S.Lanka shares at 3-wk high on IMF loan optimism

Colombo’s stock market surged to a three-week high on Monday on optimism an IMF loan could ease interest rates, revive post-war economy and increase foreign investments in the bourse. Deputy Finance Minister Ranjith Siyambalapitiya told Reuters on Monday Sri Lanka had sent a letter of intent to the International Monetary Fund (IMF) to accept a long-delayed $1.9 billion loan..

"Investors are optimistic that IMF money would help post war reconstruction and boost confidence of foreigners to invest in shares," said Geeth Balasuriya, head of research at Acuity Stockbrokers. "They also expect interest rates to decline." The benchmark index rose 1.16 percent or 27.90 points to 2422.92, its highest close since June 30. It had touched a one-year high of 2447.2 on June 22.

Market heavyweight Sri Lanka Telecom closed 2.20 percent firmer at 46.50 rupees a share, calculated on a weighted average, while top conglomerate, John Keells Holdings rose 2.31 percent to 133 rupees a share. The day's turnover stood at 312.8 million Sri Lankan rupees ($2.72 million), around two third of 2008 daily average of 464 million rupees.

The bourse is up 61.2 percent in 2009 and 27 percent since the government declared victory in the war on May 18.

Despite the end of a 25-year war with the Tamil Tiger separatists on May 18, foreign investments are still a net outflow as institutional buying has not picked up on concerns over delay in the IMF loan.