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Sri Lankan stocks fall on political uncertainty after local polls


FEBRUARY 14, 2018

COLOMBO, Feb 14 (Reuters) – Sri Lankan shares fell for a second straight session on Wednesday as political uncertainty after a defeat of the two ruling coalition parties in a local poll hurt investor sentiment.

The ruling coalition government of President Maithripala Sirisena’s centre-left Sri Lanka Freedom Party and Prime Minister Ranil Wickremesinghe’s centre-right United National Party suffered defeats in a local election over the weekend.

The results also raised concerns over the future of the unity government amid pressure from the opposition parties to dissolve the parliament.

The two ruling parties have set up a committee on Tuesday to examine the future of the unity government.

The Colombo stock index ended 0.16 percent lower at 6,532.26, further slipping from its highest close since Nov. 8 hit on Friday.

The index gained 0.8 percent last week, its third straight weekly rise.

Shares in Bukit Dhara Plc fell 7.6 percent while Hemas Holdings Plc fell 0.3 percent and Hatton National Bank Plc ended 1.6 percent weaker. Biggest listed lender, Commercial bank of Ceylon Plc, lost 1.8 percent.

“The market is negative with the continued political uncertainty,” said Dimantha Mathew, head of research at First Capital Holdings.

“Delay in settlement is creating more uncertainty,” he said, referring to a decision that could end the political instability.

Investors are waiting for some stability and to see the direction in which both the coalition partners are headed.

Turnover stood at 654.7 million rupees ($4.22 million), well below last year’s daily average of 915.3 million rupees.

Foreign investors, however, bought a net 97.2 million rupees worth of shares on Wednesday, extending the year-to-date net foreign inflow to 5.4 billion rupees worth of equities.

Analysts also said the investors were waiting to see the central bank’s key policy rate announcement on Thursday, which is widely expected to remain unchanged.