COLOMBO: Sri Lankan stocks recovered from early losses on Wednesday and closed higher, led by financials, but the gains were limited by political uncertainty before a coming presidential election.
The bourse gained 23.4 percent for the year after rising 4.8 percent last year.
The main stock index closed 7.62 points higher, or 0.1 percent, at 7,298.95. It had fallen 3.5 percent after reaching its high for the year of 7,562.52 on Nov. 19, following President Mahinda Rajapaksa's decision to hold a snap presidential election on Jan. 9.
"This year was great until the election announcement came," one stockbroker said. "The next year will be challenging."
The index returned 23.1 percent for the year measured in dollar terms. Record low interest rates to boost private-sector borrowing and economic growth led investors to shift into riskier assets from fixed deposits.
Wednesday's turnover stood at 628.7 million rupees ($4.79 million), less than half of this year's daily average of 1.42 billion rupees, stock exchange data showed.
Net foreign inflows into stocks were 22.2 million rupees, extending net inflows to 22.07 billion rupees for the year, the data showed. That was a little less than last year's 22.88 billion inflow.
The index was boosted by a 4.55 percent gain for Commercial Leasing and Finance Plc and 10 percent jump in Finlays Colombo Plc. However, only 200 shares in Commercial Leasing and 10 shares in Finlays Colombo were traded, stock exchange data showed.
Analysts said turmoil in Sri Lankan politics have hurt sentiment. The latest came on Wednesday, when a deputy minister defected from Rajapaksa's ruling party to back an opposition candidate.
That made 24 lawmakers who have quit the party since Rajapaksa announced the coming election. They include former health minister Mithripala Sirisena, who is challenging Rajapaksa's bid for a third term. Two opposition legislators have joined the ruling party.
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