Shares end at 12-week high; rupee weaker

(Colombo) REUTERS: Sri Lankan shares closed at a 12-week high yesterday, led by financial services and telecom companies, while the rupee closed weaker on dollar demand from importers.

Presidential candidate Gotabaya Rajapaksa issued a statement on Friday pledging a tax overhaul that would reduce the value-added tax to 8 percent from the current 15 percent, abolish a tax for professionals and simplify many other taxes.

Rajapaksa faces a challenge from Housing Minister Sajith Premadasa, who will announce his policy framework on November 1. Analysts said investors were waiting to see their views on tax, subsidies and private businesses.

The benchmark stock index edged up 0.18 percent to 5,946.08, its highest close since August 13, 2019 and gained for an eighth straight session. The index posted a weekly gain of 1.2 percent last week but is down 1.76 percent so far this year.

The rupee ended 0.06 percent weaker at 181.35/60 per dollar, compared with Friday’s close of 181.25/45. The currency is up 0.7 percent so far this year.

Foreign investors were net sellers of riskier assets for the fourth time in seven sessions.

They sold a net Rs.194.9 million worth of shares, extending the year to date net foreign selling to Rs.4.16 billion of equities, according to index data.

Equity market turnover was Rs.491.4 million, less than this year’s daily average of about Rs.664.8 million. Last year’s daily average was Rs.834.0 million.

Meanwhile, foreign investors bought government securities on a net basis for the first time in three weeks, buying a net Rs.1.97 billion worth of government securities in the week ended October 23.

Total foreign outflows from government securities through October 23 stood at Rs.53.63 billion, according to the Central Bank data.

Sri Lanka’s Central Bank left its key rates unchanged on October 11 after loosening policy earlier this year, although growth is likely to remain subdued as the economy faces rising global risks.