Speculation on impending tax hikes brings down bourse

By Hiran H.Senewiratne

CSE stocks slipped in mid-day trade yesterday, pushed down by retail and banking shares. During the day selling pressure was noted due to the forthcoming budget to be presented to parliament on August 30 by the Finance Minister/ President Ranil Wickremesinghe, which hinted at probable government revenue increases through taxes, stock market analysts said.

“We are seeing profit- taking in index heavy shares that gained in the previous sessions and are seeing a lot of selling in the banking shares because the investors are speculating on a domestic debt recovery to take place. Further, tax increase would likely affect many sectors in the stock market, analysts told The Island Financial Review.

Both the Central Bank Governor Nandalal Weerasinghe and the co-Cabinet spokesperson said that a local debt restructuring will not take place as it will collapse the already illiquid banking system.

Amid those profit- takings, speculation on the interim budget tax increases has created some negative investor sentiment. Therefore, both indices moved downwards. The main All -Share Price Index declined 60.29 points (0.66 per cent) to end at 9011.24 and S and P SL20 declined by 45.28 points (1.51 per cent) to end the day at 2944.50.

Turnover stood at Rs 2.55 billion with three crossings. Those crossings were reported in JKH, which crossed 1.2 million shares to the tune of Rs 159 million, its shares traded at Rs 123.50, Kahawatte Plantations one million shares crossed to the tune of Rs 36.5 million, its shares traded at Rs 36.50 and Horana Plantations 500,000 shares crossed to the tune of Rs 30.5 million; its shares fetched Rs 61.

In the retail market top seven companies that mainly contributed to the turnover were, Lanka IOC Rs 430 million (2.4 million shares traded), Expolanka Holdings Rs 277 million (1.2 million shares traded), Kotagala Plantations Rs 187 million (20.1 million shares traded), Kahawatte Plantations Rs 100.3 million (2.6 million shares traded), Horana Plantations Rs 79 million (1.4 million shares traded), Browns Investments Rs 70.7 million (8.9 million shares traded) and Asiya Siyaka Commodities Rs 67.6 million (16.8 million shares traded). During the day 115 million share volumes changed hands in 31000 share transactions.

Yesterday, the Central Bank’s dollar selling rate was Rs 368.71 and the selling rate Rs 357.40.