Tuesday 25 February 2014

Sri Lanka stocks end down 0.8-pct, rupee weaker

Feb 25, 2014 (LBO) – Sri Lanka stocks closed 0.8 percent lower Tuesday falling 4.5 percent over nine days amid steady foreign selling, brokers said, while the rupee ended weaker against the US dollar.

The Colombo benchmark All Share Price Index closed 47.13 points lower at 5,835.92, down 0.80 percent. The S&P SL20 closed 27.94 points lower at 3,180.06, down 0.87 percent.

Turnover was 426.93 million rupees, down from 499.40 million rupees a day earlier, with stocks of 118 firms closing in the red against 52 gainers.

Foreign Selling

Foreigners bought 59.68 million rupees worth shares while selling 176.30 million rupees of shares.

Index heavy JKH topped the turnover list with 60.04 million rupees falling 2.70 rupees to close at 206.30 rupees, contributing most to the index drop.

Brokers said foreign selling was seen Tuesday in John Keells Holdings, Commercial Bank and DFCC Bank.

John Keells Holdings has seen heavy foreign selling in recent days with at least one top shareholder on the lookout to sell more shares, brokers said.


There have also been selling by several foreign funds including long term players, in stocks such as Dialog, Lanka Lubricants and Aitken Spence in recent days, helping trigger a sell-off in the broader market.

It is not clear whether foreign sales are to meet redemptions of individual emerging market funds, or due to country specific concerns.

At least one fund has been seen systematically closing its positions, brokers said.

But some foreign investors have been buying stocks totaling 1.6 billion rupees since February 2012, stock exchange data show.

Sri Lanka's economy is recovering from a balance of payments crisis and profits of companies and banks are starting to stabilize with interest rates also falling.

But concerns are rising over deteriorating rule of law, citizen's freedoms and property rights.

The UN is expected to move a resolution calling on Sri Lanka to improve human rights and probe alleged war crimes in March.

Ceylon Tobacco Company closed 28.90 rupees lower at 1,090.70 rupees. JKH’s W0022 warrants closed 80 cents lower at 57.20 rupees and its W0023 warrants closed 10 cents lower at 61.00 rupees.

NDB ended 7.60 rupees lower at 176.00 rupees and Commercial Leasing and Finance closed flat at 3.90 rupees. Distilleries closed flat at 207.00 rupees.

Carson Cumberbatch ended 2.20 rupees higher at 352.30 rupees and Lanka IOC closed 80 cents higher at 37.90 rupees. Bukit Darah ended 6.00 rupees lower at 554.00 rupees and Nestle Lanka ended 10.00 rupees lower at 1,990.00 rupees.

Forex Markets

In forex markets the rupee closed 131.02/10 to the US dollar crossing the 131 mark in the spot market.

Foreign equity sales are also impacting the forex market on some days, dealers said. Funds have also been able to exit equity markets partly due to liquidity provided by state managed funds, brokers say.

But uncertainty over the currency has been a regular occurrence since the 'flexible' exchange rate the new 'flexible' exchange rate policy coupled with heavy purchases of official inflows that has been practiced since the latest balance of payments crisis.

Dealers have come under heavy moral suasion from authorities repeatedly, with market unfortunate participants going through various dramas including selling in the spot next market.

Sri Lanka's central bank buys dollar inflows without allowing inflows to the state to appreciate the rupee and the resulting rupee liquidity later tends to generate imports.

Recently proceeds of a billion US dollar bond boosted liquidity in money markets, which have been mopped up overnight or through term auctions.

But lack of similar enthusiasm is selling dollars at the price at which they were bought, when the rupees are spent on imports and hits the forex markets, pressure the rupee and undermine confidence generating unnecessary uncertainty analysts have said.

Authorities have been selling dollars to smaller banks, Tuesday dealers said, while exporters held back due to weak sentiment.

Selling dollars amid excess liquidity mops up rupees, tightening the monetary system (unsterilized forex sales) and does not undermine a loose peg to the dollar, unlike dollar sales followed by subsequent liquidity injections (sterilized sales).

Update II

Sri Lankan stocks fall to near 10-wk low; outflow continues

Feb 25 (Reuters) - Sri Lankan shares fell for a ninth straight session on Tuesday to hit a near 10-week low as investors sold large caps amid continued foreign selling in risky assets.

The main stock index fell 0.80 percent, or 47.13 points, to 5,835.92, its lowest close since Dec. 18.

The index has dropped nearly 7 percent in the last 15 sessions. The index has dipped into overbought territory since Friday, Thomson Reuters data showed.

Foreign investors sold a net 116.6 million rupees ($889,700) worth of shares on Tuesday, extending outflows to 5.41 billion rupees in the past 13 sessions as some offshore funds exited the market.

The bourse has seen a net 4.02 billion rupees of foreign outflows so far in 2014, after enjoying net inflows of 22.88 billion rupees last year.

Analysts said investors were concerned over possible further outflows, though local investors are still optimistic about risky assets due to falling interest rates.

Shares of market heavyweight Ceylon Tobacco Co Plc fell 2.58 percent to 1,090.70 rupees, while top conglomerate John Keells Holdings fell 1.29 percent to 206.30 rupees.

The day's turnover was 426.93 million rupees, well below this year's daily average of about 1.11 billion rupees. ($1 = 131.0500 Sri Lanka rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)

Sri Lanka Treasuries edge lower, rupee weaker

Feb 25, 2014 (LBO) - Sri Lanka's Treasures yields edged marginally down at Tuesday's auction with the 3-month yield down 03 basis points to 6.72 percent, data from the state debt office showed.

The 6-month yield fell 01 basis point to 6.89 percent and the 12-month yield fell 01 basis point to 7.07 percent.

The debt office said one billion rupees in three month bills, 8.7 billion rupees in 6-month bills and 12.9 billion rupees in 12-month bills totally 22.6 billion rupees were sold.

In forex markets the rupee weakened below 131.00 to the US dollar in the spot market and was quoted around 131.05/10 in afternoon trade.

There is excess liquidity in money markets, requiring the rupee to be defended with unsterilized dollar sales which will mop up liquidity and not cause any additional pressure.

There had also been some selling in the stock market by foreign investors adding to any pressure coming from excess rupee liquidity, coupled with some exporter conversion delays, dealers said.


Sri Lanka's Commercial Bank net up 25-pct in Dec

Feb 25, 2014 (LBO) - Profits at Sri Lanka's Commercial Bank of Ceylon rose 25 percent to 3.3 billion rupees in the December 2013 quarter from a year earlier, despite a steep loan loss provisioning, interim accounts showed.

The group reported earnings of 3.92 rupees per share. For the 12-months to December the group reported earnings of 12.43 rupees on total profits of 10.5 billion rupees, which were up 4.8 percent. The stock closed flat at 114.50 rupees Tuesday.

In the December quarter interest income rose 11.3 percent to 16.0 billion rupees, interest expense rose at a slower 8.6 percent to 9.3 billion rupees from a year earlier, and net interest income rose at a faster 15.6 percent to 6.68 billion rupees

The bank said there was a trading loss of 863 million rupees but gains on financial instruments were up to 1.3 billion rupees from only 16.4 billion rupees. There were forex costs on swaps.

The bank made a 1.7 billion rupee provision for specific loan losses but a general provision of 260 million rupees was reversed.

Sri Lanka is recovering from a balance of payments crisis that is that is typical for countries with so-called soft-pegged exchange rates.

Loans given during the credit bubble also goes bad during an economic slowdown that follows a balance of payments crisis.

When the balance of payments crisis develops credit bubbles high and during the crisis, the Central Bank usually buys Treasury bills held by banks printing billions rupees in domestic currency, pushing up import demand. Loan-to-deposit ratios in banks deteriorate.

The process reverses as the Central Bank sells down its Treasuries stock and withdraws liquidity, slowing bank credit and building up foreign reserves and trimming the trade deficit. Loan-to-deposit ratios of banks improve.

The Commercial Bank said it loans rose 12 percent to 418 billion rupees in the year to December, and deposits rose 15.5 percent to 451 billion rupees. Investments held to maturity rose 113 percent to 123 billion rupees.

With investment is Treasuries going up, capital adequacy can also improve in banks.

Gross assets rose 18.5 percent to 607 billion rupees during the year. Net assets rose 16 percent to 61.4 billion rupees.

SLT profits up 38% to Rs 5.3B


Ceylon FT: Sri Lanka Telecom PLC (SLT) reported a net profit of Rs 5.33 billion for the year ended 31 December 2013, up 38% from a year ago, financial results filed with the stock exchange showed.

Revenue grew 6% to Rs 60.14 billion and operating costs amounted to Rs 41.2 billion, up 6% from a year ago.


The group reported a foreign exchange loss of Rs 441 million, down from a Rs 1.21 billion loss a year ago.

Revenue from fixed telephony operations increased to Rs 36.7 billion, up from Rs 34.7 billion a year ago with profits increasing to Rs 5 billion, up from Rs 4.6 billion.

Mobile operations generated revenue amounting to Rs 27.5 billion, up from Rs 24.9 billion a year ago, with profits surging to Rs 3 billion, up from Rs 1.7 billion a year ago.

In ‘other segments’ operations, revenue fell to Rs 1.8 billion, down from 2.04 billion a year ago, reporting a Rs 170 million loss, up from Rs 1 million a year ago.
www.ceylontoday.lk

Dhammika’s biz empire opts for China’s Kingsoft over Microsoft!

After successful trials 2,000 PCs at Sampath Bank running on Chinese software; 800 PCs at LB Finance; diversified conglomerate Hayleys is next

If one thought Sri Lanka’s seeming takeover by China is confined to mega infrastructure projects, then there is a fresh business twist with Dhammika Perera’s business empire begining to embrace office software from the land of the dragons over Microsoft.


Following a thorough pre-trial study and analysis as well as successful trial, several of businesses in which Dhammika has considerable stakes have begun to roll out Kingsoft. For example, 2,000 PCs at Sampath Bank are now running on the Chinese software in addition to a further 800 PCs at LB Finance. Diversified conglomerate Hayleys is the next entity which will be rolling out Kingsoft. Dhammika’s business empire includes Royal Ceramic, Vallibel, Delmege Group, Amaya Resorts as well as Pan Asia Bank among others.



Considerable cost saving as well as greater scalability and user friendliness are among primary reasons why the Dhammika’s businesses have embraced Kingsoft.

Kingsoft Office is an office suite for Microsoft Windows, Linux, iOS and Android OS.

Hong Kong-listed Chinese software developer Kingsoft offers four office suites: Kingsoft Office Professional, Kingsoft Office Standard, Kingsoft Office Free and Kingsoft Office Student and Home. The company claims Kingsoft Office Professional 2013 offers features not available in Microsoft Office 2013, and is highly compatible with Microsoft Office file formats.

Kingsoft Office is one of the earliest companies to engage in the research and development of word processors and other office applications, and was the market leader in the late 1980′s and early 1990′s. Today Kingsoft Office is viewed as an inexpensive alternative to Microsoft Office. And it has made relationship with Dell and collaborations with Intel and IBM, and will continue to do so in the future, in order to consistently provide innovative, high quality products and services.

Established in 1989, Kingsoft Office has devoted over two decades to the development of user-friendly office software. It has maintained a similar user interface to Microsoft Office meaning that new users require no retraining, and there is a high degree of compatibility between the two products. It focuses on office software containing the three essential office applications: Kingsoft Writer, Kingsoft Presentation and Kingsoft Spreadsheets. It is also engaged in internet security and entertainment.

Kingsoft Office says it is committed to offering best quality and user-friendly office software to further expand to international markets and become a first class office software developer.

This week Kingsoft joined others including Tencent to build defences against potential internet attacks on Chinese users after support for Windows XP is discontinued on April 8.

Xinhua reported that the companies will start the protection before the shutdown and the “hedge” will continue during a transition period that may last for two to three years or even longer.

“The upcoming shutdown will seriously affect Chinese users,” said Tencent, adding that more than one quarter of China’s computers are running the operating system.
Microsoft announced earlier that it will stop providing technical assistance for Windows XP after 8 April, and computers will still work but they might become more vulnerable to security risks and viruses. 

www.ft.lk

National Equity Fund the best performing unit trust in 2013

The flagship National Equity Fund (NEF), managed by National Asset Management Limited (NAMAL) led the unit trust industry again with outstanding performance in 2013.

The NEF return of 17.1% in 2013 was the best of the 46 unit trusts in the industry according 
to data compiled by the Unit Trust Association of Sri Lanka.


NEF outperformed the CSE All Share Price Index (ASPI) by 12.30%in 2013 and has delivered an annualised return of 15.1% since inception in 1992.

Avancka Herat, Executive Director and Chief Investment Officer of NAMAL, stated the NEF was able to outperform both the aggregate market and competitor funds through superior selection of equities and timely reallocation of assets.
He stated that the introduction of the NAMAL Retirement Savings Plan linked to the NEF enables investors to benefit from these high returns, by investing regularly through a monthly investment plan (MIP). The Fund’s key equity holdings include Asiri Hospital Holdings, Dialog Axiata PLC, Central Finance, Ceylon Hospitals and Lanka IOC.
NAMAL is Sri Lanka’s first unit trust management company, having commenced operations in 1991 and was awarded the Best Investment Management Company in Sri Lanka in Investment Management Awards 2013 by World Finance.
www.ft.lk

Eden draws Rs. 363 m from LOLC

Eden Hotel Lanka (EDEN) in a filing to the CSE said yesterday that it has borrowed Rs. 363 million from its ultimate parent Lanka Orix Leasing Company Plc (LOLC).

It said that when carrying out refurbishments to the hotel in 2013, the company from time to time sought financial assistance from LOLC, resulting in a total borrowings of Rs.363mn by end September 2013.
EDEN further stated that given the incremental nature of the borrowings, the company had inadvertently overlooked the fact that the total had reached a level which required disclosure, which it made yesterday.
www.ft.lk