Bourse flat near 2-month closing low; financials fall

Reuters: Shares ended largely unchanged on Wednesday, hovering near an over two-month closing low hit in the previous session, as gains in diversified shares offset losses in financials.

The Colombo Stock Index ended 0.31 points up at 6,405.53, near its lowest close since 15 September hit on Tuesday. The index fell 1.1% last week, but is up 3% in the year so far.

Analysts said political worries over a delay in local government polls and a lack of clarity over the budget and two other key policy measures continued to weigh on sentiment.

Market heavyweight John Keells Holdings Plc ended 0.5% up while top private lender Commercial Bank of Ceylon Plc, which accounted for over 50% of the day’s turnover, ended 1.3% lower.

“There was foreign selling in Commercial Bank. Investors are concerned over possible hit on profitability due to a new tax in the budget,” said First Capital Equities CEO Jaliya Wijeratne.

“Investors are waiting for some direction and for the political and economic uncertainties to get cleared.”

Turnover stood at Rs. 799.7 million ($ 5.20 million) on Wednesday, less than this year’s daily average of Rs. 946.6 million. Foreign investors net sold equities worth Rs. 216.5 million on Wednesday. They have been net buyers of Rs. 18.2 billion worth of shares so far this year. Last week, a court issued a stay order on a legislation that cleared the island nation’s Election Commission to hold local government polls in which the coalition partners of the government have decided to contest separately.

Finance Minister Mangala Samaraweera imposed new taxes on motor vehicles, telecoms, banks and liquor in the 2018 Budget presented earlier this month, with the final budget vote scheduled for 9 December.

Analysts said market participants have sought more clarity on these taxes and that there could be some amendments to these proposals before the final vote.

The Government also released gazette notifications on the Inland Revenue Act and the Exchange Control Act, with investors waiting for clarification on the new legislations.