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Shares fall to 4-1/2 month closing low on budget worries

27 November 2015 06:30 pm - 0     - {{hitsCtrl.values.hits}}

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REUTERS: Shares edged down and closed at their lowest in four-and-a-half months yesterday on worries earnings of financial firms would fall after the new budget proposals announced last week were implemented.
The main stock index ended 0.03 percent, or 1.96 points, weaker at 6,961.41, its lowest close since July 9, in thin trade.
“Market was very dull, not much of activities. Market was basically holding on with a marginal dip,” said Yohan Samarakkody, head of research at SC Securities (Pvt) Ltd.
“People are cashing in ahead of the December festive season. It will remain in the red till the end of December and we might see proper activity after that.”
Rating agency Fitch said on Tuesday that Sri Lanka’s 2016 budget provides no clear plan for fiscal consolidation over the medium term and the absence of such a framework will put more pressure on the fiscal deficit.
“Fitch believes there are risks to government being able to meet its fiscal deficit target, especially considering the trend in revenues in recent years,” the rating agency said.
The government on yesterday announced a raft of steps, including the removal of a 0.3 percent share transaction levy, to stimulate trading in the share market and increase liquidity.
Shares of conglomerate John Keells Holdings Plc fell 0.75 percent, while Ceylon Tobacco Company Plc dropped 0.55 percent.
Turnover was Rs. 428 million ($2.99 million), its lowest since Nov. 3 and well below this year’s daily average of Rs.1.1 billion.
Foreign investors were net sellers of Rs. 21 million worth of shares, extending the year-to-date net foreign outflow to Rs.3.8 billion so far this year.
Fitch said on Monday that it maintained a negative outlook on the telecom sector based on uncertainty over proposals to increase taxes, which are likely to lower profitability and increase leverage, if implemented.
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