January 11, 2010 / 12:33 PM / 9 years ago

Sri Lanka shares hit new peak on heavy local buying

COLOMBO, Jan 11 (Reuters) - Sri Lankan shares .CSE hit a new record high on Monday, led by high local trade in the tourism, plantation, and motor sectors.

The All-Share Price Index .CSE of the Colombo Stock Exchange rose 0.99 percent or 34.64 points to its all-time high 3549.27 during the trade, surpassing the previous record of 3545.56 hit on Wednesday.

It closed 0.03 percent or 1.15 points firmer at 3515.78 due to profit-taking on blue chips.

“Shares are overheated to a greater extent,” said Prashan Fernando, executive director at Acuity Stockbrokers. “Foreign trade has been a net outflow and local investors do not have any options for investments due to low interest rates.”

Foreign trade has recorded a net outflow of 604.7 million rupees so far for the year. Foreign investors sold a net 785.3 million rupees worth of stocks in 2009, compared to a record net foreign inflow of 13.9 billion in 2008.

The sector indices for hotel and travel .CSEHT, motors .CSEMT, and plantations .CSEPL all hit record highs on hopes of high tourist arrivals, an import tax cut for motor vehicles, and rising world oil prices respectively, analysts said.

Aitken Spence Hotel Holdings AHUN.CM jumped 16.03 percent to 343.75 rupees, while shares in John Keells Hotels KHL.CM rose 1.9 percent to 26.75 rupees.

Sri Lanka tourist arrivals picked up 2.1 percent last year due to the end of a 25-year war in May. [ID:nSGE6050EV]

Shares in motor vehicle importer Diesel and Motor Engineering DIMO.CM gained 14.58 percent to 281 rupees.

Market heavyweight John Keells Holdings JKH.CM, which dominated the trade, closed 0.56 percent weaker at 179 rupees a share, while leading mobile phone operator Dialog Telekom DIAL.CM closed 3.57 percent weaker at 6.75 rupees.

The day’s turnover was 1.01 billion rupees ($8.87 million), well above the 2009 daily average of 593.6 million rupees.

Sri Lanka’s stock exchange was one of the world’s best performing markets in 2009, jumping 125.2 percent on post-war optimism. It outpaced the benchmark emerging market equities index .MSCIEF, which rose 74.8 percent in 2009.

Sri Lanka is set for presidential elections on Jan. 26 with incumbent Mahinda Rajapaksa facing a challenge from his former army chief Sarath Fonseka, who oversaw the defeat of the separatist Tamil Tiger rebels.

Both candidates have released their election manifestoes, pledging to revive the economy.

However, analysts said investors see both platforms as merely tools to win votes and expect different policies once the winner reaches office.

For Sri Lanka’s political risks, see [ID:nSGE5BE023]

The Sri Lankan rupee LKR= closed firmer at 114.33/35 per dollar, compared with Friday's close 114.39/40.

A state bank, through which the central bank directs the market, lowered its dollar trading range to 114.10/35 from 114.20/45, dealers said.

The interbank lending rate or call money rate CLIBOR fell to 8.900 percent from Friday’s 8.925 percent.

For secondary market rates, please see <0#LKBMK=>. ($1=114.34 Sri Lankan rupees) (Editing by Bryson Hull)

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