Shares edge up; tax proposals weigh

REUTERS: Sri Lankan shares ended slightly higher yesterday as investors sought bargains in blue-chips but concerns over recent budget tax proposals weighed on sentiment.
The Colombo stock index ended up 0.15 percent at 6,241.10, ending three sessions 
of losses.
The index hit a near-eight-month low on Tuesday on concerns that the proposed hike in various taxes and fees would reduce disposable income and challenge consumption-led growth, analysts said.
“Market is up on bargain-hunting by foreigners but it’s not a major factor at the moment unless the trend is going to continue,” said First Capital Equities (Pvt.) Ltd Head of Research Dimantha Mathew.
“I feel it’s like a one-off thing. Investors are concerned over the current uncertainty and we could see volatility in the market with the current economic uncertainty.”
The government aims to boost its 2017 tax revenue by 27 percent to Rs.1.82 trillion year-on-year and meet a commitment given to the International Monetary Fund in return for a US $ 1.5 billion loan in May.
The market shrugged off the Central Bank’s key monetary policy decision on Tuesday to keep rates unchanged. Brokers said investors are concerned about sustainability of rates.
Turnover stood at Rs.579.6 million, much less than this year’s daily average of 
Rs.694.6 million.
Foreign investors bought a net Rs.48.1 million worth of shares yesterday, but have been net sellers of Rs.1.64 billion worth of shares so far this year.
Shares of conglomerate John Keells Holdings PLC jumped 2.63 percent while Dialog Axiata PLC rose 2.97 percent and Ceylon Tobacco Company PLC rose 0.47 percent.