No cheer from market for 2017 Budget

Reuters: Shares closed slightly weaker on Friday while volume slumped to a 32-month low after Budget proposals on Thursday to revise corporate and withholding taxes to boost revenue.

The Government aims to boost its 2017 tax revenue by 27% to Rs. 1.82 trillion ($12.36 billion) year on year, to meet a commitment given to the International Monetary Fund in return for a $1.5 billion loan in May. “There is nothing much to see in the Budget. It has failed to give the expected boost to the market,” said Danushka Samarasinghe, Research Head at Softlogic Stockbrokers.

“Increases in various taxes, including corporate tax, will now add to the continuing negative momentum and also increases in various fees and taxes will reduce disposable income of the people.

This will challenge the consumption-led growth.”

Turnover was Rs. 112.4 million, the lowest since 17 March 2014, and well below this year’s daily average of Rs. 711.3 million.

The benchmark index of the Colombo Stock Exchange ended 0.08%, or 5.19 points, weaker at 6,415.59. It fell 0.4% for the week.

Foreign investors bought stocks for an eighth straight session, picking up a net Rs. 1.6 million. They have net sold Rs. 882.95 million worth of shares so far this year.

Shares of Hemas Holdings Plc fell 4.66% while Nestle Lanka Plc declined 1.61% and Dialog Axiata Plc dropped 0.88%.