Stock market down; capital gains tax, Brexit weigh

Wednesday, 29 June 2016 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Shares ended weaker on Tuesday, falling for the seventh straight session, as comments from a senior minister on the imposition of capital gains tax on equities dented sentiment while fresh woes after Brexit also weighed.

Sri Lanka intends to impose a capital gains tax on profits from equities, a senior government minister said late on Monday, as the government attempts to shore up its finances to qualify for an IMF loan.

The benchmark Colombo stock index ended 0.17% down at 6,307.40, after having risen early in the session.

“Market was gaining momentum after yesterday’s drop. But once the news of capital gains tax on stocks broke, the index started to fall,” said a stockbroker, asking not to be identified.

Brokers said global uncertainty after Britain’s decision to leave the EU also weighed on the local market with continued foreign selling.

Overseas funds offloaded Rs. 9.7 million ($65,785) worth of equities on Tuesday, extending the year-to-date net foreign outflow to Rs. 6.18 billion worth of shares.

“With the news of capital gain tax, existing high interest rates, and other local negativity, the market will continue to be negative until we see some positive news,” said First Capital Equities Ltd Head of Research Dimantha Mathew.

Global stocks rose for the first time in three days and sterling and the euro climbed on Tuesday, as investors made a rush for Brexit-bashed assets hammered by some of the biggest falls since the 2008 collapse of Lehman Brothers.

Turnover stood at Rs. 640.3 million, less than this year’s daily average of around Rs. 746.3 million.

Shares in Ceylon Tobacco Company Plc fell 3.50% while Lion Brewery Plc fell 3.72%.