Sri Lankan shares fall for 3rd session to over 4-mth closing low
COLOMBO, Nov 16 (Reuters) – Sri Lankan shares fell to a more than four-month closing low in thin volume on Wednesday as investor sentiment was dented by budget tax proposals last week, including revisions in corporate and withholding taxes, to boost revenue.
The government aims to boost its 2017 tax revenue by 27 percent to Rs1.82 trillion ($12.36 billion) year on year to meet a commitment given to the International Monetary Fund in return for a $1.5 billion loan in May.
The benchmark index of the Colombo Stock Exchange ended 0.89 percent, or 57.13 points, weaker at 6,349.03, its lowest close since July 7.
It fell for a third straight session and was in the over-sold territory, with the 14-day relative strength index at 26.347 versus Tuesday’s 36.333, Thomson Reuters data showed. A level between 30 and 70 indicates the market is neutral.
"The budget proposals are still not clear and there are some concerns that some of the proposals could be reversed as in the last year," said a stockbroker asking not to be named.
Foreign investors offloaded shares worth a net Rs79.6 million, their second straight session of selling. They have sold a net Rs1.09 billion of shares so far this year.
Analysts said the increase in various taxes and fees would reduce the disposable income of people and challenge consumption-led growth
Turnover was Rs514.1 million, less than this year’s daily average of Rs706.4 million.
Shares of Commercial Bank of Ceylon Plc, the country’s biggest listed lender, fell 4.66 percent, while Dialog Axiata Plc declined 5.41 percent and Sri Lanka Telecom Plc dropped 0.27 percent.