June 9, 2016 / 11:42 AM / 2 years ago

Sri Lankan shares close steady; turnover falls to over 2-1/2 mth low

COLOMBO, June 9 (Reuters) - Sri Lankan shares closed steady on Thursday as positive sentiment after an IMF loan approval offset concerns over rising interest rates and foreign fund outflows.

Turnover was 326.9 million rupees ($2.25 million), the lowest since March 19, and less than half of this year’s daily average of around 778 million rupees.

The benchmark Colombo stock index ended 0.03 percent higher at 6,528.03.

“There were some concerns over the prime minister’s comment on the capital gain tax,” a stockbroker said asking not to be named.

Prime Minister Ranil Wickremesinghe told the parliament that the government would take measures to abolish the Exchange Control Act and introduce the capital gain tax soon, without giving any time frame.

Treasury bill yields have risen between 16 and 36 basis points to near three-year highs in the last three weekly auctions through Wednesday despite the central bank leaving key policy rates steady for a third straight month on May 20.

The International Monetary Fund’s (IMF) executive board approved a three-year $1.5 billion loan to support Sri Lanka’s economic reform agenda, the global lender said on Saturday.

Investors are, however, concerned about foreign outflows, with overseas investors offloading a net 37.9 million rupees worth of shares on Thursday, extending the year-to-date net foreign outflow to 5.7 billion rupees.

Stockbrokers said a rise in interest rates could be detrimental to risky assets if they jumped beyond 12 percent. The average prime lending rate (AWPR) edged up 8 basis points to 10.23 percent in the week ended June 3.

Lion Brewery (Ceylon) Plc rose 3.87 percent, while conglomerate John Keells Holdings Plc gained 0.96 percent. ($1 = 145.5000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

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