Stock market dips; investors await clarity on tax

Tuesday, 16 May 2017 00:00 - - {{hitsCtrl.values.hits}}

Reuters - Shares ended marginally lower on Monday, slipping from a near one-year high hit last week, as investors waited for some clarity after the finance ministry said a new tax structure is being considered under reforms.

Finance Minister Ravi Karunanayake on Sunday said a new tax revenue proposal, which has yet to be approved by Parliament, would further increase government coffers in the coming years.

However, the new tax system which is urged by the International Monetary Fund, could face some amendments when it goes through parliament approval process, analysts say.

“The market will wait for the confirmation. When you see the history, there has been a lot of reversal. So investors will wait until they see the final numbers,” Softlogic Stockbrokers Deputy CEO Hussain Gani said.

The Colombo stock index ended 0.18% lower at 6,659.87, slipping from its highest close since 18 May 2016 hit on Friday. The index added 0.5% last week, its seventh straight weekly gain.

Turnover stood at Rs. 465.4 million ($3.05 million), half of this year’s daily average of Rs. 886 million.

Foreign investors net-sold shares worth Rs. 10.1 million, marking the first net outflow in seven session. They have been net buyers of Rs. 16.8 billion worth of equities so far this year.

A reduction of 36-38 basis points in T-bill yields in the last three weeks, stable currency on expectation of inflows from foreign borrowing, and an IMF statement on the disbursement of the third tranche of a $1.5 billion loan, have helped boost sentiment, analysts said.

Shares in Melstacorp PLC fell 2.3% while, Hatton National bank PLC fell 0.7% and Sri Lanka Telecom PLC fell 1.2%.