Home / Financial Services/ Shares steady at 17-month high on tax-cut optimism; Rupee slips

Shares steady at 17-month high on tax-cut optimism; Rupee slips


Comments / {{hitsCtrl.values.hits}} Views / Tuesday, 3 December 2019 00:00


Reuters: Shares closed nearly unchanged yesterday, steadying at a 17-month high hit in the previous session, as positive sentiment surrounding tax cuts by the country’s new Government continued to cheer investors, while the rupee ended weaker.

The benchmark stock index closed 0.05% up at 6,215.23, its highest since 25 June 2018. The bourse gained 1.5% last week, and is up 2.69% for the year.

The rupee fell 0.22% to 181.25/35 per dollar, compared to Friday’s close of 180.85/181.00, Refinitiv data showed. It is up 0.7% so far this year.

The Government said last Wednesday it had decided to reduce value-added tax (VAT) to 8% from 15% from 1 December, and abolish some other taxes as well, in its attempt to boost economic growth that has fallen to a near two-decade low.

Emerging Asia Economics said in a note yesterday that the tax cut decision would provide a significant boost to the economy, but put increased strain on the country’s fragile public finances. “Unless Sri Lanka raises taxes elsewhere or cuts spending, the VAT cuts will lead to around $ 2 billion in lost revenue (around 2% of GDP) and the deficit is likely to widen to around 6.5% of GDP in 2020,” it said. “This is much larger than the 5.3% deficit target agreed with by the IMF (International Monetary Fund), who could withhold future loan payments unless the government reverses course.” Foreign investors were net buyers in the equity market for the first time in five sessions yesterday and after being net sellers for 24 sessions out of 26. They bought a net Rs. 70.1 million ($ 389,444) worth of shares yesterday, but the market has suffered a net foreign outflow of Rs. 10.7 billion worth of equities so far this year, according to index data. Equity market turnover was Rs. 702.6 million, less than this year’s daily average of about Rs. 725 million. Last year’s daily average was Rs. 834 million.

Foreign investors were net buyers of government securities on a net basis for the sixth straight week, purchasing a net Rs. 4.3 billion worth of government securities in the week ended 27 November.

Total foreign outflows from government securities through 27 November stood at Rs. 43.7 billion, according to Central Bank data.


Share This Article

Facebook Twitter


DISCLAIMER:

1. All comments will be moderated by the Daily FT Web Editor.

2. Comments that are abusive, obscene, incendiary, defamatory or irrelevant will not be published.

3. We may remove hyperlinks within comments.

4. Kindly use a genuine email ID and provide your name.

5. Spamming the comments section under different user names may result in being blacklisted.

COMMENTS

Today's Columnists

Stock market, Mark Mobius and State entities

Wednesday, 29 January 2020

The expert of emerging capital markets, Mark Mobius was in Sri Lanka recently. A key recommendation he made for the development of the local capital market was to list certain State entities in the Colombo stock market. The local stock brokerages se


Autocatalytic descent from plural democracy to supremacist authoritarianism

Wednesday, 29 January 2020

In a few days, Sri Lanka will celebrate its 72nd year of independence from colonialism. But behind the pomp and pageant of that celebration is a sad reality of an autocatalytic process – a small initial event triggering a chain reaction that evolve


Trump destroying brand USA: Implications for Sri Lanka

Wednesday, 29 January 2020

There is an old adage that ‘politics and tourism’ has a positive correlation. Many have tried to disprove this aspect but the relationship is coming out very strongly, the latest case study to the world being in the United States.


Freedom! Freedom! Where art thou?

Wednesday, 29 January 2020

Freedom: who could object? Yet this word is now used to justify a thousand forms of exploitation. In the name of freedom – the freedom of the powerful to exploit the weak, the rich to exploit the poor. The definition of freedom is, the condition of


Columnists More