Monday 16 March 2015

Sri Lankan shares down for 11th straight session

(Reuters) - Sri Lankan shares fell for the 11th straight session on Monday to a six-week closing low with some buying by foreign investors, but local investors awaited direction with worries over rising interest rates.

The main stock index ended 0.57 percent, or 40.34 points weaker, at 7,050.91, its lowest close since Feb. 5, extending the fall to 3.64 percent in the last 11 sessions.

Foreign investors were net buyers of 204.2 million rupees worth of shares, extending the year-to-date foreign inflow to 2.81 billion rupees.

The day's turnover stood at 582.9 million rupees ($4.39 million), well below this year's daily average of 1.27 billion rupees.

Dealers said the market was closely monitoring interest rates amid heavy government borrowing. Sri Lanka's new government has borrowed more than $1 billion in four days through Thursday, which economists have blamed on poor revenue and higher expenditure.

The heavy borrowing has resulted in a spike in market interest rates.

Yields on t-bills rose between 21 basis points and 38 basis points at a weekly auction on Wednesday with the 91-day t-bill yield rising to a 14-month high of 7.10 percent.

Shares in Ceylinco Insurance Plc fell 11.76 percent while conglomerate John Keells Holdings Plc fell 0.92 percent. 

($1 = 132.9000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

'I will respond to critics'– CB Governor

By Ravi Ladduwahetty

Ceylon Finance Today: Central Bank Governor Arjuna Mahendran coming down hard on his critics, said that he will respond to all the allegations that have been made against him regarding the Rs 15 billion Treasury Bond issue when he returns to Sri Lanka from his overseas visits.

"I will respond to all these allegations after I return to Sri Lanka from the United States and other countries, where I was present at investor fora," he told the Ceylon FT by telephone.

However, there was huge pressure from not only sections from the Opposition, but certain government quarters as well, for Mahendran to resign in the wake of the ongoing controversy regarding the bond issue.

However, other sources in the Central Bank told Ceylon FT that there were certain quarters within the Central Bank, who were raising a huge hue and cry over the thirty-year Treasury Bond issue as it was known that they were resisting the huge administrative and structural changes within the bank made by Mahendran on his assumption of office. Also in that light, was the huge restructuring of the Public Debt Department, which also saw the transfer of its Director Dhammika Nanayakkara.

They also said that behind these protests were those loyal to the former Governor Ajit Nivaard Cabraal. The source also said that they did not know whether these critics had any knowledge of the Treasury Bond operations of the Central Bank, adding that only a few people within the bank had an in-depth knowledge of this operation.

They also queried how some SLFP members of Parliament were raising their protests over Mahendran, while they were utterly scared even to utter a whimper at the time the country lost billions in rupees during the Hedging deal under their regime.
www.ceylontoday.lk