Sri Lankan shares on Tuesday hit a two-week closing low in thin trade as investor sentiment was dented by last week's budget proposals that were announced to revise corporate and withholding taxes and boost revenue. The government aims to boost its 2017 tax revenue by 27 percent to 1.82 trillion rupees ($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.
The benchmark index of the Colombo Stock Exchange ended down 0.15 percent at 6,406.16, hitting its lowest close since November 1. Foreign investors were net sellers for the first time in nine sessions; they sold a net 125.4 million rupees worth of shares on Tuesday. They have net sold 1.01 billion rupees worth of shares so far this year.
"Things are very slow as investors are awaiting direction and more clarity on the taxes imposed by the budget," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd. "Increases in various taxes, including the withholding tax and corporate tax, have impacted the capital markets." Analysts said the increase in various taxes and fees will reduce the disposable income of the people and challenge the consumption-led growth Turnover was 470.3 million rupees, less than this year's daily average of 707.3 million rupees. Shares of conglomerate John Keels Holdings Plc fell 1.34 percent while Dialog Axiata Plc dropped 1.79 percent.