Shares hit near 8-mth low ahead of CB rate decision

REUTERS: Sri Lankan shares fell yesterday to a near eight-month low, ahead of Central Bank policy rate announcement as investors kept to the sidelines amid concerns over budget tax proposals including revisions in corporate and withholding taxes. Analysts said investors were awaiting the Central Bank’s decision on interest rates today. They expect the apex bank to leave rates unchanged for a fourth straight month. The Colombo stock index ended 0.21 percent down at 6,238.87, its lowest close since April 7. The bourse lost 1.17 percent last week, marking its third straight weekly fall. “Market is very sluggish as there is no positive direction for it to move up. Everybody is waiting, looking for a direction (in interest rates),” said Richard Pieris Securities (Pvt.) Ltd Chief Operating Officer Reshan Kurukulasuriya. Analysts said the increase in various taxes and fees would reduce disposable income and challenge consumption-led growth.

The government aims to boost its 2017 tax revenue by 27 percent to Rs.1.82 trillion year-on-year and meet a commitment given to the International Monetary Fund in return for a US $ 1.5 billion loan in May. Turnover was Rs.386.3 million, well below this year’s daily average of Rs.693.7 million. Foreign investors sold a net Rs.137.2 million worth of shares yesterday, extending the year-to-date net foreign selling to Rs.1.39 billion. Shares of biggest listed lender Commercial Bank of Ceylon PLC fell 1 percent and Ceylon Cold Stores PLC lost 7.35 percent, while National Development Bank PLC closed 2.76 percent lower.