Menu
RSS

770

Shares hit 18-month closing high on foreign buying

Shares hit 18-month closing high on foreign buying

Reuters : Shares posted their highest close in more than 18-months on Friday led by foreign buying in blue chips on expectations of strong corporate earnings, while improved local buying also helped boost sentiment.

The Colombo stock index snapped three sessions of declines to end 0.41% higher at 6,766.14, its highest close since 8 January, 2016. “Foreign investors have been buying because they expect improvement in earnings in the future,” said Softlogic Stockbrokers Deputy CEO Hussain Gani.

“They see value in our markets with lower PE ratio. Unless there is volatility in the exchange rate and interest rate, the market should gain with continuous foreign buying.”

The market could see a rising trend if yields on fixed-income securities fall as expected by the Central Bank, said analysts.

The Central Bank expects a further fall in T-bill yields due to less pressure from government borrowing and a proposed new auction system, Deputy Governor Nandalal Weerasinghe said in an interview with Reuters on Wednesday.

Foreign investors were net buyers of shares worth Rs. 478.1 million, extending the year-to-date net foreign inflow to Rs.23.4 billion worth of equities this year.

The day’s turnover was Rs. 1.63 billion, higher than this year’s daily average of Rs. 912.1 million.

New foreign investors have been buying Sri Lankan shares since the Pakistani bourse was upgraded as an emerging market from a frontier one, said analysts.

Brokers said domestic investors have been waiting for clarity on the proposed Inland Revenue legislation, which some companies expect would result in higher costs of production.

The IMF, which has long urged Sri Lanka to boost tax revenue through modernization and simplification of its fiscal system, has urged the Government to submit to parliament a new Inland Revenue Act.

Shares of conglomerate John Keells Holdings PLC closed 0.2% higher, while Commercial bank of Ceylon PLC , the country’s biggest listed lender, ended 0.3% higher.

back to top