Colombo bourse nervous over shaky new administration’s first steps

Colombo shares on Monday, despite the high turnover levels, remained volatile primarily due to the uncertainty surrounding the current political situation. New President Maithripala Sirisena’s fledging administration has been rocked by reports of a political comeback by deposed President Mahinda Rajapaksa and a tussle for power within the latter’s Sri Lanka Freedom Party in which Sirisena is also a key figure. Rajapaksa has been accused by the Government of trying to stage a coup with the military, soon after realising on January 9^th that he was losing the election held the previous day. The former president has rejected the claims but not denied reports that he was seeking to come back to parliament. At the bourse, there was both foreign selling and buying, though most were net sellers who were booking profits after holding positions for over a year. "Some of the selling decisions seem to be motivated by absolute price increases in specific stocks rather than on any political situation in the country," one analyst said. Market turnover closed at Rs. 2.57 billion today. The market also expected some pressure to be thrust upon certain companies who may have received undue benefits from the previous government and, as a result the stock prices of those companies fell, he added. Analysts said that retail traders were showing signs of volatile trading with profit taking and portfolio shifts. The ASPI lost 39 points to close at 7566.7 whilst the S&P SL20 lost 2.94 points to close at 4269.56. Bond markets also lost ground with most interest rates trending up. "We see this trend due to policy uncertainty," Deshan Pushparajah, Head of Investment Banking, Capital Alliance said. He added that appointments to key regulatory positions and policy clarity over the next few days could stem the volatility.