Sri Lanka shares end down; capital gains tax, Brexit weigh
COLOMBO, June 28 (Reuters) – Sri Lankan shares ended weaker on Tuesday, falling for the seventh straight session, as comments from a senior minister on the imposition of capital gains tax on equities dented sentiment while fresh woes after Brexit also weighed.
Sri Lanka intends to impose a capital gains tax on profits from equities, a senior government minister said late on Monday, as the government attempts to shore up its finances to qualify for an IMF loan.
The benchmark Colombo stock index ended 0.17 percent down at 6,307.40, after having risen early in the session.
"Market was gaining momentum after yesterday’s drop. But once the news of capital gains tax on stocks broke, the index started to fall," said a stockbroker, asking not to be identified.
Brokers said global uncertainty after Britain’s decision to leave the EU also weighed on the local market with continued foreign selling.
Overseas funds offloaded 9.7 million rupees ($65,785) worth of equities on Tuesday, extending the year-to-date net foreign outflow to 6.18 billion rupees worth of shares.
"With the news of capital gain tax, existing high interest rates, and other local negativity, the market will continue to be negative until we see some positive news," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.
Global stocks rose for the first time in three days and sterling and the euro climbed on Tuesday, as investors made a rush for Brexit-bashed assets hammered by some of the biggest falls since the 2008 collapse of Lehman Brothers.
Turnover stood at 640.3 million rupees, less than this year’s daily average of around 746.3 million rupees.
Shares in Ceylon Tobacco Company Plc fell 3.50 percent while Lion Brewery Plc fell 3.72 percent.