Shares end higher on foreign buying; tax bill weighs

Reuters: Shares posted their second straight session of gains on Friday, further moving away from the lowest close in more than four months hit this week, as foreign investors picked up beaten down shares.

Parliament on Thursday passed tax reforms that should simplify the tax system, widen the tax base and increase government revenue, as agreed with the International Monetary Fund in exchange for a $1.5 billion, three-year loan. The Colombo stock index ended 0.22% higher at 6,375.86. The Bourse fell 0.2% during the week, its eight straight weekly fall. As of Friday’s close, it shed 4.4% since 27 July.

Shares of Ceylon Cold Stores Plc ended 1.6% higher, while Asiri Hospitals Plc closed up 6%, Browns Investments Plc closed 6.5% higher and Dialog Axiata Plc ended 0.9% firmer.

Foreign investors net bought Rs. 78.8 million ($516,044.53) worth of shares, extending the year-to-date net foreign inflow to Rs. 27.8 billion worth equities.

“We have seen active participation of foreign investors after the Inland Revenue Bill was passed,” said First Capital Holdings PLC Senior Research Analyst Atchuthan Srirangan.

“We are seeing buying interest in blue chips. We expect market to see more active participation from both local and foreigners next week onwards,” he added.

The bill, Sri Lanka’s major tax reform since independence from Britain in 1948, seeks to expand the tax net and stamp out evasion.

Turnover stood at Rs. 688.1 million, less than this year’s daily average of around Rs. 859.9 million.