Sri Lanka stocks down for 3rd straight session amid tax hike worries
ECONOMYNEXT – Sri Lanka stock market closed weaker on Thursday (26) for the third consecutive session as some investors shifted their funds to fixed assets while others stayed on the sidelines amid fears of tax hikes in the near future after Prime Minister Ranil Wickremesinghe was appointed as the new finance minister, dealers said.
“We saw selling pressure starting to enter the market while investors stayed on the sidelines as news of the new budget keeps coming,” a top market analyst said.
He expects the downward trend to accelerate in the next two weeks.
Another analysts said some investors are shifting their funds to fixed assets like government securities which are giving around 24 percent annual return.
Wickremesinghe was appointed as the new finance minister on Wednesday (25). He has promised to present a new budget soon and said the budget deficit for this year could be as high as 13 percent of the GDP, which is the highest since 1982.
The All Share Price Index (ASPI) closed 0.6 percent or 50.58 points down at 8,319.58.
Fuel hike, which is a deterrent to the economic growth, also weighed on the sentiment.
Added to the worries, the central bank governor’s comment on the country’s growth contracting to record levels due to the economic crisis also dented the sentiment.
The most liquid index S&P SL20 fell 1.28 percent or 35.49 points to 2,744.54.
The day’s turnover was 1.62 billion rupees, less than a half this year’s average daily turnover of 4.0 billion rupees.
Sri Lanka’s sovereign default has already led it to restricted/selective default rating by rating agencies. The 84.5 billion economy has already suspended foreign debt payments as it had run out of dollars.
Investors are also concerned over the steep fall in the rupee, which has fallen over 80 percent since it was allowed flexibility on March 7.
The market has gained 9.1 percent in May so far following a loss of 23 percent in April and 14.5 percent in March.
The market has lost 31.9 percent so far this year after being one of the world’s best stock markets with an 80 percent return last year.
Foreign investors sold a net 47.1 million rupees worth of shares. The market has witnessed a total foreign outflow of 1.2 billion rupees so far this year.
The ASPI was dragged down mainly by Expolanka, which fell 2.5 percent to 223 rupees a share. In addition to that, Sampath Bank fell 2 percent to 38.40 rupees a share while John Keells Holdings slipped 1.3 percent to 129 rupees a share (Colombo/May26/2022)
