Sri Lankan shares at 8-wk low on poor earnings forecast

By Shihar Aneez

COLOMBO, Sept 12 (Reuters) - Sri Lankan shares fell 0.69
percent on Friday to a near eight-week low in thin trade, led
by top bluechips like Dialog and John Keells Holdings as
investors sold the shares on earnings outlook fears.

The Colombo All-Share index .CSE fell 16.41 points to
2,355.63, its lowest close since July 22. The bourse has fallen
five sessions, taking the weekly fall to 1.78 percent.

It is down 3.9 percent since market heavyweight Dialog
Telekom DIAL.CM posted a 78 percent fall in its June quarter
on August 13, and 7.3 percent so far for the year.

"The market is down on blue chips," Geeth Balasuriya,
assistant research manager at HNB Stockbrokers, said.

"Some smalltime investors sold shares in Dialog and John
Keells expecting lower profits and moved to speculative shares
to make profits."

Analysts blame the poor earnings of listed companies on
high interest rates and high inflation, and say that has cooled
trading.

The market turnover was 93.1 Sri Lankan million rupees
($86,286), less than a quarter of last year's daily average of
400 million rupees. The bourse data showed the total market
turnover for the last five sessions was 704.1 million rupees.

Dialog closed 2.27 percent at a life closing low of 10.75
rupees, calculated on a weighted average. The shares fell to a
new life low of 10.50 rupees during the trading.

Traders said Dialog shares are looking less attractive,
given many investors are expecting its profit margins to narrow
due to more competition in the telecoms sector.

India's top mobile operator, Bharti Airtel Ltd (BRTI.BO: Quote, Profile, Research),
on Thursday said it expected to launch in Sri Lanka by end of
the year, which would make it the island nation's fifth. See
[ID:nDEL001907].

The top conglomerate by market capitalisation, John Keells
Holdings JKH.CM, fell 1.25 percent to a new 39-month closing
low of 89 rupees a share, as its oil bunkering subsidiary,
Lanka Marine Services (LMS) vacated its premises.

On Monday, Sri Lanka's Supreme Court ordered John Keells to
vacate by Friday the land from which its subsidiary Lanka
Marine Services (LMS) has been selling bunker fuel to ships at
the Colombo port.

That followed a July 21 ruling nullifying Keells' 2002
purchase of the assets that became LMS, from the government
after a lawsuit challenged it on grounds that it paid too low a
price.

The company on Wednesday said LMS would provide all grades
of bunkering fuels to its customers from next week, by using
floating storage and a proposed shared land storage facility
run by the Sri Lanka Ports Authority.

"But it is doubtful whether the LMS could perform in its
oil bunkering business as earlier," Balasuriya said. Keells
has said the ruling could cost it up to $12 million.

Top fixed-line telephone operator Sri Lanka Telecom
SLTL.CM fell 1.1 percent to 44.50 rupees a share, while top
listed private lender Commercial Bank of Ceylon COMB.CM
closed 0.65 percent weaker at a new 22-month low of 115.25
rupees.

The rupee LKR= edged down at 107.85/90 per dollar,
slightly down from Thursday's close of 107.86/88 on thin
volumes.

"There was very low liquidity for dollars or rupees. State
banks are keeping the exchange rate stagnant. So nobody wants
to trade in the forex market. That's why we've seen thin
volumes during the past few days," a currency dealer said.

The interbank lending rate or call money rate CLIBOR rose
to 17.692 percent, up from Wednesday's 16.882 percent.
(Editing by Bryson Hull)