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Sri Lankan Stocks Drop Most in 18 Months With Limit

Aug. 9 (Bloomberg) -- Sri Lanka’s benchmark index tumbled the most in 18 months, falling for a third day, after the exchange imposed a 10 percent limit on daily stock moves.

The Colombo All-Share Index slumped 4 percent to close at 4,862.86, its biggest drop since Jan. 21, 2009. John Keells Holdings Plc, Sri Lanka’s biggest diversified company, dropped 2.2 percent, the most since July 29.

The South Asian nation’s benchmark index has climbed 44 percent this year, the best performance among Asia’s 16 biggest markets, as the end of a civil war spurred an economic recovery. The Colombo Stock Exchange on Aug. 5 set a 10 percent daily trading band on stocks after suspending four companies, including Dankotuwa Porcelain Plc, a maker and exporter of tableware.

“The market is still feeling the after-effects of last week’s price-band announcement; it seems liquidity has dried up in the speculative favorites,” said Channa Amaratunga, a director at CT Capital Ltd. in Colombo “Other shares are falling as traders try to make good settlements and margin calls. Maybe it’s the case that the market also needed a reality check.”

Dankotuwa shares, which doubled from July 29 to Aug. 3, fell by the daily limit today. People’s Leasing Finance Plc and Ceylon Brewery Plc also fell by the maximum 10 percent today.

To contact the reporter on this story: Anusha Ondaatjie in Colombo at anushao@bloomberg.net

To contact the editor responsible for this story: Reinie Booysen at rbooysen@bloomberg.net

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