The Colombo stock market saw Rs. 28 billion in value wiped off as investors lost confidence with the announcement of Cabinet giving approval to the contentious capital gains tax.
Market capitalisation which was Rs. 2.77 trillion on Wednesday dipped to Rs. 2.74 trillion yesterday with the benchmark All Share Index down 1% or 65 points to close at a seven week low.
Most analysts linked yesterday’s dip to fears over return of capital gains tax. On Wednesday the Government announced plans to introduce capital gains tax though the rate or date of implementation is unknown.
Reuters also said investor sentiment also took a hit on continued foreign fund outflows and rising interest rates.
“Market is falling on low volumes with the high interest rates and the news of reintroduction of the capital gains tax,” Dimantha Mathew, head of research at First Capital Equities was quoted as saying by Reuters.
Shares in conglomerate John Keells Holdings Plc and the biggest listed lender Commercial Bank of Ceylon Plc lost 2% and Carson Cumberbatch Plc dropped 5.44%.
Stock market turnover stood at Rs. 325.6 million, well below this year’s daily average of around Rs. 764.8 million.
Overseas funds offloaded a net Rs. 5.84 million worth of equities on Thursday, extending the year to date net foreign outflow to Rs. 5.59 billion worth shares.
Treasury bill yields rose between 1 and 4 basis points at a weekly auction on Wednesday. They have risen between 6 and 40 basis points since the central bank left key policy rates steady for on 20 May.
The average prime lending rate edged up 24 basis points to 10.47% in the week ended 10 June. Stockbrokers have said rising interest rates could be detrimental to risk assets if they jump beyond 12%.
www.ft.lk
Market capitalisation which was Rs. 2.77 trillion on Wednesday dipped to Rs. 2.74 trillion yesterday with the benchmark All Share Index down 1% or 65 points to close at a seven week low.
Most analysts linked yesterday’s dip to fears over return of capital gains tax. On Wednesday the Government announced plans to introduce capital gains tax though the rate or date of implementation is unknown.
Reuters also said investor sentiment also took a hit on continued foreign fund outflows and rising interest rates.
“Market is falling on low volumes with the high interest rates and the news of reintroduction of the capital gains tax,” Dimantha Mathew, head of research at First Capital Equities was quoted as saying by Reuters.
Shares in conglomerate John Keells Holdings Plc and the biggest listed lender Commercial Bank of Ceylon Plc lost 2% and Carson Cumberbatch Plc dropped 5.44%.
Stock market turnover stood at Rs. 325.6 million, well below this year’s daily average of around Rs. 764.8 million.
Overseas funds offloaded a net Rs. 5.84 million worth of equities on Thursday, extending the year to date net foreign outflow to Rs. 5.59 billion worth shares.
Treasury bill yields rose between 1 and 4 basis points at a weekly auction on Wednesday. They have risen between 6 and 40 basis points since the central bank left key policy rates steady for on 20 May.
The average prime lending rate edged up 24 basis points to 10.47% in the week ended 10 June. Stockbrokers have said rising interest rates could be detrimental to risk assets if they jump beyond 12%.
www.ft.lk
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