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Sri Lankan shares extend fall to near 3-month closing low


DECEMBER 5, 2017

COLOMBO, Dec 5 (Reuters) – Sri Lankan shares extended falls into a second session on Tuesday and closed at their lowest in nearly three months, dragged down by beverage stocks.

The Colombo Stock Index ended down 0.24 percent at 6,390.55, its lowest close since Sept. 14. It fell 0.03 percent last week, recording its fourth straight weekly drop, but has gained about 3 percent so far this year.

Worries over a delay in local council polls and a lack of clarity over the budget and two other key policy measures weighed on sentiment, said analysts.

Meanwhile, the Election Commission said on Monday that the council polls would be held before Feb. 17.

Investors are concerned about political stability as coalition partners in President Maithripala Sirisena government had decided to contest separately in the council polls.

Finance Minister Mangala Samaraweera imposed new taxes on motor vehicles, telecoms, banks and liquor in the 2018 budget presented last month, with a final budget vote scheduled for Dec. 9.

Analysts said market participants were seeking more clarity on those taxes and that there could be some amendments before the final vote.

The government also released gazette notifications on the Inland Revenue Act and the Exchange Control Act, with investors waiting for clarification on the new legislation.

Shares in Nestle Lanka Plc fell 1.5 percent on Tuesday, Commercial Leasing & Finance Plc ended 6.9 percent weaker, and Lanka ORIX Leasing Co Plc dropped 1.2 percent.

“The market is down on low volumes but the turnover was pushed by foreign to foreign block deals,” said Dimantha Mathew, head of research at First Capital Holdings.

“Local investor participation was low.”

Foreign buying accounted for 64 percent of the day’s turnover, which was 917.8 million rupees ($6 million), less than this year’s daily average of 943.3 million rupees.

Foreign investors were net buyers of equities worth 90.3 million rupees, extending the year-to-date net foreign inflow so far this year to 18.8 billion rupees worth of shares. ($1 = 153.3500 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)


The comments on this report are provided by the Capital Markets Research Unit of First Capital Holdings PLC an investment bank in Sri Lanka.

The company operates in the capital markets of Sri Lanka in government securities – treasury bills and bonds, stock brokering and share market investments, asset management, private wealth management, retirement planning, personal financial planning, unit trust, margin trading, capital market research, trustee services, corporate finance advisory services including corporate debt structuring (debentures, trust certificates, commercial papers), valuations, restructuring, mergers and acquisitions, initial public offerings (IPOs) and project advisory.

The First Capital Group consists of First Capital Treasuries PLC, First Capital Limited, First Capital Markets Limited, First Capital Asset Management Limited and First Capital Equities (Private) Limited covering Colombo, Negombo, Matara, Kandy and Kurunegala.<

First Capital is an investment bank providing a full range of financial advisory and services. The Company’s research deliver heightened perspective in fundamental research aiding Share Market Investment in Sri Lanka. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis. With fundamental research coverage of 62 listed securities (reflecting approximately 65% market capitalization) across 15 sectors in Share Market Investment in Sri Lanka