November 6, 2015 / 12:21 PM / in 2 years

Sri Lanka shares gain; econ policy statement boosts sentiment

COLOMBO, Nov 6 (Reuters) - Sri Lankan stocks rose to their highest in more than a week on Friday as the prime minister’s medium-term economic policy statement, which focused on raising revenue through reforms and suspending retrospective taxes, helped boost sentiment.

The main stock index ended 0.6 percent higher at 7,059.48, its highest close since Oct. 29.

The day’s turnover stood at 1.75 billion rupees ($12.41 million), much higher than this year’s daily average of 1.1 billion rupees.

“Everybody reacted very positively to the prime minister’s statement. This gives an indication that the budget will be very favourable,” said Reshan Kurukulasuriya, chief operating officer of Richard Pieris Securities (Pvt) Ltd.

Prime Minister Wickremesinghe, outlining the country’s economic priorities ahead of the 2016 budget, said the government would minimise tax holidays and aim to garner more revenues from the rich through direct taxes.

The prime minister’s announcement that a proposal to impose a retrospective tax targeting corporates would be annulled helped boost investor confidence, analysts said.

In September, parliament approved finance bills to raise 80 billion rupees in revenues, including from a super gains tax to be paid by corporates that earned more than 2 billion rupees in the last financial year.

Analysts said the next trigger for the markets would be the budget, scheduled for Nov. 20.

Shares in conglomerate John Keells Holdings Plc gained 2.48 percent while Sri Lanka Telecom Plc rose 3.20 percent and Nestle Lanka Plc rose 2.44 percent.

Foreign investors, who have been net sellers of 3.71 billion rupees worth of equities so far this year, bought a net 16.5 million rupees worth shares on Friday. ($1 = 141.0000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

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