Bourse down to 2-month closing low on foreign selling

Saturday, 25 November 2017 00:55 - - {{hitsCtrl.values.hits}}

Reuters: Shares fell to a near two-month closing low on Friday on foreign selling, while investors waited for clarity on new taxes introduced in the national budget and on key legislations.

The Colombo stock index ended 0.66% weaker at 6,413.68, its lowest close since 26 September. The index fell 1.1% during the week, but is still up 3% for the year so far.

Turnover stood at Rs. 596.4 million on Friday, less than this year’s average of around Rs. 953.3 million.

“It is turning into a typical year-end market. But, we expect to see foreign activity supporting the market. They see value in some select shares,” said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

Foreign investors net sold equities worth Rs. 117.5 million ($ 764,476) on Friday, but they have bought a net Rs. 18.4 billion worth of stocks so far this year.

Top fixed-line phone operator Sri Lanka Telecom fell 5.4% and Lion Brewery Ceylon Plc lost 4.9%, dragging the overall index down.

Analysts said political worries over delay in local government polls and a lack of clarity over budget and two other key policy measures also weighed on sentiment.

A court on Wednesday issued a stay order on a legislation that cleared the island nation’s Election Commission to hold local government polls in which the coalition partners of the government have decided to contest separately.

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

Analysts said market participants have sought more clarity on these taxes and that there could be some amendments to these proposals 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 legislations.