Sri Lanka’s stock index hits fresh peak helped by illiquid shares

ECONOMYNEXT – Sri Lanka’s benchmark stock index crossed 11,000 points on Tuesday (16) to touch a new all-time high for a second straight day mainly helped by illiquid shares but liquid blue chips marginally gained on budget policy woes, brokers said.

The Colombo benchmark All Share Price Index (ASPI) closed 2.38 percent or 255.51 points higher at 11,008.33, its fresh all-time closing high.

The S&P SL20 index of more liquid stocks, however, gained marginally, moving 0.24 percent or 8.47 points to close at 3,606.85.

“Many illiquid shares boosted the market with large gains and if this trend continues, we might see a steep fall in the near future,” a broker said.

The day’s turnover was 10 billion rupees, above this year’s average daily turnover of over 4 billion rupees.

On Friday, the Finance Minister proposed a 25 percent retrospective tax surcharge on firms that earned over 2 billion rupees in 2020/21 and 3 percent increase on VAT for banks, insurance, and financing firms.

The Finance minister said 62 individuals and companies under this category are expecting to generate 100 billion rupees through this tax.

A value added tax (VAT) was increased to 18 percent from the current 15 percent on banks and financial service providers under supply of financial services by specified institutions with effect from Jan.1, 2022, targeting 14 billion rupees from the proposal.

Although the market saw a plunge in the morning hours on Monday where investors sold fundamentally weak shares, it recovered immediately.

Brokers had expected a recovery after some time as it was the same in 2015 when the last government came up with a similar retrospective tax.

Foreign investors, however, sold a net of 111 million rupees worth of shares, extending the net foreign inflow to 46.2 billion rupees so far this year.

The gain was led by Commercial Leasing and Finance, LOLC Finance and Expolanka Holdings.

Commercial Leasing and Finance gained 14.40 percent to close at 82.60 rupees a share while LOLC Finance gained 23.18 percent to close at 37.20 rupees a share.

Expolanka Holdings gained 6.04 percent to close at 215.00 rupees.

The bourse saw 75 stocks gaining against 129 falling on Tuesday (Colombo/Nov 16/2021)

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