manusath-derana

Sri Lankan stocks drop; telcos, banks drag after budget measures

November, 10, 2017

Reuters - Sri Lankan shares fell on Friday, weighed down by declines in telecom and banking stocks after the island nation targeted both cash-rich sectors in its 2018 budget to boost revenue.

Sri Lanka imposed new taxes on motor vehicles, telecoms, banks and liquor in a bid to boost revenues in its 2018 budget outlined on Thursday, as the budget deficit for the current year slipped to 5.2 percent of the gross domestic product.

Finance Minister Mangala Samaraweera imposed taxes on telecom towers and text messages, and introduced a debt repayment levy of 20 cents per 1,000 rupee bank transaction with effect from April 1 next year.

“It is a progressive budget. We see a lot of positive measures. The finance minister’s clarity on listing state banks will be a huge boost to the market liquidity,” said Prashan Fernando, CEO at Acuity Stockbrokers.

The Colombo stock index ended 0.22 percent weaker at 6,552.59, its lowest close in one month. For the week, it dropped 1 percent.

Turnover was 1.35 billion rupees ($8.79 million) on Friday, more than this year’s average of around 954.3 million rupees.

The finance minister announced tax concessions worth a monthly 1.5 billion rupees ($9.8 million) on Wednesday to reduce the cost of living and boost consumption.

Top mobile services provider Dialog Axiata dropped 3 percent, while No.1 listed private lender Commercial Bank of Ceylon fell 1.3 percent.

Diversified conglomerate Hayleys Plc accounted for more than 50 percent of the day’s turnover and closed up 2.6 percent.

Foreign investors bought shares worth net 61.8 million rupees, extending the net foreign inflow in equities to 18.2 billion rupees so far this year.