Sri Lanka stocks slip 1.5-pct on tax hikes, weak sentiment
ECONOMYNEXT – Sri Lanka’s stocks slipped 1.5 percent on Tuesday for the sixth straight session as the country decided to hike the taxes to 2019 levels amid continued monetary instability and political uncertainty.
The All Share Price Index (ASPI) closed 1.5 percent or 123.2 points down at 8,108.09 on Tuesday.
“It’s the overall uncertainty in the system,” a market analyst said. “There are a lot of questions of the 21st amendment, do they have enough to pass it.
“May was a very crucial month, so as it comes to an end, there are a lot of questions of ‘what next’. The country cannot go back to its old ways.”
The proposal to raise taxes back to 2019 levels also hit the market, analyst said.
Though higher taxes are good for state finances and an IMF deal it will hit earnings.
The more liquid S&P SL20 index slipped 1.46 percent or 39.75 points to 2,679.33.
Investors however did expect a new budget with new revenue measures under Prime Minister Wickremesinghe.
Sri Lanka also hiked fuel prices.
The market has gained 6 percent in May so far following a loss of 23 percent in April and 14.5 percent in March.
The market has lost 33 percent so far this year after being one of the world’s best stock markets with an 80 percent return last year when large volumes of money were printed.
Trade controls were also slammed giving profits to the so-called ‘import substitution cronies’.
The daily market turnover was 1.6 billion rupees, more than half of this year’s average daily turnover of 3.9 billion rupees.
Sri Lanka’s sovereign default has already led it to restricted/selective default rating by rating agencies and has been weighing on the investor sentiment.
Investors are also concerned over the steep fall of the rupee from 200 to 370 levels so far in 2022.
Foreign investors bought a net 66.6 million rupees worth of shares this week. The market has witnessed a total foreign outflow of 1.2 billion rupees so far this year.
On Tuesday, the All Share Price Index was dragged down mainly by LOLC, which fell 4.70 percent to 598.00 rupees a share.
Expolanka fell 2.9 percent to 216.5 rupees a share while Sampath bank slipped 2.6 percent to 36.30 rupees a share (Colombo/May31/2022)
