-best
performer with a year-to-date loss of 4.6 percent after being on the top for most of 2011 and in 2009 and 2010.
No comments:
Post a Comment