Sri Lankan shares edge down on VAT hike concern
COLOMBO, Sept 14 (Reuters) – Sri Lankan shares closed marginally lower on Wednesday, posting their lowest closing level in nearly six weeks, as a government proposal to raise the value added tax (VAT) hurt market sentiment.
The government on Wednesday said the cabinet has approved a proposal to increase the VAT to 15 percent from 11 percent with some amendments, a move halted by the Supreme Court earlier. The hike is expected to be implemented after parliamentary approval later this month.
The benchmark Colombo stock index ended 0.24 percent lower at 6,492.74, its lowest close since Aug. 4.
"Investors are worried about the VAT hike. Profit-taking was also there," said Atchuthan Srirangan, a senior research analyst with First Capital Equities (Pvt) Ltd.
Turnover stood at 749.9 million rupees ($5.15 million), in line with this year’s daily average of 747.2 million rupees.
Foreign investors, who have been net sellers of 2.29 billion rupees worth of shares so far this year, were net buyers of 407.3 million rupees worth of equities on Wednesday.
Shares of Distilleries Company of Sri Lanka Plc fell 4.38 percent, while Ceylon Tobacco Company Plc dropped 1.21 percent.