(Colombo) REUTERS: Sri Lankan shares ended weaker yesterday to post their tenth session of declines in 11, as worries over new tax proposals weighed on investor sentiment.

However, foreign investors bought beaten-down stocks, limiting the downside. Foreign buying accounted for about 30 percent of the day’s turnover of Rs.246.2 million, which was less than a third of this year’s daily average of Rs.818.3 million.

Foreign investors purchased a net Rs.20.6 million of shares, making them net buyers for a third straight session after five consecutive sessions of sales. They have sold a net Rs.3.4 billion worth of shares so far this year.

The Colombo stock index ended 0.14 percent lower at 6,044.14. The bourse hovered near their lowest close since March 30, 2017, hit last week. It closed marginally higher last week after four straight weekly falls.

“It was a bit of a slow day. Overall, the turnover was on the slower side as there were not much of activities. Because of the tax uncertainties the local investors are on the sidelines,” said First Capital Holdings Research Head Dimantha Mathew.

“We have seen some foreign interest in the last few days as the prices have come down.”
Banking and telecom stocks have been under pressure after a media report last week stated the government planned to impose new levies on these sectors to boost revenue, analysts said.

Lacklustre corporate results and a Moody’s report saying Sri Lanka could face significantly tighter external refinancing conditions in the next five years, have also dented investor appetite for riskier assets, analysts added.

Shares in Dialog Axiata PLC ended 0.8 percent lower, while Lion Brewery PLC closed 2.6 percent down, Overseas Realty PLC ended down 0.7 percent and Sri Lanka Telecom PLC closed 0.4 percent weaker.

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

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