Sri Lanka shares slip from one-week high, led by Nestle Lanka, Keells

Sri Lankan shares fell on Thursday from the previous session's one-week high, led by Nestle Lanka Plc and market heavyweight John Keells Holdings Plc due to political uncertainty ahead of the announcement of parliamentary polls.

The main stock index ended 0.32 percent, or 22.50 points, lower at 7,031.33.

Turnover stood at 628.1 million rupees ($4.7 million), well below this year's daily average of about 1.1 billion rupees.

"The market continued its downtrend, ending the day on a negative note, with institutional and high networth investors dominant," TKS securities said in a note to investors.

Nestle Lanka fell 2.40 percent, while conglomerate John Keells fell 0.49 percent.

Keells said in a disclosure to the bourse that its subsidiary Waterfront Properties (Private) Ltd had finalised a $395-million syndicated project development facility with Standard Chartered Bank for debt financing of its luxury real estate project.

The market saw net foreign outflow of 166.2 million rupees on Thursday, extending net foreign outflows in the past 22 sessions to 3.63 billion rupees in stocks.

Investors were confused due to a lack of direction on interest rates, economic policies, and on the timing of the parliamentary election, analysts said.

President Maithripala Sirisena has said he will dissolve the parliament once some crucial reforms, including an electoral bill, are passed, but is yet to fix a date for the election. 

($1 = 133.6000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)

Sri Lanka sells USD327mn of 1, 3 and 5 year development bonds

June 25, 2015 (LBO) – The issue of Sri Lanka development bonds amounting to 100 million US dollars have been oversubscribed with 357.00 million US dollars of bids received from investors.

The central bank has accepted 255.00 million US dollars of one year bonds at a floating rate of weighted average margin over six month LIBOR of 340.12.

The bond auction held on Thursday accepted 35.00 million US dollars of three year bonds at a floating rate of 376.43.

The public debt department of the central bank has also accepted 37.00 million US dollars of five year bonds at a floating rate of weighted average margin over six month LIBOR of 410.95.

Sri Lanka Telecom to expand mobile business with WiFi islandwide

COLOMBO (EconomyNext) – Sri Lanka Telecom has selected two foreign suppliers to set up a network of WiFi hotspots islandwide in a new thrust to expand its mobile business by providing better connectivity and user experience.

It aims to integrate WiFi with its broadband and cellular networks to expand its offerings and explore new profitable revenue streams, a statement said.

SLT has entered into partnerships with Ruckus Wireless, Inc., headquartered in Sunnyvale, California, USA, a global supplier of wireless systems for the mobile internet infrastructure market, and Alepo, which provides enabling IT and network infrastructure software.

Ruckus Wireless announced that Sri Lanka Telecom, with the help of Ruckus channel partner Alepo, is deploying Ruckus Smart WiFi products and technology across this island

Sri Lanka Telecom plans to expand into new wireless services and markets, offering single-use prepaid service, bundled subscriptions for existing broadband customers, automated offload for mobile users, and partnerships with external providers for roaming and wholesale.

Dileepa Wijesundera, SLT Group chief executive said SLT’s ‘carrier-grade’ WiFi network provides a host of direct, targeted marketing opportunities for shop owners, companies and big brands within these environments.

Carrier grade WiFi refers to a better quality, more reliable system than existing "best-effort" Wi-Fi, which provide higher quality of experience that offer businesses new revenue streams.

The higher quality of experience is necessary for services such as TV everywhere, health monitoring, enterprise voice, online gaming, media streaming and voice over Internet protocol (VoIP) services.

“With our extensive country-wide fibre optic network, we’re able to provide the end-to-end infrastructure required delivering carrier-grade Wi-Fi to business locations as well as crowd-sourcing public places,” Wijesundera said.

“We are aiming to adopt an aggressive expansion strategy for this solution, and already have a pipeline of additional retail sites that we will be launching very soon.”

Sudarshan Boosupalli, managing director, India & SAARC region, Ruckus Wireless, said their joint solution with Alepo provides Sri Lanka Telecom with a seamlessly integrated platform to help enable them to maximize revenue in the growing wireless market.

“As the wealth and diversity of connected devices explodes, which now includes wearable devices, vehicles, and even home appliances – service providers demand more sophisticated and seamless infrastructure to manage and monetize data over WiFi,” said Dan Stern, VP of Sales at Alepo.

Sri Lanka markets regulator says to act against money laundering

COLOMBO (EconomyNext) – Sri Lanka’s capital markets regulator, the Securities and Exchange Commission (SEC), has said it will improve surveillance and take tougher action to counter money laundering in the island.

Vajira Wijegunawardane, SEC Director General, said they want to foster a culture of good conduct among market participants as it remains one of the most important factors influencing investor confidence in the capital market.

“Recognising the need for early mitigation of such risks, the SEC continued to conduct risk focused supervision emphasising on the effectiveness of governance and internal controls of the market participants,” he said in the SEC’s annual report for 2014.

“The SEC is committed to ensuring that capital market intermediaries implement the highest standards of pre-emptive measures to counter money laundering,” said Wijegunawardane.

During the year, the SEC participated in the assessment to ensure Sri Lanka’s adherence with recommendations of the Financial Action Task Force, an independent inter-governmental body responsible for protecting the global financial system against money laundering and terrorist financing.

Wijegunawardane said good conduct cannot simply be legislated and regulated and must be encouraged and internalized by companies.

“The significance of our capital market can only be ensured if our regulatory and governance framework is reinforced by a culture of accountability and propriety across all stakeholders,” he said.

“I believe, regaining public trust and confidence requires a stronger ethical dimension to the actions of individual participants.”

The SEC will use technology “to the fullest” for effective market monitoring, Wijegunawardane said.

It will have strong oversight over conduct of market participants to keep a constant eye to detect wrong doing early and take preventive measures.

“If violations are detected we will take prompt action, as failure to act fast will only encourage unethical behaviour,” Wijegunawardane said.

John Keells Holdings concludes debt financing for Waterfront Project re-branded ‘Cinnamon Life’

Waterfront Properties (Private) Limited, the subsidiary controlled by John Keells Holdings PLC has finalized a syndicated project development facility amounting to USD 395 million with the Standard Chartered Bank thus concluding the required debt financing for the project.

John Keells’ Waterfront Project situated in a premier location of Colombo includes a 6 star hotel, apartment blocks, large retail centre, office buildings and car parks. It is a city within a city.

While the project was under the former government’s Strategic Projects Development Act, work began on the site in March 2014 and was to be complete in 2018.

However, following the regime change, the new government halted this project while banning new casinos and other gaming facilities proposed at the venture between Australian James Packer’s Crown Resort and Lake Leisure, Water Front Properties and Queensbury Leisure hotel projects.

John Keells Holdings PLC instructed its subsidiary Waterfront Properties (Private) Limited to engage with the government over the announcement by Prime Minister Ranil Wickremesinghe that the agreements entered into by Waterfront Properties (Pvt) Limited under the Strategic Projects Development Act will be amended to restrict the ability to rent space for gaming activities.

The company said that while this proposed amendment would constrain the ability to command premium rentals on this component of the project, the multi-faceted nature of this development gives the Board of Directors the confidence that this project would be still viable given its diverse portfolio of revenue streams and iconic design which it believes would transform the landscape of Colombo.

The project continued as planned after the overall brand architecture for the ‘Waterfront Project’ being finalized with the project being branded as ‘Cinnamon Life’.

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Sri Lanka Treasuries yields flat

Sri Lanka's Treasury bill yields were unchanged across maturities at Wednesday's auction, data from the debt office showed, with 14.6 billion rupees of bills being sold.

The debt office said 1.6 billion rupees of 3-month bills were sold at an average of 6.08 percent, 7.0 billion rupees  6-month bills were sold at 6.18 percent and  6.0 billion rupees 12-month bills were sold at 6.28 percent, unchanged from a week earlier.

Validity of the Governors appointment and the currency notes issued by the Central Bank

The Central Bank of Sri Lanka wishes to inform the general public of the position on the validity of the appointment of the present governor, and validity of the currency notes issued by the Bank on 2015.02.04, in view of frivolous allegations appearing in certain media.

It is re-iterated that the appointment of Mr Lakshman Arjuna Mahendran as the governor of the Central Bank has been done in compliance with law as well as the established practice. The provisions of section 11 of the Monetary Law Act specifically sets out the circumstances where a person becomes disqualified for appointment as the governor, and the present governor’s appointment has not been tainted with any such disqualification.

It is specifically stated that the citizenship or nationality of an individual has never been a relevant consideration for appointment of a governor from the time John Exter, a U.S. national was appointed the first governor of the Central Bank of Sri Lanka.

The Central Bank of Sri Lanka is cognizant of the tenuous and malicious assertions on the validity of the currency notes bearing the signature of the present governor. In this respect, it is pertinent to note that provisions of section 53 (2) of the Monetary Law Act requires every currency note to bear the signatures in facsimile of the Minister in charge of the subject of Finance and of the Governor of the Central Bank, and statement that it has been issued on behalf of the Government of Sri Lanka. Every currency note issued by the Central Bank shall, according to section 52 of the Act, be legal tender in Sri Lanka for the payment of any amount. Accordingly, the general public is guaranteed that currency notes issued by the Central Bank of Sri Lanka bearing the signatures of the Governor of the Central Bank of Sri Lanka and Hon. Minister of Finance with the date 2015.02.04 are legal tender for the payment of any amount in Sri Lanka. Validity of such notes has not been affected in any manner whatsoever by the specious concerns raised by persons with ulterior motives.

Commercial Credit growth continues with Rs. 2.1 b profit

Commercial Credit and Finance PLC, posted an impressive 108.7% growth in net profits for the financial year ended March 31,2015 to reach Rs. 2.1 billion.

This set a new milestone for the company, moving up from the Rs. 1 billion achieved for the first time in 2013/14.

"The results delivered by Commercial Credit for the financial year 2014/15 are extraordinary and will go down in the annals of the history of our Company as the year during which we first recorded Rs. 2.1 billion in profits.

This is all the more creditable in view of the various challenges of differing magnitudes that the leasing and finance sectors experienced during this period," Commercial Credit's Chief Operating Officer Rajiv Casie Chitty said.

The company's total Customer Deposits grew by over 84.6 per cent in the 2014/15 financial year, with 93.7 per cent of the growth coming from the Fixed Deposits segment.

Total assets grew from Rs. 31.6 billion as at the beginning of the financial year under review to Rs. 57.7 billion by year-end.

The interest income reached Rs. 11.1 billion for the year under review, recording an increase of 61.2 per cent over the previous financial year.

The total lending portfolio grew by 80%. The main drivers of this growth were Lease and Hire Purchase, and also, Micro Finance Loans which grew by 101.2 and 104.1 per cent respectively.

"Our continued efforts to provide customer centric products and a value-based service ethos have been the corner stones of sustaining this growth momentum over consecutive years. We have been able to win the trust of the people.

The growth of our deposit base and loan portfolio is testament to this confidence," Casie Chitty added.

The Company also expanded its service network substantially to reach all districts of the country. In the financial year 2014/15 the Company extended it service network from 75 to 119 locations. In selecting the locations for expansion, the Company not only considered current and future business potential, but also the needs of the population in such areas.

"With this extended service network, Commercial Credit is well positioned to further develop its business activities.

The Company is undertaking substantial strategic investments to further strengthen the IT infrastructure of the Company.

This is a fundamental requirement in view of the growing service network, increasing transaction volumes and growing capabilities and capacities demanded by business needs."

Directors have recommended a final dividend of Rs. 1for the year ended March 31,2015. This is in addition to an interim dividend paid of 0.50 per share during the year.

The company acquired 96.9% of Trade Finance & Investments PLC (TFI), a registered finance company listed on the Colombo Stock Exchange, under the financial sector consolidation program initiated by the Central Bank of Sri Lanka.
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Orient Finance to suspend shares

Orient Finance has informed the Colombo Stock Exchange that in the event the Special Resolution approving the amalgamation of Orient Finance with Bartleet Finance is passed at the forthcoming Extraordinary General Meeting scheduled for today, the dealings in the ordinary shares of Orient Finance will be suspended from June 26,2015.
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SEC to get tough on manipulators

The Securities and Exchange Commission (SEC) will take rigorous action against those who commit regulatory breach,which include market manipulation,misconduct by regulated entities and corporate disclosure-related offences,Chairman Tilak Karunaratne said.

"However, the current Sri Lanka securities law, which was enacted 28 years ago, has its drawbacks with the enforcement framework built on criminal prosecution and compounding of offences," he said in the SEC annual report.

He said in the past the SEC has mainly resorted to issuing warning letters, imposing suspensions on investment advisors and compounding.

"In tandem with the expansion of the capital market it has been considered necessary to make changes to the SEC Act to broaden the range of enforcement powers", Karunaratne said.

The proposed amendments to the SEC Act will introduce a range of administrative and civil sanctions, including the seeking of restitution to any person aggrieved.

The SEC increased its efforts to expedite the amendments since this will pave the way for credible regulation and market confidence. In addition the amendments to the Act will align the SEC governance structure with International Organisation of Securities Commissions (IOSCO) standards, facilitate the introduction of new categories of market intermediaries and regulation of their business conduct and provide for the regulation of derivative products.

In line with our mandate the SEC continue to monitor, mitigate and manage risk with the aim of promoting integrity in the market. Through our Risk Based Supervisory Framework we attempt to focus on capital and other prudential requirements for market intermediaries, protect client assets and compliance with internal controls on a regular basis. Our supervisory role further extends to mitigating the settlement risk in the securities market.

Towards achieving this objective we are getting together with the Colombo Stock Exchange (CSE) to setup up a Clearing House which will act as a Central Counterparty (CCP) for settlement of securities, shares, corporate debt and any other instruments coming under our purview.
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