Shares fall from two week high on tax, economic woes

cseSri Lankan shares fell on Friday after two sessions of gains as uncertainty over a capital gains tax, higher budget deficit and economic growth weighed on investors’ sentiment.

The benchmark share index was down 0.17 percent, or 10.38 points, at 6,057.79, edging down from its highest close since March 3 hit on Thursday.

Sri Lanka will raise its value-added tax and reintroduce capital gains tax to break out of a debt trap, ahead of talks on a $1.5-billion loan it is seeking from the International Monetary Fund.

“There isn’t much information on capital gains tax, though the government said it will reintroduce it. There is an uncertainty on the capital tax percentage. Investors are waiting to know more,” said Prashan Fernando, COO, Acuity Stockbrokers.

ADVERTISING

Investors preferred fixed-interest-rate-bearing assets over shares due to a rise in yields on treasury bills, which are hovering at two-year highs, and on the central bank’s unexpected interest rate hike in mid February, dealers said.

Sri Lanka’s economy is expected to grow 5.3 percent in 2016, data from the state statistics office showed, but analysts say tight monetary and fiscal policies may curb its growth.

The $82.2-billion economy expanded at a sluggish 2.5 percent in the December quarter, down from an upwardly revised 5.6 percent in the previous quarter.

Analysts and economists worry slower growth could reduce corporate earnings of some listed firms.

Turnover stood at 919.5 million rupees ($6.3 million), more than this year’s daily average of 794.1 million rupees.

Shares in Sri Lanka Telecom Plc fell 2.69 percent. (Reuters)

 

Leave a Reply

Your email address will not be published. Required fields are marked *

*


*

* Copy This Password *

* Type Or Paste Password Here *

176,932 Spam Comments Blocked so far by Spam Free Wordpress

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>