Shares hit over 7-week closing low on foreign selling

Saturday, 18 August 2018 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Shares extended losses for a sixth straight session on Friday, marking their lowest close in more than seven weeks as foreign investors trimmed equity exposure amid fears that the Government may introduce new taxes on several sectors.

Foreign investors sold shares worth a net Rs. 229 million ($ 1.43 million) on Friday, extending the foreign outflow to a net Rs. 839 million in the last three sessions. They have sold a net Rs. 3.46 billion worth of equities so far this year.

Lacklustre corporate results, fears of new taxes in several sectors and a Moody’s report dented investor appetite for riskier assets, analysts said.

A local daily reported that a number of changes proposed in the Finance Act will impose new levies on several sectors including telecom, vehicle imports and tourism.

Meanwhile, Moody’s Investor Service said Sri Lanka could face significantly tighter external refinancing conditions in the next five years.

The Colombo stock index fell 0.53% to 6,051.10, its lowest close since 4 July. It has declined about 5% so far this year.

“There was no change in sentiment. Reports of new taxes on the finance sector brought the index down,” said Softlogic Stockbrokers Deputy CEO Hussain Gani.

“We need some substantial buying either from foreign or local investors to boost the sentiment.”

Turnover for the day stood at Rs. 569.4 million on Friday, less than this year’s daily average of Rs. 831 million.

However, global stocks rose on Friday as news of a fresh round of US-China trade talks soothed nerves even as the recovery in Turkey’s lira ran out of steam.

Shares in John Keells, which accounted for more than a third of the day’s turnover, fell 0.1%. Large-cap stock Ceylon Tobacco Company PLC fell 2.2%.

The Central Bank left its key policy rates unchanged, as expected, on 3 August, citing its goals of stabilising inflation and fostering sustainable economic growth.

Central Bank Governor Indrajit Coomaraswamy said the economy was unlikely to grow more than 4% in 2018, falling short of an earlier estimate of 5%.