Bourse extends run of declines, hit near 6-week closing low

Tuesday, 14 November 2017 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Shares fell for a third straight session on Monday to their lowest close in near six weeks, weighed down by declines in telecom and banking stocks after the island nation targeted both cash-rich sectors in its 2018 Budget to boost revenue.

The Colombo stock index ended 0.63% weaker at 6,511.55, its lowest close since 4 October. Last week it dropped 1%.

The market was dominated by foreign investors who accounted for 86% of the day’s buying.

The net bought shares worth Rs. 570.1 million ($ 3.71 million), extending the net foreign inflow in equities to Rs. 18.7 billion so far this year.

Finance Minister Mangala Samaraweera imposed new taxes on motor vehicles, telecoms, banks and liquor in a bid to boost revenues in its 2018 budget outlined on Thursday, as the budget deficit for the current year slipped to 5.2% of the gross domestic product.

Samaraweera imposed taxes on telecom towers and text messages, and introduced a debt repayment levy of 20 cents per 1,000 rupee bank transaction with effect from 1 April next year.

“Retail investors are not clear about the budget. That is the main reason for the fall. Retail investors were not active at all,” said Atchuthan Srirangan, senior research analyst, First Capital Holdings Plc.

“There are several taxes that are not decided if they should be borne by the customers or businesses. But eventually they will be passed to the customers, making cost of living higher.”

He also said the release of the government gazzate notification on new Inland Revenue Act will also weigh on the market in the next few days.”

Turnover was Rs. 1.29 billion ($ 8.40 million) on Monday, more than this year’s average of around Rs. 956 million.

The Finance Minister announced tax concessions worth a monthly Rs. 1.5 billion ($ 9.8 million) on Wednesday to reduce the cost of living and boost consumption.

Top mobile services provider Dialog Axiata dropped 3%, while listed private lender Hatton National Bank fell 1.8%.