Shares fall for 8th session; tax proposals weigh

REUTERS: Sri Lankan shares extended falls to an eighth session yesterday, posting their lowest close since April 7, as investor sentiment was hit by budget tax proposals, including revisions in corporate and withholding taxes. The government aims to boost its 2017 tax revenue by 27 percent to Rs.1.82 trillion yearon- year, and meet a commitment given to the International Monetary Fund in return for a US $ 1.5 billion loan in May. The benchmark index of the Colombo Stock Exchange ended down 0.21 percent at 6,242.68. It has fallen 2.77 percent over the past eight sessions after the budget was presented on November 10. The index was in oversold territory, with the 14-day relative strength index at 15.978 versus Tuesday’s 16.929, Thomson Reuters data showed. A level between 30 and 70 indicates the market is neutral. “Market is down in low trade as investors are on wait-and-see mode,” said First Capital Equities (Pvt.) Ltd Head of Research Dimantha Mathew.

Foreign investors sold a net Rs.100.7 million worth of shares on Wednesday, extending the year-to-date net foreign outflow to Rs.1.27 billion. Analysts said the increase in various taxes and fees would reduce disposable income and challenge consumption-led growth. Turnover was Rs.284.9 million, well below this year’s daily average of Rs.698.6 million. Shares of Lion Brewery PLC fell 6.81 percent, while Hemas Holdings PLC declined 5.00 percent and Ceylon Tobacco Company PLC fell 1.24.