COLOMBO, July 6 (Reuters) - Sri Lankan stocks on Thursday edged up from a near one-week closing low hit in the previous session, buoyed by industrial and telecom shares while offshore investors continued to be net buyers.
Local investors, however, cautiously acquired shares amid concerns over a proposed tax bill weighed on overall investor sentiment.
The Colombo stock index ended 0.07 percent higher at 6,714.34. The bourse hit an 18-month high last week, though it gained 0.47 percent for the week.
Foreign investors net bought 58.1 million rupees ($378,255) worth of shares on Thursday, extending their year-to-date net inflows to 22.5 billion rupees worth of equities.
“Some new foreign investors seem to be buying,” said Prashan Fernando, CEO, Acuity Stockbrokers.
“We see new investors buying Sri Lankan shares since the Pakistan bourse was upgraded to emerging market from frontier market. Those frontier market investors are interested in Sri Lankan shares though they have only a few options given that a few stocks are available in large quantity.”
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 status, and the addition of 57 securities and removal of 28 securities from its All-Country World Index .
Stockbrokers said foreign inflows are mainly from those investors who had invested in Pakistan.
“They see Sri Lanka as the next best alternative to Pakistan,” Fernando said.
The day’s turnover was 535.9 million rupees, less than this year’s daily average of 919.3 million rupees.
Brokers said local investors have been waiting for some clarity on the proposed inland revenue legislation, which some companies expect will result in higher cost 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 conglomerate John Keells Holdings Plc ended 0.8 percent higher, Dialog Axiata Plc closed up 1.7 percent, while Richard Pieris Plc ended up 8.5 percent.
$1 = 153.6000 Sri Lankan rupees Reporting by Shihar Aneez and Ranga Sirilal; Editing by Sherry Jacob-Phillips