DIMANTHA MATHEW, HEAD OF RESEARCH AT FIRST CAPITAL HOLDINGS PLC, SPEAKS TO REUTERS
AUGUST 27, 2018
COLOMBO, Aug 24 (Reuters) – Sri Lankan shares ended slightly weaker on Friday in light trade and posted their ninth session of decline in 10, as worries over new tax proposals weighed on sentiment.
However, foreign investors bought beaten-down stocks, limiting the downside. Foreign buying accounted for about half of the day’s turnover of 209.5 million rupees ($1.31 million) which was well below this year’s daily average of 822 million rupees.
Foreign investors purchased a net 32.3 million rupees of shares, making them net buyers for a second straight session after five consecutive sessions of sales. They have sold a net 3.4 billion rupees worth of shares so far this year.
The Colombo stock index fell 0.05 percent to 6,052.69, hovering near its lowest close since March 30, 2017 hit on Tuesday. It closed marginally higher for the week after four straight weekly falls.
“We expected the uptrend to be short lived and today there was not much of turnover due to less foreign and local participation,” said Dimantha Mathew, head of research at broker First Capital Holdings.
“Lower local participation is continuing due to the tax worries and hurting investor sentiment.”
Banking and telecom stocks have been recently under pressure after a local media reported last week 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, have also dented investor appetite for riskier assets, analysts said.
Shares in Dialog Axiata Plc fell 1.7 percent, market heavyweight John Keells Holdings lost 0.5 percent and Lanka ORIX Leasing Co Plc declined 3.2 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. ($1 = 160.3500 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)