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Apr 02, 2012 (LBO) - Sri Lanka's motor distributor stocks fell in the first hour of trading following a steep hike in tax on vehicles over the weekend though trading volumes were low, brokers said.
United Motors Limited, which has the agency for Japan's Mitsubishi, opened at 108.00 rupees and fell 5.80 to 102.20 rupees, slipping 5.4 percent.
Diesel and Motor Engineering Limited fell 42.20 rupees to 940.00 slipping 4.3 percent.
Colonial motors fell 29.80 cents to 290 rupees on 783 shares traded, falling 9.3 percent.
"To some extent the market had already anticipated and increase in taxes, which is why motor companies have been underperforming the market," Channa Amaratunga, an independent analyst said.
"Together with higher interest rates and a weaker currency, a decline in profitability of motor companies was expected.
"But the extent of the excise duties did take people by surprise."
There was no trading in Sathosa Motors, which has the agency for Isuzu. Commercial vehicles were largely untouched by the taxes, except three wheelers which are used as taxis.
Sri Lanka triggered a balance of payments crisis in mid 2011 by not raising interest rates and engaging in sterilized foreign currency sales despite repeated warnings from independent analysts, economists and the International Monetary Fund to take corrective measures.
The government in particular borrowed heavily from the banking system to manipulate energy prices and keep loss-making state enterprises afloat.
Though corrective steps have been taken in the form of higher energy prices, an increase in interest rates and a reduction in sterilized currency sales by the Central Bank the finance ministry hiked taxes on motor car imports.
Some of the steepest increases have fallen on motor cycles, at time when lady drivers were just starting to use scooters like in many East Asian nations.
http://lbo.lk/fullstory.php?nid=1015280986
United Motors Limited, which has the agency for Japan's Mitsubishi, opened at 108.00 rupees and fell 5.80 to 102.20 rupees, slipping 5.4 percent.
Diesel and Motor Engineering Limited fell 42.20 rupees to 940.00 slipping 4.3 percent.
Colonial motors fell 29.80 cents to 290 rupees on 783 shares traded, falling 9.3 percent.
"To some extent the market had already anticipated and increase in taxes, which is why motor companies have been underperforming the market," Channa Amaratunga, an independent analyst said.
"Together with higher interest rates and a weaker currency, a decline in profitability of motor companies was expected.
"But the extent of the excise duties did take people by surprise."
There was no trading in Sathosa Motors, which has the agency for Isuzu. Commercial vehicles were largely untouched by the taxes, except three wheelers which are used as taxis.
Sri Lanka triggered a balance of payments crisis in mid 2011 by not raising interest rates and engaging in sterilized foreign currency sales despite repeated warnings from independent analysts, economists and the International Monetary Fund to take corrective measures.
The government in particular borrowed heavily from the banking system to manipulate energy prices and keep loss-making state enterprises afloat.
Though corrective steps have been taken in the form of higher energy prices, an increase in interest rates and a reduction in sterilized currency sales by the Central Bank the finance ministry hiked taxes on motor car imports.
Some of the steepest increases have fallen on motor cycles, at time when lady drivers were just starting to use scooters like in many East Asian nations.
http://lbo.lk/fullstory.php?nid=1015280986
