Recovery effort lifts Sri Lanka to a record

SRI LANKA'S benchmark stock index is headed for a record-setting fifth consecutive quarterly gain as the country rebuilds from the December tsunami disaster. Companies including ACL Cables and Ceylon Oxygen are leading the rally. Reconstruction work, flows of international aid money and optimism that the economy will sustain an expansion have driven the Colombo All Share index 21 per cent higher in dollar terms this quarter. The winning streak accelerated a rally that has lifted the index fourfold since October 2001. Shares of ACL, the island's biggest maker of electrical cables, have jumped 69 per cent as Sri Lanka rebuilds homes and rail lines.

Ceylon Oxygen, a unit of Norsk Hydro of Norway with a monopoly in supplying welding gases, has risen 38 per cent. "Everyone who's going to build a house has to wire their home and use construction materials," said Namal Kamalgoda, chief investment officer at Eagle NDB Fund Management. The Eagle NDB fund, Sri Lanka's biggest, holds both stocks, he said. This month, the government said that it would build at least 40,000 houses, free for some of the 500,000 people left homeless when ocean waves washed away villages.

Government spending on homes, roads and other facilities will total $500 million this year. Shares of John Keells Holdings, Sri Lanka's biggest company by market value, and Aitken Spence, the seventh largest, have risen amid optimism that they can offset tourism losses at their hotel chains by gains at other units. John Keells, which also runs malls, supermarkets and a port terminal, is up 23 per cent this year. Aitken Spence, with units in power and shipping, has advanced 8.2 per cent. International Herald Tribune