Sri Lanka shares nosedive despite strong inflows amid tax hike talks, debt exposure cut
ECONOMYNEXT – Sri Lanka stocks plummeted over 3 percent on Tuesday (06), falling for a third straight session and closed at six-week low amid speculation over tax hikes in the upcoming budget and selling of shares to reduce debt exposure, dealers said.
But its saw strong net foreign inflow of 828 million rupees on Tuesday. The inflow so far this year is 16.4 billion rupees after 17.8 billion rupees of net offshore buying in the last 40 consecutive sessions amid positive sentiment over an IMF deal.
Dealers said an expected bad earnings in September quarter has also triggered a sell-off by high net worth individuals.
The main All Share Price Index (ASPI) fell 3.37 percent or 304.91 points to close at 8,744, its lowest since August 29.
“The upcoming budget is a concern. Everyone knows there’s going to be harsh taxes so high net worth investors are selling off because they know the September quarter earnings are going to be bad. That’s why we are seeing a sell off in the market,” a top market analyst said.
“Overall there’s no negativity in the market.”
Another analyst said with Expolanka shares falling, the overall market is also affected.
“The market was mainly brought down by Expolanka as we saw in the past weeks due to the falling global freight prices which has brought the overall market down,” the analyst said.
“The speculation on corporate tax has also dented market sentiments.”
The most liquid index S&P SL20 closed at 4.29 percent or 118.83 points lower at 2,652.99.
The market saw a turnover of 3 billion rupees, lower than this year’s average turnover of 3.2 billion rupees.
The index has lost 11.9 percent so far this year and 28 percent year-to-date after being one of the world’s best stock markets with an 80 percent return last year when large volumes of money were printed.
Expolanka, leading the index fall, closed 11.9 percent at 145 rupees a share.
Lanka IOC fell 6.7 percent to 212 rupees a share while LOLC closed 6.5 percent down at 392.5 rupees. (Colombo/Oct11/2022)
