Shares extend falls to near 17-month closing low

(Colombo) REUTERS: Sri Lankan shares extended losses into an eighth session yesterday and posted their lowest close in nearly 17 months, as foreign investors continued to sell, while a report about new tax proposals weighed on the market as well.

Foreign investors sold shares worth a net Rs.48.1 million (US$300,000), extending the foreign outflow to a net Rs.888.8 million in the last five sessions, and a net Rs.3.52 billion worth of equities so far this year.

Banking and telecom stocks have been declining since a local media reported that 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, also dented investor appetite for riskier assets, analysts said.

A local daily reported on Friday that a number of changes proposed in the Finance Act would see new levies on several sectors including telecom, vehicle imports and tourism.

“Still the tax issue has not been clarified. Banks and telecom shares are mostly hit by this and an uncertainty prevails over this,” said Atchuthan Srirangan, Assistant Manager - research, First Capital Holdings Plc.

The Colombo stock index edged down 0.06 percent to 6,040.37, its lowest close since March 30, 2017. It has declined about 5 percent so far this year.

Turnover stood at Rs.464.1 million, compared with this year’s daily average of Rs.824.4 million.

Top mobile phone service provider Dialog Axiata fell 0.7 percent, while conglomerate Hemas Holdings lost 4.3 percent.

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

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

The markets will be closed today for a holiday.