Stock market drop; telcos, banks drag after Budget measures

Saturday, 11 November 2017 00:48 - - {{hitsCtrl.values.hits}}

Reuters - Shares fell on Friday, weighed down by declines in telecom and banking stocks after the island nation targeted both cash-rich sectors in its 2018 budget to boost revenue.

The Government imposed new taxes on motor vehicles, telecoms, banks and liquor in a bid to boost revenues in its 2018 budget outlined on Thursday, as the budget deficit for the current year slipped to 5.2% of the gross domestic product.

Finance Minister Mangala Samaraweera imposed taxes on telecom towers and text messages, and introduced a debt repayment levy of 20 cents per Rs. 1,000 bank transaction with effect from 1 April next year.

“It is a progressive budget. We see a lot of positive measures. The finance minister’s clarity on listing state banks will be a huge boost to the market liquidity,” Acuity Stockbrokers CEO Prashan Fernando said.

The Colombo Stock Index ended 0.22% weaker at 6,552.59, its lowest close in one month. For the week, it dropped 1%.

Turnover was Rs. 1.35 billion ($8.79 million) on Friday, more than this year’s average of around Rs. 954.3 million.

The Finance Minister announced tax concessions worth a monthly Rs. 1.5 billion ($9.8 million) on Wednesday to reduce the cost of living and boost consumption.

Top mobile services provider Dialog Axiata dropped 3%, while No.1 listed private lender Commercial Bank of Ceylon fell 1.3%.

Diversified conglomerate Hayleys PLC accounted for more than 50% of the day’s turnover and closed up 2.6%.

Foreign investors bought shares worth net Rs. 61.8 million, extending the net foreign inflow in equities to Rs. 18.2 billion so far this year.