Sri Lankan recovers from early loss; sees 23.4 pct gain for year

Dec 31 (Reuters) - Sri Lankan stocks recovered from early losses on Wednesday and closed higher, led by financials, but the gains were limited by political uncertainty before a coming presidential election.

The bourse gained 23.4 percent for the year after rising 4.8 percent last year.

The main stock index closed 7.62 points higher, or 0.1 percent, at 7,298.95. It had fallen 3.5 percent after reaching its high for the year of 7,562.52 on Nov. 19, following President Mahinda Rajapaksa's decision to hold a snap presidential election on Jan. 9.

"This year was great until the election announcement came," one stockbroker said. "The next year will be challenging."

The index returned 23.1 percent for the year measured in dollar terms. Record low interest rates to boost private-sector borrowing and economic growth led investors to shift into riskier assets from fixed deposits.

Wednesday's turnover stood at 628.7 million rupees ($4.79 million), less than half of this year's daily average of 1.42 billion rupees, stock exchange data showed.

Net foreign inflows into stocks were 22.2 million rupees, extending net inflows to 22.07 billion rupees for the year, the data showed. That was a little less than last year's 22.88 billion inflow.

The index was boosted by a 4.55 percent gain for Commercial Leasing and Finance Plc and 10 percent jump in Finlays Colombo Plc. However, only 200 shares in Commercial Leasing and 10 shares in Finlays Colombo were traded, stock exchange data showed.

Analysts said turmoil in Sri Lankan politics have hurt sentiment. The latest came on Wednesday, when a deputy minister defected from Rajapaksa's ruling party to back an opposition candidate.

That made 24 lawmakers who have quit the party since Rajapaksa announced the coming election. They include former health minister Mithripala Sirisena, who is challenging Rajapaksa's bid for a third term. Two opposition legislators have joined the ruling party.

($1 = 131.1500 Sri Lankan rupees) 

(Reporting by Shihar Aneez)

Sri Lanka Treasury bill yields flat

Dec 23, 2014 (LBO) –Sri Lanka's Central Bank re-issued of 12,000 million rupees maturing Treasury bills was oversubscribed with bids amounting to 36,335 million rupees being received, data from the state debt office showed.

It was decided to accept 15,135 million rupees from the auction.

The 3-month yield was flat at 5.74 percent and 4,175 million rupees were accepted from the auction.

The 12-month yield increased at 6.01 percent from 6.00 percent at the previous auction, and 10,960 million rupees were accepted data from the state debt office showed.

Worries over rise in foreign debt

By Paneetha Ameresekere

Ceylon Finance Today: The Government of Sri Lanka (GoSL) may be exposing its vulnerability to external shocks in the backdrop of the rapid rise of its external debt profile, market sources told Ceylon FT.

As per the latest data released by Central Bank of Sri Lanka (CBSL) on Friday (26 December), it showed that external debt in the nine month period from last year end to end September of this year increased by Rs 222.5 billion (7.5%) to Rs 3182.9 billion, constituting 43.2% of GoSL's total debt profile.

Further, Sri Lanka's external debt servicing commitments, which in the 12 months ended November of this year (2014) was estimated to have had been US$ 5.7 billion according to CBSL, are however expected to increase by US$ 1.2 billion (21.1%) to US$ 6.9 billion by October of next year, causing pressure on both the exchange rate (ER) as well as on CBSL's external reserves.

These developments have to be looked at in the backdrop of two key issues that are expected to take place next year, an economist said.

Those are the possibility of sanctions being placed on the island in Geneva in March over human rights (HR) issues. This may affect export and tourism earnings as Sri Lanka's key markets for such is the West which is gunning for the island on those matters. And the other, the expected rise in international interest rates by summer, in tandem with a decision that the Federal Reserve System is expected to take, i.e. of raising its key policy rate, the reverse repo, because of the recovery of the US economy, which is making demand once more robust in the world's largest economy. That however would be to the detriment of Sri Lanka, which seeks to meet its external commitments by increased foreign borrowings because it runs a trade deficit, which in the first 10 months of the year (2014) grew by 4.3% year on year to US$ 6.79 billion.

This is also in the context that Sri Lanka is expected to raise another US$ 1.5 billion (Rs 198.5 billion) by the sale of a Sovereign Bond in international markets next month. The figure Rs 198.5 billion is arrived at, on the basis that the exchange rate (ER) had deteriorated to Rs 132.35 to the US dollar in 'spot next next' trading as at Monday (29 December), a deterioration of 36 cents in a day, thereby causing pressure on interest rates as well, in the backdrop of the market's and GoSL's growing appetite for US dollars.

These foreign debt figures however may be deflated numbers, because they don't take into account proxy international borrowings made by the state through certain financial institutions. For instance last year (2013) GoSL raised $ 1.35 billion this way. Envisaged repayment commitments may however be accurate.

Meanwhile, those proxy borrowings comprised $ 500 million raised by Bank of Ceylon at a 5.3% interest rate in April, $ 750 million by NSB at a higher 8.875% interest rate in September and $ 100 million by DFCC Bank at an even higher 9.6% interest rate in October. All these three issues were of a five year tenure, each.

According to CBSL, the annual average value of the ER was Rs 129.11 last year. On that basis, $ 1.35 billion is equivalent to Rs 174.3 billion worth of proxy borrowings by GoSL last year.

Additionally, GoSL directly raised five year money of $ one billion in value at a 6% interest rate in January 2014. Three months later in April, it raised a further $ 500 million of a similar tenure at a lower, 5.125% interest rate.
www.ceylontoday.lk

Oil hits 5-1/2-year low below $ 57 on supply glut

LONDON (Reuters): Brent crude fell to a 5-1/2-year low of less than $ 57 a barrel on Tuesday as a global supply glut outweighed concerns of lost supply from Libya where battling militias have closed ports.

The oil benchmark recovered ground later but was on track for its second weakest month since the global financial crisis of 2008, and traders said the sell-off that has halved crude prices in six months showed no sign of coming to an end.

Brent fell $ 1.14 a barrel to $ 56.74, its lowest since May 2009, before recovering to trade around $ 57.70, down 18 cents, by 1440 GMT. US crude was up 10 cents at $ 53.71 after hitting $ 52.70 – also its lowest since May 2009.

Oil markets have been heavily oversupplied this year due to increasing output of high quality, light oil from US shale and lower-than-expected consumption as a result of faltering global economic growth and competition from alternative fuels.

Several members of the Organization of the Petroleum Exporting Countries have suffered supply disruptions in recent months, but this has had little impact on prices.

In Libya, clashes between rival factions have closed oil ports and terminals this month, reducing exports from the OPEC producer, which used to sell over 1 million barrels per day of crude to world markets, to almost nothing.

OPEC, which pumps a third of the world’s oil, had been expected to trim output to try to stabilise prices, but it decided in November to keep production unchanged and let the market find its own level.

Brown Investments, Palm Garden Hotel and Eden Hotel in JV to acquire Maldives resort

Brown Investments, Palm Garden Hotel and Eden Hotel have jointly invested $ 1.5 million to acquire a beach resort in Maldives for the purpose of developing a resort hotel in the island.

Brown Investments, Palm Garden Hotel and Eden Hotel have each invested US$ 500,000 to acquire 5,000 shares of Bodufaru Beach Resort Ltd., (BBR), Maldives amounting to 33.33% of the equity of the Company for the purpose of developing a resort hotel in the Maldives.

The three companies announced in a stock market disclosure that they are in a joint investment in BBR, each investing $ 500,000 (33.33% each).

Bodufaru Beach Resort is a limited liability company incorporated in the Republic of Maldives and holds a 50-year head lease for the island of Bodufarufinolhu in Maldives.

Subsequent to the investment by Eden Hotel Lanka PLC, Palm Garden Hotels PLC, and Brown Investments PLC, BBR will become an associate of Eden Hotel Lanka PLC and a subsidiary of Palm Garden Hotels PLC, and Brown Investments PLC.
www.ft.lk