August 28, 2018 / 12:07 PM / 2 months ago

Sri Lankan shares hit 17-month closing low; tax proposals weigh

COLOMBO, Aug 28 (Reuters) - Sri Lankan shares extended losses on Tuesday to hit their lowest close in 17 months, as investors offloaded telecom and beverage stocks, while worries over new tax proposals dented sentiment.

The Colombo stock index ended 0.56 percent lower at 6,010.23, its lowest close since March 28, 2017. It closed marginally higher last week after four straight weekly falls.

The bourse posted their eleventh session of declines in 12.

The day’s turnover was at 374.8 million rupees ($2.34 million), less than half of this year’s daily average of 815.5 million rupees.

Foreign investors sold a net 24.3 million rupees of shares on Tuesday, extending the net foreign selling so far this year to 3.4 billion rupees worth of shares.

“The market came off with foreign selling in thin volumes,” said Hussain Gani, deputy CEO, Softlogic Stockbrokers.

Local investors are on the sidelines due to uncertainties regarding tax proposals, analysts said.

Banking and telecom stocks have been under pressure after a media report last week stated the government planned to impose new levies on these sectors to boost revenue, analysts said.

Lacklustre corporate results and a Moody’s report saying Sri Lanka could face significantly tighter external refinancing conditions in the next five years, have also dented investor appetite for riskier assets, analysts added.

Shares in Dialog Axiata Plc ended 3 percent lower, while Ceylon Cold Stores Plc closed 3.2 percent down, and Ceylon Tobacco Company Plc ended down 1.9 percent.

Conglomerate John Keells Holdings Plc ended 0.4 percent weaker, while the biggest listed lender Commercial Bank of Ceylon Plc closed 0.7 percent lower.

The central bank left its key policy rates unchanged, as expected, on Aug. 3, citing its goals of stabilising inflation and fostering sustainable economic growth.

The economy was unlikely to grow more than 4 percent in 2018, falling short of an earlier estimate of 5 percent, Central bank Governor Indrajit Coomaraswamy said.

$1 = 160.3500 Sri Lankan rupees Reporting by Ranga Sirilal and Shihar Aneez, Editing by Sherry Jacob-Phillips

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