Investment in Sri Lanka

Sri Lankan shares fall on profit-taking

FIRST CAPITAL’S HEAD OF RESEARCH DIMANTHA MATHEW SPEAKS TO REUTERS

Wed Jul 5, 2017

Sri Lankan stocks fell to a near one-week closing low on Wednesday as investors booked profits in diversified and telecom shares while concerns over a proposed tax bill weighed on overall investor sentiment.

The Colombo stock index ended 0.36 percent down at 6,709.76, its lowest close since June 29. The bourse hit 18-month high and climbed 0.47 percent last week.

However, foreign investors net bought 56.1 million rupees ($365,353.31) worth of shares on Wednesday, extending their year-to-date net inflows to 22.5 billion rupees worth of equities.

Gross foreign buying accounted for around 77 percent of the day’s turnover of 854.7 million rupees, which was less than this year’s daily average of 922.4 million rupees.

“Foreigners are running the show and taking bulk of the turnover. The local participation is low due to uncertainty over taxes,” said Dimantha Mathew, head of research, First Capital Holdings PLC.

Brokers said local investors have been waiting for some clarity on the proposed inland revenue legislation, which some companies expect will result in higher cost of production.

The IMF, which has long urged Sri Lanka to boost tax revenue through modernisation and simplification of its fiscal system, has urged the government to submit to parliament a new Inland Revenue Act.

Shares of Carson Cumberbatch Plc lost 7.7 percent while Dialog Axiata Plc fell 1.7 percent, Conglomerate John Keells Holdings Plc fell 0.5 percent and Sri Lanka Telecom Plc ended 1.9 percent weaker. ($1 = 153.5500 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)

The comments on this report are provided by the Capital Markets Research Unit of First Capital Holdings PLC an investment bank in Sri Lanka.

The company operates in the capital markets of Sri Lanka in government securities – treasury bills and bonds, stock brokering and share market investments, asset management, private wealth management,  retirement planning, personal financial planning, unit trust, margin trading, capital market research, trustee services, corporate finance advisory services including corporate debt structuring (debentures, trust certificates, commercial papers), valuations, restructuring, mergers and acquisitions, initial public offerings (IPOs) and project advisory. 

The First Capital Group consists of First Capital Treasuries PLC, First Capital Limited, First Capital Markets Limited, First Capital Asset Management Limited and First Capital Equities (Private) Limited covering Colombo, Negombo, Matara, Kandy and Kurunegala.<