By Hiran H.Senewiratne
The higher 30 per cent Corporate Tax proposed by the International Monetary Fund, to be unveiled in the upcoming 2023 budget, is likely to threaten the resilience and robust performance of the crucial export sector, especially in the case of high potential ICT services, CSE analysts warned yesterday.
The overall manufacturing export sector is taxed at a supportive 14 per cent and the IT services export sector is exempted as a special policy to boost investments, jobs and foreign exchange earnings and for tapping high growth potential, given the competence in our talent and Sri Lanka’s geographic location.
Therefore, manufacturing sector counters in the CSE will likely be affected due to the proposed 30 per cent corporate tax hike in the upcoming budget, analysts said.
The CSE began on a negative note due to heavy selling pressure noted in blue chip counters, especially Expolanka Holdings, Lanka IOC, LOLC and many other counters yesterday, stock analysts added.
Amid those developments both indices moved downwards. The All- Share Price Index went down by 304.9 points and S and P SL20 declined by 132 points. Turnover stood at Rs 3 billion with one crossing. The crossing was reported in JKH, which crossed 3.5 million shares to the tune of Rs 709 million, its shares traded at Rs 129.50.
In the retail market, seven companies that mainly contributed to the turnover were; Expolanka Holdings Rs 536 million (3.6 million shares traded), Lanka IOC Rs 319 million (1.5 million shares traded), CIC (Non Voting) Rs 170.7 million (2.5 million shares traded), ACL Cables Rs 113 million (1.2 million shares traded), Browns Investments Rs 110 million (18 million shares traded), CIC Holdings Rs 98.7 million (1.1 million shares traded) and JKH Rs 46.9 million (364,000 shares traded). During the day 91.3 million share volumes changed hands in 30000 share transactions.
CSE’s primary and secondary market transactions recorded a net inflow of foreign investments amounting to US$ 97 million during the eight months ending August 2022.
Gross official reserves stood at U$ 1.7 billion at the end of August 2022. This included the swap facility from the People’s Bank of China, equivalent to around US $ 1.4 billion, which is subject to conditionalities on usability.
Total foreign assets, which consist of gross official reserves and foreign assets of the banking sector, amounted to US$ 5.7 billion at end August 2022.
The exchange rate continued to remain stable through August 2022, following the introduction of daily permissible bands in mid-May 2022. Accordingly, during the year up to October 6, 2022, the rupee recorded a depreciation of 44.8 per cent against the US dollar.
Yesterday, as usual the Central Bank- announced US$ buying rate was Rs 359.23 and selling rate Rs 369.96.
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