Stock market fall persists for 9th session; Capital Gains Tax weighs

Reuters: Shares ended lower for the ninth straight session on Thursday as comments from a minister earlier this week on the imposition of Capital Gains Tax on equities continued to dampen sentiment.

Sri Lanka will impose a Capital Gains Tax on profits from equities, a Senior Government Minister said late on Monday, as the Government tries to shore up its finances to meet conditions for an IMF loan.

The benchmark Colombo stock index ended 0.12% down at 6,283.27. It has fallen 2.83% in the last nine sessions.

“It’s the confidence factor which is impacting the market. Everybody is on the sidelines. Investors want to see the details of the capital gain tax, such as tax-free threshold,” said Dimantha Mathew, Head of Research, First Capital Equities Ltd.

Turnover stood at Rs. 449.5 million ($3.09 million), much lower than this year’s daily average of around Rs. 746.3 million.

European and Asian stock markets built on a recovery from the shattering aftermath of last week’s Brexit vote as investors wagered central banks would ultimately ride to the rescue with more stimulus.

Global uncertainty after Britain’s decision to leave the EU also weighed on the market with continued foreign selling.

Overseas funds offloaded Rs. 6.12 billion worth of equities so far this year, but were net buyers of Rs. 31.6 million worth of shares on Thursday, recording the second net inflow in the last six sessions.

Shares in conglomerate John Keells Holdings Plc fell 13.18% after a subdivision of the shares.

Shares in Bukit Darah Plc fell 9.52%  percent while Ceylon Tobacco Company Plc fell 0.98%.