Reuters: Sri Lankan shares closed lower for the first time in four sessions on Monday amid a steep rise in foreign outflow as worries over macroeconomic stability dented investor sentiment, stockbrokers said.
Foreign investors sold a net 406.6 million rupees ($2.80 million) worth of shares, the highest since March 17 and extending net foreign outflows for the year to 2.63 billion rupees.
The benchmark share index ended 0.06 percent lower, or down 3.86 points, at 6,079.15. The index had gained 0.85 percent in the past three trading days.
Turnover was at 643.2 million rupees on some block deals, but still shy of this year's daily average of 791.9 million rupees.
"There is a lot of uncertain area, especially in the macroeconomic side. Investors are concerned over a rating downgrade and the still uncleared capital gain tax," a stockbroker said, asking not to be named.
"The currency has been falling sharply in the last few weeks and the macroeconomic side is pretty pathetic at the moment."
Sri Lanka on Friday postponed a plan to reintroduce capital gains tax by six months after the move threatened to dent foreign investor sentiment.
Stockbrokers said the concern is now more on how the government is going to impose the tax, rather than the tax itself.
Higher market interest rates and higher borrowing by the island nation facing a balance-of-payments crisis have also weighed on investor appetite for risky assets, dealers said.
The average weighted prime lending rate has risen 84 basis points to 9.19 percent since Feb. 19, when interest rates were increased by 50 basis points, central bank data showed.
A downgrade of Sri Lanka's credit rating by Fitch and an outlook change by Standard & Poor's in March have intensified scrutiny of the country's finances. Sri Lanka borrowed over 25 percent more last year than in 2014, the finance minister said last month.
Shares in Carson Cumberbatch CARS.CM. fell 5.3 percent, while conglomerate John Keells Holdings Plc edged down 0.74 percent.
Foreign investors sold a net 406.6 million rupees ($2.80 million) worth of shares, the highest since March 17 and extending net foreign outflows for the year to 2.63 billion rupees.
The benchmark share index ended 0.06 percent lower, or down 3.86 points, at 6,079.15. The index had gained 0.85 percent in the past three trading days.
Turnover was at 643.2 million rupees on some block deals, but still shy of this year's daily average of 791.9 million rupees.
"There is a lot of uncertain area, especially in the macroeconomic side. Investors are concerned over a rating downgrade and the still uncleared capital gain tax," a stockbroker said, asking not to be named.
"The currency has been falling sharply in the last few weeks and the macroeconomic side is pretty pathetic at the moment."
Sri Lanka on Friday postponed a plan to reintroduce capital gains tax by six months after the move threatened to dent foreign investor sentiment.
Stockbrokers said the concern is now more on how the government is going to impose the tax, rather than the tax itself.
Higher market interest rates and higher borrowing by the island nation facing a balance-of-payments crisis have also weighed on investor appetite for risky assets, dealers said.
The average weighted prime lending rate has risen 84 basis points to 9.19 percent since Feb. 19, when interest rates were increased by 50 basis points, central bank data showed.
A downgrade of Sri Lanka's credit rating by Fitch and an outlook change by Standard & Poor's in March have intensified scrutiny of the country's finances. Sri Lanka borrowed over 25 percent more last year than in 2014, the finance minister said last month.
Shares in Carson Cumberbatch CARS.CM. fell 5.3 percent, while conglomerate John Keells Holdings Plc edged down 0.74 percent.
($1 = 145.0000 Sri Lankan rupees)
(Reporting by Shihar Aneez; Editing by Savio D'Souza)
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