Sri Lanka stocks up

Sri Lanka's stock market edged up on Friday but uncertainty surrounding the impact of a new government take-over law saw turnover and volume slump to multi-month lows. Trading resumed for the first time since Sri Lanka's parliament on Wednesday passed the controversial legislation that will allow the government to acquire enterprises or assets it deems underperforming or under-utilised, despite concerns the bill could hit investment in the country.
Markets were closed for a holiday on Thursday. The new law will allow the government to take over 37 properties, including from two listed firms. The main share index ended 0.17 percent, or 10.46 points firmer at 6,332.47, led by 7 percent gain in large cap Ceylon Tobacco Company.
Analysts said investors were confused about the legislation which they said would further hurt long-term institutional investor sentiment. Under the law, the government will take over the properties of Pelwatte Sugar Industries and Hotel Developers Lanka Plc, which owns the five-star Hilton Colombo hotel building in the commercial heart of Colombo.
The bourse halted the trading in the shares of both firms. Shares in Pelwatte Sugar have fallen 15.5 percent and those of Hotel Developers Lanka have dropped 27.1 percent since the market first got wind of the proposed bill on November 1. The day's turnover was 393.7 million Sri Lanka rupees ($3.6 million), lowest since December 14, 2009, and fraction of last year's average of 2.4 billion and this year's 2.5 billion.
Total volume was 13.6 million shares, lowest since April. 1, 2010, against a five-day average of 28.3 million. The 30-day and 90-day average trading volumes were 62.2 million and 102.4 million. Last year's daily average was 67.9 million. The bourse has fallen 6.7 percent since October 1. It is Asia's sixth-best performer with a year-to-date loss of 4.6 percent after being on the top for most of 2011 and in 2009 and 2010. The bourse saw a net foreign inflow of 94.5 million rupees on Friday, but thus far in 2011, offshore investors have sold 16.5 billion, and a record 26.4 billion in 2010.