Shares slip; telecom stocks lead

Tuesday, 5 December 2017 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Shares fell slightly on Monday, hovering near a more than two-month closing low hit early last week, with telecom stocks leading the decline.

The Colombo Stock Index ended down 0.09% at 6,405.91, hovering near its lowest close since 15 September hit on Tuesday. It fell 0.03% last week, recording its fourth straight weekly drop, but has gained about 3% so far this year.

Worries over a delay in local council polls and a lack of clarity over the budget and two other key policy measures weighed on sentiment, said analysts.

Meanwhile, the Election Commission said on Monday that the council polls would be held before 17 February.

Investors are concerned about political stability as coalition partners in President Maithripala Sirisena’s Government had decided to contest separately in the council polls.

Finance Minister Mangala Samaraweera imposed new taxes on motor vehicles, telecoms, banks and liquor in the 2018 Budget presented last month, with a final budget vote scheduled for 9 December.

Analysts said market participants were seeking more clarity on those taxes and that there could be some amendments before the final vote.

The Government also released gazette notifications on the Inland Revenue Act and the Exchange Control Act, with investors waiting for clarification on the new legislation.

Shares in Hatton National Bank Plc fell 1%, Sri Lanka Telecom Plc dropped 2.4% and Overseas Realty Plc ended 3.4% weaker.

“We saw some foreign interest coming in to the market when the market is at very low levels,” said Dimantha Mathew, head of research at First Capital Holdings.

“Local interest was not there but suddenly we saw some foreign interest coming into the market. Foreign investors are collecting at cheaper rates.”

Turnover was Rs. 716.1 million ($ 4.67 million) on Monday, less than this year’s daily average of Rs. 943.3 million.

Foreign investors were net buyers of equities worth Rs. 455.1 million, extending the year-to-date net foreign inflow so far this year to Rs. 18.7 billion worth of shares.