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Wednesday, June 02, 2010 - 4.05 GMT |
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Shares gain as Govt. slash taxes |
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Sri Lankan shares gained on Tuesday (1 June) as the government slashed several taxes on imports including 50 percent for motor vehicles.
The Colombo Stock Exchange's All-Share Price Index closed 21.64 points, or 0.51 percent, firmer at 4,258.80. It hit a record of 4,281.97 on May 21. The market is up 25.8 percent so far in 2010, making it Asia's best performer, reported Reuters.
Heavy retail buying has driven the bourse's price-to-earnings ratio to 21.03, bourse data showed, compared with about 11 a year ago, when Sri Lanka ended a 25-year war.
Sri Lanka yesterday slashed tax on imports and simplified its tax system to widen the country's tax structure and boost revenue, which may help cut its budget deficit.
'The tax cut boosted the market and we expect it to go further up,' quoting an analyst Reuters reported.
However, some analysts say the $42 billion economy's bourse is yet to go through a major technical correction this year and retail buyers, along with state investment funds, have been pushing up prices, the report added.
Foreign investors bought a net 196.2 million rupees' worth shares on Tuesday, data showed. They have sold a net 17.4 billion rupees ($154.6 million) worth of shares this year.
Shares in vehicle trader Diesel & Motor Engineering surged 23.6 percent to 550.75 rupees, while United Motors jumped 28.6 percent to 135.75 rupees.
The day's turnover was 1.2 billion rupees, twice of the 2009 daily average turnover of 593.6 million rupees, but less than this year's average of around 1.6 billion rupees.
The rupee closed flat at 113.80/113.85 a dollar, as an early rise was eroded after the government's tax reduction announcement as the market expected the rupee to fall with high demand for dollars, quoting currency dealers, Reuters further added.
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