Reuters – Sri Lankan shares rose 1.7 percent to a one-and-a-half-month high on Tuesday (02), led by sharp gains in Distilleries Company of Sri Lanka PLC after the company announced reorganisation of shares and stated capital.
Shares of Distilleries Company rose as much as 18.7 percent to their highest since Nov. 6, 2015, after the company said after market hours on Monday that investors would be allotted four shares of the new parent company for each share of Distilleries after the reorganisation.
“In a 180-degree share swap, Melstacorp, which is a 100 percent-owned subsidiary of Distilleries Company, will become the holding company, while Distilleries Company will become a subsidiary of Melstacorp,” the company said in a disclosure to the bourse.
“There was a lot of interest in Distilleries shares after the announcement. Most retailers believe the price of shares will be much higher than what it is now after the valuation,” said Prashan Fernando, COO at Acuity Stockbrokers.
“It was an active retail investor market today.”
The Sri Lankan stock index was up 1.74 percent at 6,522.51, its highest since June 15, as of 0855 GMT. Turnover was 833.5 million rupees ($5.72 million).
Meanwhile, the rupee edged up as foreign investors sold dollars to buy bonds after the central bank’s policy rate hike, dealers said.
Last week, the central bank raised its main interest rates by 50 basis points each in a surprise move aimed at curbing stubbornly high credit growth that is adding to concern about inflationary pressures.
One-week rupee forwards, which have been acting as a proxy for the spot rupee, traded at 146.10/20 per dollar, up from Monday’s close of 146.22/30.
The spot rupee is tightly managed by the central bank, and market participants use the forward market levels for guidance on the currency.
The spot rupee was not traded on Tuesday.
Spot-next, which are rupee forwards settled a day after the spot rupee settlement, were trading at 146.10/20 per dollar, compared with Monday’s close of 146.06/08.