Sri Lanka’s MTD Walkers to raise Rs2.4bn through a rights issue

Oct 10, 2014 (LBO) – Sri Lanka’s MTD Walkers Plc, a member of the MTD group is to raise 2.4 billion rupees by way of a rights issue, the company said in a stock exchange filing.

Subjected to the necessary approvals, the company is to issue 53.29 million shares at 45.00 rupees each in the ratio of 466 shares for every exiting 1,000 shares held.

Part of the proceeds will be utilized to acquire Wincon Development Ceylon (Pvt) ltd while the rest will be used to fulfill the working capital requirements of the company.

MTD Walkers, a construction and engineering giant in the island recently announced that it is acquiring 100 percent stake in Wincon Development for 2.17 billion rupees under a restructuring plan of the MTD group in Sri Lanka.

Sri Lanka stocks close down 0.9-pct

Oct 10, 2014 (LBO) - Sri Lanka's stocks closed 0.88 percent lower with tobacco and banking stocks losing ground amid strong foreign selling, brokers said.

The Colombo benchmark All Share Price Index closed 65.08 points lower at 7,321.00, down 0.88 percent. The S&P SL20 closed 41.33 points lower at 4,110.02, down 1.00 percent.

Turnover was 2.81 billion rupees, up from 1.46 billion rupees a day earlier with 53 stocks closed positive against 164 negative.

John Keells Holdings closed 1.10 rupees lower at 250.90 rupees with nine off-market transactions of 443.77 million rupees changing hands at 250.00 rupees per share contributing 16 percent of the turnover.

The aggregate value of all off-the-floor deals represented 20 percent of the daily turnover.

Chilaw Finance closed 50 cents higher at 26.00 rupees with market transactions of 495.47 million rupees contributing 18 percent of the turnover.

Millennium Housing Developers closed 60 cents lower at 5.00 rupees with market transactions of 495.47 million rupees contributing 16 percent of the turnover.

Access Engineering closed 1.10 rupees lower at 31.60 rupees and MTD Walkers closed 3.90 rupees lower at 53.30 rupees, attracting most number of trades during the day.

Foreign investors bought 274.28 million rupees worth shares while selling 780.29 million rupees worth shares.

Ceylon Tobacco Company closed 25.20 rupees lower at 1,124.90 rupees with the company increasing its cigarette prices from midnight today while contributing most to the index drop.

DFCC Bank closed 6.20 rupees lower at 229.80 rupees and Commercial Bank of Ceylon closed 1.70 rupees lower at 167.20 rupees.

Hatton National Bank closed 3.70 rupees lower at 195.00 rupees.

Budget not full of election goodies

More focus on knowledge economy concept

Shirajiv Sirimane shirjivs@gmail.com

The 2015 budget to be presented this month will not be a budget full of election goodies but it will be a development oriented one Secretary to the Treasury Dr. P.B. Jayasundara said yesterday.

Speaking at the Capital Market Conference 2014 held yesterday he said the forthcoming budget presented on October 24 will focus on promoting the knowledge economy concept, for which the country has gained momentum.

He also said the country has been maintaining steady economic growth at 7.8%. High economic growth has been maintained in the recent years and if the economic growth rate lowers to around 6% it would be considered very low.

CSE Chairman Vajira Kulatilleke, Central Bank Governor Ajith Nivard Cabraal, Secretary to the Treasury, Dr. P. B. Jayasundera and SEC Chairman Dr. Nalaka Godahewa at the event.

He also said the recent visit of Japanese and Chinese Prime Ministers have helped Sri Lanka to secure commitments of in excess of US$ 2 billion of investments to promote tourism and aviation as well as trade and tourism.

The net value of Unit Trusts has shifted from less than Rs. 6 billion to over Rs. 75 billion and the value of listed debt has increased from Rs. 12.5 billion in 2009 to Rs. 68.7 billion by end 2013. The market capitalization is now over Rs. 3 Trillion and appreciation of 300 percent. “So, all sounds good for the industry participants and investors as the market has grown well on a diversified basis and underscores the country's economic prospects,” he said.

The topic of Asset Markets have attracted global attention in recent times with assets bubbles in well established markets that have compelled everyone to take note of underlying risk management challenges. Understanding this is difficult when the ‘going is good’ since the tendency is to forget everything and feel good, but when the ‘going is bad’, everything becomes amazingly hard. We must not permit good times of today, to be the sad thoughts of tomorrow.
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Foreign investors seek Clarity

Visiting foreign delegates yesterday raised concerns regarding key elements of the local capital market, indicating exercising of caution before investing in the country.

During an interactive panel discussion at the Capital Market Conference 2014, potential investors sought clarification from the regulators themselves on areas such as availability of liquidity, transaction costs and probable impacts on Sri Lanka due to interest rates increase in the US.

While investors pointed out that challenges observed by them in the local capital market are the “sheer lack of liquidity” and the high transaction cost, Colombo Stock Exchange Chairman (CSE) Vajira Kulatilaka assured that much was being done by the regulators to increase liquidity levels. However, he dismissed the notion that Sri Lanka has high transaction costs.

“On the transaction cost, it is debatable. There are no taxes on capital gain and in that case the transaction cost is lower compared to any other countries. The trend is that it has come down. We can’t just open up as there will be other repercussions on the market,” he said at the panel discussion, which also featured Securities and Exchange Commission (SEC) Chairman Dr. Nalaka Godahewa and Central Bank Deputy Governor Ananda Silva.

Regarding the possible impacts on the local stock market due to an increase in interest rates in the US, Deputy Governor Silva admitted that while Sri Lanka could be hit, the situation would be manageable.

“Our country is open, so there will be some impact. Since we have built certain buffers and have strengthened our reserves, we should be able to manage it. However, if there is a sudden increase, some investors might pull out; but then, if you look at the growth of the country and its prospects, there are opportunities to invest in Sri Lanka,” expressed Silva.
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