Shares recover from 2-mth closing low as large caps gain

REUTERS: Sri Lankan shares ended marginally higher yesterday in dull trade, recovering from a near two-month closing low hit in the previous session, even as investors awaited clarity on new taxes and key legislations.

The Colombo stock index ended 0.05 percent firmer at 6,417.15, edging up from its lowest close since September 26 hit on Friday. The index fell 1.1 percent last week, but is still up 3 percent in the year so far.

Turnover stood at Rs.342.7 million yesterday, around a third of this year’s average. “Investors are on wait-and-see approach with continued political uncertainty,” said First Capital Holdings PLC Senior Research Analyst Atchuthan Srirangan.

“The good sign is that the foreign participation is high.”

Foreign investors net bought equities worth Rs.42.9 million yesterday, extending the year-to-date net foreign inflow to Rs.18.4 billion worth of stocks.

Shares in Ceylon Tobacco Company PLC rose 2.1 percent, while Lion Brewery PLC ended 2.3 percent up and Hatton National Bank PLC ended 0.7 percent firmer, pushing the overall index up.

Analysts said political worries over delay in local government polls and a lack of clarity over budget and two other key policy measures continued to weigh on sentiment.

A court on Wednesday issued a stay order on a legislation that cleared the island nation’s Election Commission to hold local government polls in which the coalition partners of the government have decided to contest separately.

Finance Minister Mangala Samaraweera imposed new taxes on motor vehicles, telecoms, banks and liquor in the 2018 budget presented earlier this month, with the final budget vote scheduled for December 9.

Analysts said market participants have sought more clarity on these taxes and that there could be some amendments to these proposals before the final vote.
The government also released gazette notifications on the Inland Revenue Act and Exchange Control Act, with investors waiting for clarification on the new legislations.