Oct 09 (Reuters) COLOMBO- Sri Lankan stocks closed at a near three-week high on Wednesday, led by blue-chips, but foreign investors exited from the Indian Ocean island's risky assets with the start of presidential poll campaigning.
Local investors picked up select shares, with one of the two presidential frontrunners, former wartime defence chief Gotabaya Rajapaksa, possibly getting the broader support of other smaller parties after President Maithripala Sirisena's center-left Sri Lanka Freedom Party (SLFP) pledged its backing for his candidature in the election scheduled for Nov. 16.
Analysts said some company shares gained on Wednesday on speculation that those companies may do better if Rajapaksa wins the presidency.
Rajapaksa started his campaign on Wednesday, while the other strong candidate Sajith Premadasa, the housing minister who has the backing of most of the rural poor, will kick off his campaign on Thursday.
The benchmark stock index ended 1.23% firmer at 5,809.59, rising for the fourth straight session to its highest close since Sept. 19. The bourse fell 1.42% last week. So far this year, the index has dropped 4%.
Equity market turnover was 951.3 million rupees ($5.27 million), well above this year's daily average of about 655 million rupees. Last year's daily average was 834.0 million rupees.
Foreign investors were net sellers for the sixth straight session. They sold a net 212.1 million rupees worth of shares, extending the year-to-date net foreign outflow to 3.43 billion rupees of equities, according to index data.
Meanwhile, the rupee ended 0.1% weaker at 180.50/60 per dollar compared with Tuesday's close of 180.25/40. The currency is up 1.2% so far this year.
Foreign investors bought government securities on a net basis for the first time in seven weeks, buying 522 million rupees worth of government securities in the week ended Oct. 2.
The foreign outflows, which are one of the major reasons behind the rupee's recent weakness, may not abate until after a parliamentary election in 2020, some analysts said.
The central bank does not release foreign trade numbers on a daily basis, but weekly data in the past five weeks through Sept. 25 has shown a steady outflow.
Sri Lanka has seen a net foreign outflow of 54.8 billion rupees through Oct. 2, according to central bank data.