Sri lanka News – Sri Lanka stocks fell 0.59 percent Friday, as higher taxes and concerns over future profits began to affect sentiment, brokers said.
The market saw a turnover of 1.3 billion rupees, lower than this year’s average turnover of 3.2 billion rupees.
The main All Share Price Index (ASPI) slipped 0.59 percent or 51.86 points to close at 8,685.52.
The more liquid index S&P SL20 closed 0.30 percent or 7.72 points lower at 2,605.34.
The index has lost 12.5 percent so far this nonth and 28.9 percent year-to-date after being one of the world’s best stock markets with an 80 percent return last year when large volumes of money were printed.
“After the new taxes were announced sentiments are a bit poor,” a market analyst said. “It seems like the market is looking for some direction to run.”
Many Sri Lankan firms showed good results in the June quarter helped by lower cost inventory and ability to increase prices as inflation soared.
Since then utility prices are up and workers are starting to get restive demanding higher wages, while concerns are emerging about buying power. Economies (and firms) generally begin to feel the negative effects of money printing when inflation ceases to accelerate.
There are however concerns over fourth quarter earnings.
Following the tax hike proposals, stockbrokers said that the market has become bearish as investors moved to a wait-and-see approach as they expect the move to hit the fourth quarter earnings.
“Overall market expectation is a bearish at the moment,” a broker said. “Until interest rates start coming down a bit aggressively we may see that. B
Shares have been on a falling trend following the proposed tax hikes that were gazetted last week with companies expecting their profits to decline as the increased taxes are likely to reduce the disposable income of the general public, dealers said.
The appropriation bill for the 2023 budget which is expected to be a blueprint of the country’s reform package was tabled in the parliament on October 18. Investors are now waiting for the detail budget policies for 2023 which will be presented next month.
Ceylon Tobacco Company, dragging the index down, closed 6.3 percent lower at 651 rupees a share.
Lanka IOC fell 4.4 percent to 191.8 rupees a share while Melstacorp closed 2.8 percent weaker at 45.3 rupees a share. (Colombo/Oct21/2022)
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