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Sri Lankan shares slip from 18-month high on profit-taking


COLOMBO, July 11 (Reuters)

Sri Lankan stocks edged down on Tuesday from its 18-month closing high hit in the previous session as investors booked profits in blue chips, while concerns over a proposed tax bill weighed on overall sentiment.

The Colombo stock index ended 0.15 percent weaker at 6,748.15, slipping from its highest close since Jan 7, 2016 hit on Monday.

“The index is down on profit-taking, but the good thing is that retail participation has increased,” said Dimantha Mathew, head of research, First Capital Holdings PLC.

“There was less foreign participation today.”

Foreign investors net bought 42.3 million rupees ($275,391) worth of shares on Tuesday, extending their year-to-date net inflows to 22.9 billion rupees worth of equities.

Analysts said new foreign investors have been buying Sri Lankan shares since the Pakistani bourse was upgraded to emerging market status from frontier market.

The day’s turnover was 559.7 million rupees, less than this year’s daily average of 912.7 million rupees.

In May, index provider MSCI announced changes to its indexes as a result of its semi-annual market reclassification, including reclassifying Pakistan as an emerging market from frontier market, and the addition of 57 securities and removal of 28 securities from its All-Country World Index .

Brokers said local investors have been waiting for some clarity on a proposed inland revenue legislation, which a few companies expect will result in higher costs of production.

The IMF, which has long urged Sri Lanka to boost tax revenue through modernisation and simplification of its fiscal system, has urged the government to submit to parliament a new Inland Revenue Act.

Shares of Ceylon Tea Services Plc dived 13.4 percent, Melstacorp Ltd ended 1.8 percent weaker, while conglomerate John Keells Holdings Plc closed 0.2 percent lower.

$1 = 153.6000 Sri Lankan rupees Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips

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.<