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Sri Lanka stocks weaken

Aug 03, 2010 (LBO) - Sri Lankan stocks weakened Tuesday, interrupting a bull-run as the regulator suspended trading in several speculative shares that brokers said might hit market sentiment.
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The All Share Price Index closed at 5,148.

34 down 0.67 percent (34.51 points) while the more liquid Milanka index eased 0.
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86 percent (50.87 points) to close at 5,834.28, according to stock exchange provisional figures.
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Turnover was 3.9 billion rupees, according to provisional statistics on the CSE website.

The CSE has said heavy trading had delayed market updates on its website.

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The markets regulator, Securities and Exchange Commission, halted trading in Environmental Resources Investments warrants, and shares of Dankotuwa Porcelain, Blue Diamonds and Touchwood Investments.

The CSE said in a statement this was because of unusual increases in the price and the number of transactions of the shares during since July 29.

The SEC also demanded an explanation from the firms for the prices increases.

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Nikita Tissera, manager research at SC Securities said Dankotuwa Porcelain, Touchwood Investment, Blue Diamonds and Environmental Resources were the highest traded stocks Tuesday, ahead of market heavyweight John Keells Holdings.

"We are still optimistic on the earnings ability of most fundamentally strong stocks and their ability to sustain the market high," Tissera said.

"The CSE suspension on (these four stocks) may however hurt the sentiment of the speculative trader who'd have a high tolerance for risk.




"

The Colombo bourse is now the world's second best performing stock market, up almost 50 percent this year, as post-war optimism, improved company earnings and interest by foreign funds triggered a buying spree by local investors.

Sri Lanka's 30-year ethnic war ended in May 2009, resulting in an immediate upturn in the economy which is expected to grow seven percent this year.

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But the bull-run and speculative trading in some shares that have sent their prices soaring have raied concern among stock market participants and regulators.


Environmental Resources Investments shares and warrants were the biggest losers in Tuesday's trading along with a group unit Ceylon Leather Products, according to CSE provisional figures.

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