Share market slumps in the wake of VAT hike news

By Hiran H.Senewiratne

CSE trading was dampened yesterday by reports that the Value Added Tax would be increased to 18 percent from 15 percent. “Investors want to wait and see what the outcome is, an analyst said.

In the wake of such negative news, the stock market slumped as investor interest faltered, market analysts said.

Consequently, both indices moved downwards. The All- Share Price Index went down by 14.68 points and S and P SL20 declined by 16.6 points. Turnover stood at Rs 739 million without any crossings.

In the retail market top seven companies that mainly contributed to the turnover were; JKH Rs 159 million (827,000 shares traded), Dialog Axiata Rs 100 million (10.6 million shares traded), Grain Elevators Rs 54.6 million (330,000 shares traded), Aitken Spence Rs 43.3 million (333,000 shares traded), Sri Lanka Milk Food Rs 39.4 million (237,000 shares traded), Lanka IOC Rs 21.1 million (195,000 shares traded) and First Capital Holdings Rs 20.2 million (658,000 shares traded). During the day 30.4 million share volumes changed hands in 11000 transactions.

It is said high net worth and institutional investor participation was noted in JKH. Mixed interest was observed in Lanka IOC, Expolanka Holdings and Ceylon Grain Elevators, while retail interest was noted in SMB Leasing voting and non-voting, Browns Investments and Laxapana Batteries.

The Capital Goods sector was the top contributor to market turnover (due to John Keells Holdings and Laxapana Batteries), while the sector index lost 0.29%. The share price of John Keells Holdings closed flat at Rs 192.50. The share price of Laxapana Batteries appreciated by Rs. 1.10 to reach Rs. 14.90.

The Food, Beverage & Tobacco sector was the second highest contributor to the market turnover (due to Ceylon Grain Elevators), while the sector index increased by 0.75 percent. The share price of Ceylon Grain Elevators recorded a gain of Rs. 7.75 to reach Rs. 164.25.

Lanka IOC and Expolanka Holdings were also included among the top turnover contributors. The share price of Lanka IOC increased by Rs. 6.50 to hit Rs. 110. The share price of Expolanka Holdings moved up by 75 cents to reach Rs. 129.

Yesterday, the rupee opened at Rs 327.50/75 to the US dollar, from 327.40/70 on the previous day, dealers said.

Bond yields were up. A bond maturing on 01.06.2026 was quoted at 14.95/15.00 percent from 14.95/15.05 percent. A bond maturing on 01.07.2028 was quoted at 14.90/95 percent from 14.80/15.00 percent.

At yesterday’s bond auction, Sri Lanka’s debt office rejected all bids for the sale of Rs 45 billion in bonds. The debt office offered Rs 22.5 billion of 2028 and Rs 22.5 billion of 2031 bonds. All bids were rejected. Sentiment was slightly negative, market participants said.