October 29, 2009 / 1:03 PM / in 9 years

S.Lanka bourse slides to one-month on retail sell-off

COLOMBO, Oct 29 (Reuters) - Sri Lanka’s stock market .CSE fell to a one-month low close on Thursday, led by retail selling of blue chips amid a growing threat of labour strikes and in spite of a lending rate cut by state banks.

The All-Share Price Index of the Colombo Stock Exchange fell 28.56 points to 2977.16, its lowest close since Sept. 30.

“Investors are increasingly becoming cautious with some strikes and road protests which could hamper future economic activities and corporate profits,” said an analyst on condition of anonymity.

Thursday’s fall comes despite a lending rate cut at state banks ordered by President Mahinda Rajapaksa, in his capacity as finance minister, which brought down interest rates by nearly half. [ID:nCOL190249]

The market has already been cooling off because of the likely loss of an EU trade concession , worries that corporate earnings will not improve yet and the arrest of one of Sri Lanka’s main investors in a U.S. insider trading case earlier this month. Another worry is threats from trade unions in sectors like power, energy, education, health, and transport, to strike to demand post-war salary hikes, ahead of national polls due by April 2010.

For more political risks, click [ID:nSP539379]

Market heavyweight John Keells Holdings JKH.CM closed 1.56 percent at 141.75 rupees, before it posted a 43 percent drop in its net profit in the September quarter. [ID:nCMB000025]

With around 98 percent return so far this year, the CSE is still one of the best performing bourses in Asia.

The rupee LKR= closed flat at 114.80/85 a dollar with the central bank buying dollars at 114.80, dealers said.

The interbank lending rate or call money rate CLIBOR edged down to 8.963 percent from Wednesday’s 9.085 percent.

For secondary market rates, please see <0#LKBMK=>. (Editing by Bryson Hull)

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