Stock market hits near 8-mth low on foreign fund outflow

Wednesday, 30 November 2016 00:01 -     - {{hitsCtrl.values.hits}}

Reuters: Shares fell on Tuesday for the third straight session to end at a near eight-month low as foreign investors trimmed their exposure to the island nation’s risky assets amid concerns over budget tax proposals.

The Colombo stock index ended 0.11% down at 6,231.87, its lowest close since 7 April. The Bourse lost 1.17% last week, marking its third straight weekly fall.

A proposed hike in various taxes and fees would reduce disposable income and challenge consumption-led growth, analysts said.

“Investors are concerned over the current uncertainty and they are worried over the sustainability of the rates given the current economic uncertainty,” said Dimantha Mathew, head of research at First Capital Equities Ltd.

The government aims to boost its 2017 tax revenue by 27% to Rs. 1.82 trillion year-on-year and meet a commitment given to the International Monetary Fund in return for a $ 1.5 billion loan in May.

The market shrugged off the central bank’s key monetary policy decision on Tuesday to keep rates unchanged. Brokers said investors are concerned about the sustainability of the rates.

At the post-monetary policy media briefing, central bank Governor Indrajith Coomaraswamy said aggressive monetary policy tightening by the US Federal Reserve will have an impact on the foreign outflow.

Turnover was Rs. 1.01 billion ($ 6.78 million), more than this year’s daily average of Rs. 695.1 million.

Foreign investors sold a net Rs. 295.8 million worth of shares on Tuesday, extending the year-to-date net foreign selling to Rs. 1.68 billion.

Shares of Dialog Axiata Plc fell 0.98% while Asiri Hospitals Plc fell 0.77%.