Thursday 17 July 2014

Sri Lanka stocks slip from over 33-month high; telecommunications, banks lead

(Reuters) - Sri Lankan stocks fell on Thursday from over 33-month highs hit in the previous session, ending a three-session winning streak as investors booked profits in an overbought market.

The island nation's share index had risen 5.71 percent up this month through Wednesday as the yields in risk free treasury bills and the central bank's key monetary policy rates have fallen to multi-year lows while continued foreign buying also boosted sentiment.

The main stock index fell 0.31 percent, or 20.69 points, to 6,721.87, edging down from its highest close since Oct. 3, 2011 hit on Wednesday.

Yields in treasury bills fell further at the Wednesday's weekly auction.

"Bit of profit-taking brought the market down. But it will continue to go up with the positive sentiment," said a stockbroker asking not to be named.

The central bank on Monday kept policy rates steady at multi-year lows for a sixth straight month, as expected, despite private sector credit growth slowing to a 4-1/2-year low.

The index is in the overbought region since July 3 as it has gained 5.38 percent so far this month and 13.68 so far this year, Thomson Reuters data showed.

Turnover was 926 million rupees ($7.11 million), slightly below this year's daily average of about 1.09 billion rupees.

Foreign investors were net buyers of 163.6 million rupees worth of shares on Thursday, extending net foreign inflows in stocks to 9.95 billion rupees so far this year.

Thursday's losses were led by Sri Lanka Telecom Plc , which lost 2.14 percent to 55 rupees.

Shares in biggest listed lender Commercial Bank of Ceylon fell 0.42 percent to 141.50 rupees, while Bukit Darah Plc declined 1.43 percent to 690 rupees.

Shares in market heavyweight John Keells Holdings, which accounted 30 percent of the days turnover, rose 0.04 percent to close at 245 rupees.

Lower interest rates have prompted local investors to buy shares and shift their savings from unattractive fixed assets, analysts said, as yields on treasury bills edged down further at a weekly auction on Wednesday.

Analysts said foreigners have been buying risky assets because they see value in them, while falling yields in fixed assets gradually prompt local investors to shift to equities.

The market has been on a rising trend since late February due to continued foreign buying and lower interest rates. 

($1 = 130.2000 Sri Lankan Rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)

Sri Lanka's NDB, DFCC hire Boston Consulting to advice on merger

June 17, 2014 (LBO) - Sri Lanka's National Development Bank and DFCC Bank has engaged Boston Consulting Group (India) Pvt Ltd, to advice on a planned merger.

The two banks are merging under a regulatory move to create a bigger entity.

The banks said in a joint stock exchange filing that no final decision has been made on the merger.

Sri Lanka shares close down 0.3-pct

July 17, 2014 (LBO) - Sri Lanka's shares closed 0.31 percent lower on Thursday despite net foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 20.69 points lower at 6,721.87, down 0.31 percent. The S&P SL20 closed 13.58 points lower at 3,747.47, down 0.36 percent.

Turnover was 926.45 million rupees, down from 1.21 billion rupees a day earlier with 75 stocks closed positive against 124 negative.

John Keells Holdings closed 10 cents higher at 245.00 rupees with market transactions of 279.10 million rupees contributing 30 percent of the turnover.

JKH’s W0022 warrants closed 1.20 rupees higher at 65.90 rupees and its W0023 warrants closed 40 cents lower at 73.70 rupees.

HNB closed 1.30 rupees lower at 169.10 rupees with an off-market transaction of 21.93 million rupees changing hands at 173.00 rupees per share contributing 2 percent of the turnover.

E-Channelling closed 1.10 rupees higher at 16.80 rupees, attracting most number of trades during the day.

Foreign investors bought 189.13 million rupees worth shares while selling 26.49 million rupees worth shares.

Sri Lanka Telecom closed 1.20 rupees lower at 55.00 rupees, contributing most to the index drop.

Lion Brewery Ceylon closed 13.90 rupees lower at 659.90 rupees and Distilleries closed 1.10 rupees higher at 204.90 rupees.

Ceylon Tobacco Company closed 2.50 rupees higher at 1,102.50 rupees and Hemas Holdings closed 70 cents higher at 48.90 rupees and.

COMBank to buy Indra Finance for Rs. 870 m

* Less liabilities but a strong foothold in motor leasing biz a key reason for selection – industry analysts
* Indra Traders proprietor is single largest individual shareholder of COMBank with 5% stake
* Commercial first in top banking league to announce acquisition under CB’s consolidation policy drive
* Private sector industry giant exploring takeover of more finance companies

Commercial Bank disclosed yesterday that it intends to fully acquire the unlisted Indra Finance Ltd., for Rs. 870 million.


The deal is subject to relevant statutory and regulatory approvals and COMBank being satisfied of the financials submitted by Indra Finance, which is a subsidiary of motor trade fame Indra Traders.

Commercial Bank said in the meantime it is carrying out a due diligence of Indra Finance Ltd.

The acquisition complies with the consolidation road map of the Central Bank.

The announcement didn’t reflect well in COMB’s share price yesterday. On a day when market was on the up, voting shares of COMBank closed at Rs. 142.10, down by Rs. 2.90 though it touched an intra-day high of Rs. 145.

However the planned local acquisition by COMBank is first in many years.Analysts noted Indra Finance was a good fit for the largest private commercial bank. Some years ago it had a leasing entity (Commercial Leasing) but divested it. Whilst plans on Indra were disclosed, analysts speculated that COMBank could be exploring several more finance companies as part of expansion and in tandem with Central Bank policy towards industry consolidation.

Incidentally, Commercial Bank was the first among the banking league to announce an acquisition under CB’s new policy environment.

The asset base and business volume of Indra is unknown since the entity is not quoted on the Colombo Stock Exchange but industry analysts noted Indra is well managed and had lower liabilities since it wasn’t too focused on deposit mobilisation.

Indra Finance was registered as a finance company by the Central Bank in May 2013. It is part of Indra Group, which is strong on the motor trade and big vehicle financing and leasing portfolio. Its proprietor Indra Silva incidentally is the fourth largest shareholder and the biggest individual shareholder of Commercial Bank with a 5.53% stake as at end March 2014.

This facet may be one of the reasons why COMBank had disclosed the move though the deal does not constitute a major transaction as defined in Section 185 of the Companies Act for Commercial Bank.

Indra Group is also a customer of Commercial Bank. He is also a high net worth investor in the stock market with a select blue chip portfolio.

Indra also has interests in property development. In the motor business, Indra Traders has 13 main branches, fully-equipped workshops, spare part dealers and 40 exclusive dealers.
www.ft.lk