Shares fall for 7th session in thin trade

(Colombo) REUTERS: Sri Lankan shares extended losses into a seventh session yesterday and posted their lowest close in nearly seven weeks, as foreign investors continued to reduce their holdings, while confusion over new tax measures weighed on the market as well.

Lacklustre corporate results and a Moody’s report saying Sri Lanka could face significantly tighter external refinancing conditions in the next five years, also dented investor appetite for riskier assets, analysts said.

A local daily reported on Friday that a number of changes proposed in the Finance Act will impose new levies on several sectors including telecom, vehicle imports and tourism.

“Confidence level is the issue. There is confusion over new taxes and the market still is confused about the proposed taxes,” said First Capital Equities CEO Jaliya Wijeratne.

“Foreigners have been selling since last week and that has been a concern for the market.”

Foreign investors sold shares worth a net Rs.11.7 million yesterday, extending the foreign outflow to a net Rs.840 million in the last four sessions, and a net Rs.3.48 billion worth of equities so far this year.
The Colombo stock index edged down 0.11 percent to 6,044.23, its lowest close since July 4. It has declined about 5 percent so far this year.

Turnover stood at Rs.193.2 million yesterday, less than a quarter of year’s daily average of Rs.827 million.

Most Asian share markets, however, crept cautiously higher as investors awaited developments on proposed Sino-U.S. trade talks and the Chinese yuan rallied away from alarming lows.

Top mobile phone service provider Dialog Axiata fell 2.1 percent, while top lender Commercial Bank of Ceylon closed 0.8 percent weaker.

The central bank left its key policy rates unchanged, as expected, on August 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.