Tuesday 10 March 2015

Sri Lankan shares fall for 7th straight session

(Reuters) - Sri Lankan stocks fell to a more than one-month low on Tuesday, losing for a seventh consecutive session, as investors stayed on the sidelines amid rising interest rates and political uncertainty ahead of parliamentary elections.

The main stock index fell 0.09 percent, or 6.28 points, to 7,130.05, its lowest close since Feb. 5, extending the fall to 2.56 percent in the last seven sessions.

"Everybody is waiting for directions on the interest rates and political front," a stockbroker said on condition of anonymity.

Foreign investors were net buyers of 106.9 million rupees worth of shares, extending the year-to-date foreign inflow to 2.48 billion rupees.

The central bank removed a penalty rate of 5 percent on its repo rate with effect from March 2. The bank had imposed the penalty in September to discourage commercial banks from parking money with it at an interest rate of 6.5 percent.

The scrapping of the penalty resulted in a rise in t-bill yields of between 86 basis points and 91 basis points last Tuesday.

The central bank raised 51.8 billion rupees ($389.77 million) through sale of treasury bonds on Tuesday, 72.8 percent higher than what it offered. It borrowed $156.5 million through development bonds on Monday.

The central bank also plans to raise 20 billion rupees ($150.49 million) through t-bills on Wednesday.

Elections to Sri Lanka's 225-member parliament are expected to be announced after April 23 and it is unclear whether the ruling coalition led by President Maithripala Sirisena would contest unitedly or go to the polls separately.

Political analysts expect a hung parliament if Sirisena's coalition members contest separately.

Shares in Ceylon Tobacco Company Plc fell 1.85 percent, while Ceylinco Insurance Company Plc fell 1.39 percent.

Turnover was 585.6 million rupees, well below this year's daily average of 1.37 billion rupees. 

($1 = 132.9000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)

Union Assurance posts Rs 1203 m PAT in 2014

Union Assurance PLC (UA), a leading player in the Sri Lankan insurance sector recorded steady growth in combined gross written premium (GWP) and profits as at the end of the fourth quarter of 2014.

GWP from life and non-life insurance for the twelve months period commencing from January 1 to December 31, 2014 amounted to Rs. 11.2 billion compared to Rs. 10.9 billion in the preceding period. Life insurance premiums contributed Rs. 6 billion and non-life premiums contributed Rs. 5.2 billion.

Total net revenue of the company grew by 13% to Rs. 13.7 billion in 2014 from Rs. 12.1 billion in 2013 mainly due to increase in investment income. Net benefits and claimsincluding the increase in the life fund, grew by 17% as well.

Profit after tax (PAT) increased by 7% from Rs. 1,123 million in 2013 to Rs. 1,203 million in 2014. PAT included the surplus from life insurance business amounting Rs. 750 million in 2014 which was determined after an actuarial valuation as at year end.

As at December 31, 2014, UA’s life fund stood at Rs. 23 billion with a healthy solvency ratio indicating the financial strength of the business.

Without a doubt we have one of the strongest teams in the industry and it is evident in the results achieved by the company,” UA Director and Chief Executive Officer Dirk Pereira said. “The future landscape for both life and non- life businesses is very bright, and we believe we have the right people, products and brand to reap maximum benefits,” he added.
www.dailynews.lk

Rs 15 B Bond Issue to settle overdues to road contractors – CB Governor

By Ravi Ladduwahetty

Ceylon Finance Today: Central Bank Governor, Arjuna Mahendran said yesterday that the reason for the Rs 15 Billion Bond issue was to settle overdue payments to local and foreign road contractors.

Explaining the events that led to the decisions for the bond issue to the Ceylon FT, Governor Mahendran said: " A meeting was held on 26 February at the Central Bank of Sri Lanka (CBSL) with the participation of Finance Minister, Ravi Karunanayake; Minister of Highways and Investment Promotion, Kabir Hashim; Secretary to the Treasury, Dr. R.H.S. Samaratunga; Secretary to the Ministry of Policy Planning and Economic Affairs, Prof. K.M. Liyanage; officials of the Ministry of Highways, and myself to discuss the way forward on the road sector projects.

"The officials of the Ministry of Highways highlighted the need for making overdue payments for road sector projects, which are foreign and locally funded. The immediate funding requirement was around

Rs 15 billion. A team of officials of the Ministry of Highways and Investment Promotion, the Treasury and the CBSL were instructed to analyze the fund requirements to make pending payments for these projects," he said.

Subsequently, Finance Minister, Ravi Karunanayake called a meeting on 3 March 2015 with the key contractors of the road sector projects to negotiate on overdue payments. The officials of the Ministry of Highways, the Treasury and the CBSL, also participated at this meeting. The Minister had one-to-one discussions with the contractors and negotiated with them, with a view to reduce the due payments for the continuation of these projects. Most contractors agreed with Minister Karunanayake for a 10 to 20% reduction on their outstanding bills and he agreed to settle these within a couple of weeks, the Governor said.
www.ceylontoday.lk

Asia Capital–Belluna Japan ink $ 137 m for 3 property development projects in SL

By Charumini de Silva

Capitalising on the booming leisure and real estate sectors, Asia Capital Plc, in partnership with Belluna Co. Ltd of Japan, yesterday announced that they would invest over $ 130 million to develop three properties in Sri Lanka.

The two companies have shortlisted a resort hotel in Galle worth $ 15 million, a city hotel in Colombo 3 worth $ 22 million and a mixed development project in Vauxhall Street costing $ 100 million. The agreement in this regard was officially signed yesterday by Bellunda Co. Ltd. President Kiyoshi Yasuno and Asia Capital Plc Group CEO Stefan Abeysinghe.

Abeysinghe said that this was probably the largest transaction they had done and that 90% of the shares would be held by Bellunda while the remaining 10% would belong to Asia Capital.

He said that they had identified three properties and that they are trying to do the legal due diligence required to obtain the lease for the foreign-owned company.

Currently, the projects are in their investment stages and the company will step in during the conceptualisation, planning and approval phases of these projects as soon as they acquire the properties.

“We hope to complete the two hotel projects in Galle and Colombo 3 within 36 months after obtaining approval.

However, it would take about one and half years to conceptualise and finalise the drawings of the mixed development project as we seek foreign architects’ assistance for this project,” Abeysinghe revealed.

Elaborating on the mixed development project, he confirmed that it would be a two-tower fully-fledged mixed development project which would include residencies and a hotel.

“This is a property on Vauxhall Street which already has been given approval for a mixed development project. It has been lingering for a very long time and they have been looking for an investor. As a result, we signed with the existing leaseholder yesterday morning,” he added.

The three projects in total will add over 500 rooms to the leisure industry, while adding 300 units of apartments to the real estate sector.

“The Galle resort will consist of approximately 48 rooms, while with the City Hotel we are aiming for 200 to 250 rooms. In terms of the mixed development projects, we have not finalised the exact apartment numbers and the number of hotel rooms. However, approval for now allows 400-plus apartments and about 300 to 400 rooms — but we will probably scale it down to 200 apartment units and 250-300 hotel rooms,” he explained.

During the past two years Asia Capital has attracted $ 40 million worth of Foreign Direct Investments (FDIs) and they intend to attract more FDIs from Japan.

Abeysinghe revealed that companies of this size have not yet looked at Sri Lanka from Japan. Belluna of Japan is significantly larger than a regular company listed in Japan with a market capitalisation of $ 1billion. Belluna aims to reach a target of $ 2 billion within the next five years.

Belluna Co. Ltd. President Kiyoshi Yasuno, commenting on their investments in Sri Lanka, said that the company aimed to expand its business to the food service industry apart from real estate and leisure sector projects.

“Our eyes are wide open to every good investment opportunity in Sri Lanka. In geopolitical terms, Sri Lanka is in a strategic maritime location, has an educated work force and has wonderful resources for tourism. Sri Lanka is a great country to invest in due to its rapid economic growth, public safety and also as a country that is very friendly with Japan.”

Asia Capital and Belluna of Japan commended the support extended by both the Urban Development Authority (UDA) and the Board of Investment (BOI).
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