Investment in Sri Lanka

Sri Lankan shares slip from 18-month high; John Keells drags

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

Mon Jul 3, 2017

Sri Lankan stocks ended slightly weaker on Monday, down from an 18-month high hit in the previous session, as investors sold blue chip shares such as John Keells Holdings Plc, brokers said.

Analysts said concerns over a proposed tax bill weighed on overall investor sentiment. But foreign investors continued to snap up the island nation’s risky assets.

The Colombo stock index ended down 0.21 percent at 6,733.06, slipping from its highest close since Jan. 7, 2016, hit on Friday.

The bourse climbed 0.47 percent last week, and gained 1.09 percent in June.

Foreign investors, however, net bought 189.1 million rupees ($1.23 million) worth of shares on Monday, extending their year-to-date net inflow to 22.4 billion rupees worth of equities.

“A few selected big caps brought the market down, especially the selling in Keells,” said Dimantha Mathew, head of research, First Capital Holdings PLC.

“Local participation is still low, but foreign investors are seen to continue and drive up the volumes.”

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.

Turnover was 640.9 million rupees, less than this year’s daily average of 926.4 million rupees.

Shares of conglomerate John Keells ended 0.17 percent weaker, while Sri Lanka Telecom Plc closed down 1.87 percent.

($1 = 153.2000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips)

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.<