Shares end weaker in thin trade; tax proposal weighs

Tuesday, 22 August 2017 00:23 - - {{hitsCtrl.values.hits}}

Reuters: Shares ended weaker on Monday, lingering near a four-month low, in their lowest turnover in nearly a month, as investors awaited direction on a new tax reform bill after a string of disappointing June-quarter corporate results.

The Colombo stock index fell 0.24%, or 15.75 points, to 6,420.53, hovering near its lowest close since 18 April hit on Thursday.

The index shed 3.7% since 27 July through Monday and fell in 15 out of 17 sessions due to lacklustre corporate earnings in the June quarter and speculation that the new tax reform bill might impose a tax on stock trading. “Investors are staying away awaiting for clarity on the tax on share trading,” said Dimantha Mathew, head of research at First Capital Holdings.

“Very interestingly, the foreign interest also slowed down on shares.”

Junior Finance Minister Eran Wickramaratne said on Thursday the concerns over tax on trading stocks would be addressed before the proposed bill is passed in the parliament. The bill is expected to be presented in the parliament on Friday.

Foreign investors turned net sellers for the first time in nine sessions. They sold shares worth a net Rs. 36.2 million ($ 236,447) on Monday. But they have been net buyers of shares worth Rs. 27.7 billion so far this year.

Turnover was Rs. 322.6 million, its lowest since 26 July, and less than half of this year’s daily average of around Rs. 866.5 million.

Shares of conglomerate John Keells Holdings Plc fell 0.6%, while Bukit Darah Plc lost 3.8% and Dialog Axiata Plc ended 0.9% weaker.