10 December 2019 09:08 am
(Colombo) REUTERS: Sri Lankan shares closed weaker for the fourth straight session yesterday, weighed down by foreign sell-offs and profit-taking in construction shares, while the rupee ended steady.
The benchmark stock index closed down 0.75 percent at 6,103.63, its lowest since November 26. The bourse fell one percent last week, but is up 1.61 percent for the year.
The index touched its highest level since June 25, 2018 on December 2, lifted by hopes of booming economic activity after the new government cut some key taxes.
The Sri Lankan rupee ended steady at 181.10/30 per dollar, Refinitiv data showed. It is up 0.8 percent so far this year.
Analysts said the tax reduction has already been factored in and the market was waiting to see the impact of the new policy. They said investors sold shares that rose on hopes the new government will encourage an economic boom led by construction.
“We see a profit taking in construction sector shares, which jumped on construction boom hopes,” said Atchuthan Srirangan, Assistant Research Manager at First Capital Holdings PLC.
“There was no negative news and when investors see in values in shares, they will come again and buy.”
The government on November 27 reduced value-added tax to 8 percent from 15 percent effective December 1 and abolished some other taxes as well in its attempt to boost economic growth that has fallen to a near two-decade low.
Singapore-based research firm Emerging Asia Economics in a note last week said the tax cut decision would provide a significant boost to the economy but put increased strain on the country’s fragile public finances, with a possible loss of US $ 2 billion in revenue.
Foreign investors were sellers yesterday in the equity market for the 28th session out of the last 31.
They sold a net Rs.141 million worth of shares yesterday, extending the year-to-date foreign outflow to Rs.11 billion, according to index data.
Equity market turnover was Rs.435.5 million, less than this year’s daily average of about 726 million. Last year’s daily average was Rs.834 million.
Foreign investors were net sellers of government securities on a net basis for the first week in seven, selling a net Rs.4.2 billion worth of government securities in the week ended December 4.
Total foreign outflows from government securities through November 27 stood at Rs.47.9 billion, according to the Central Bank data.