Sri Lankan shares inched up on Monday in dull trade as cautious investors selectively bought risk assets, while uncertainty over a capital gains tax, higher budget deficit and economic growth hurt market sentiment.
Markets will be closed on Tuesday and Friday this week for holidays.
Sri Lanka will raise its value-added tax and reintroduce capital gains tax to break out of a debt trap, ahead of talks on a $1.5-billion loan it is seeking from the International Monetary Fund.
Analysts said a lack of clarity on capital gains tax also weighed on sentiment as the market is still uncertain on the capital tax percentage.
Investors preferred fixed-interest-rate-bearing assets over shares due to a rise in yields on treasury bills, which are hovering at two-year highs, and on the central bank’s unexpected interest rate hike in mid February, dealers said.
Sri Lanka’s economy is expected to grow 5.3 percent in 2016, data from the state statistics office showed, but analysts say tight monetary and fiscal policies may curb its growth.
(Courtesy – Reuters)
-Agencies
