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Sri Lanka stocks down 0.5-pct, uncertainty over tax changes

Economy Next – 17.08.2018

By First Capital Research

ECONOMYNEXT – Sri Lankan stocks closed lower Friday near a five-week low with investor sentiment dampened by uncertainty over proposed changes to the Finance Act that could raise costs for businesses, brokers said.

The rupee was trading at 160.45/50 against the US dollar in the spot market in mid-afternoon trade before the close, dealers said.

The All Share Price Index closed at 6,051.10, down 32.49 points (0.53%) while the more liquid S&P SL20 index closed at 3,240.27, down 7.89 points (0.24%).

Turnover was Rs569 million, about 35% of which was accounted for by trading in John Keells Holdings.

The benchmark index was dragged down mainly by the fall in Ceylon Tobaccco Company, which closed at Rs.1,251.90, down Rs. 28.40 (2.22%). The stock was trading ex-dividend.

JKH, which also has a heavy weighting on the ASPI closed at Rs138.00, down 20 cents (0.14%).

Atchuthan Srirangan, assistant manager research at First Capital Holdings, said investors were mostly on the sidelines given uncertainty over proposed taxes in amendments to the Finance Act which were gazetted recently.

Among proposed changes is a  Debt Repayment Levy on banks and finance companies.

“The gazette is not clear and banks and finance companies are confused about the debt repayment levy,” Srirangan said.

Also, although the market is undervalued and has been seeing foreign selling, local buying has still not got activated owing to lack of confidence in government policy, he said.
(COLOMBO, 17 August, 2018)