Sri Lanka rupee gains on dollar sales; Fitch downgrades forecast

Reuters: Sri Lanka's rupee rose0.5 percent on Thursday, and posted a gain of 2.4 percent for the month, as foreign investors purchased government securities, while Fitch rating agency revised down forecast for the currency for 2019 and 2020. 

** Fitch Solutions Macro Research, a subsidiary under Fitch Group in a report revised its average forecast for the rupee weaker to 186.00 per U.S. dollar for this year and 192.00 in the next year, from the previous 177.00 and 183.00 respectively. 

 ** "We expect the rupee to continue weakening over the short term due to a worsening terms of trade, although the pace of depreciation is likely to ease from what was seen during the November/December 2018 constitutional crisis," it said. 

** Sri Lanka's higher inflation trajectory relative to the United States, the nation's need to accumulate dollars to repay its external debt and to achieve the IMF's foreign reserves target over longer term will likely see further weakness for the rupee - Fitch. 

 ** The rupee closed at 178.40/60 per dollar, compared with Wednesday's close of 179.30/60, market sources said. On Jan. 3, the rupee dropped to an all-time low of 183.00 against the dollar. 

 ** The currency has appreciated 2.4 percent so far this year. 

 ** Investor confidence in Sri Lanka is stabilising after the country repaid a $1 billion sovereign bond in mid-January, Central Bank of Sri Lanka Governor Indrajit Coomaraswamy told Reuters on Monday. 

** Worries over heavy debt repayment after a 51-day political crisis that resulted in a series of credit rating downgrades have dented investor sentiment as the county is struggling to repay its foreign loans, with a record $5.9 billion due this year, including $2.6 billion in the first three months. 

 ** The International Monetary Fund on Jan. 16 said it would resume discussions for further disbursal of part of a $1.5 billion loan amid investor worries of heavy debt repayments. 

** The rupee dropped 16 percent in 2018, and was one of the worst-performing currencies in Asia due to heavy foreign outflows. 

** The rupee has declined 3.5 percent since a political crisis started in October. The political crisis had dented investor sentiment and delayed Sri Lanka's borrowing plans. 

** Sri Lanka was plunged into political turmoil when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved parliament. Wickremesinghe was later reinstalled as premier. A court ruled the move was unconstitutional. 

 ** The Colombo Stock Index ended 0.02 percent weaker at 5,989.90 on Thursday. 

 ** Turnover was 442 million rupees ($2.48 million), nearly half of last year's daily average of 834 million rupees. 

** Foreign investors net sold 82.5 million rupees worth shares on Thursday. They have been net sellers of 2.3 billion rupees worth of stocks so far this year and 15.7 billion rupees since the political crisis began on Oct. 26, 2018. 

($1 = 178.2500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez, Editing by Sherry Jacob-Phillips)

Sri Lanka rupee firmer on dollar sales; stocks end weaker

Reuters: Sri Lanka's rupee rose 0.9 percent on Wednesday on banks' dollar sales from inward remittances, while foreign investors purchased short-term bills. Stocks ended weaker. 

** The rupee closed at 179.30/60 per dollar, compared with Tuesday's close of 180.90/179.15, market sources said. On Jan. 3, the rupee dropped to an all-time low of 183.00 against the dollar. 

** The currency has appreciated 2 percent so far this year. 

 ** Investor confidence in Sri Lanka is stabilising after the country repaid a $1 billion sovereign bond in mid-January, Central Bank of Sri Lanka Governor Indrajit Coomaraswamy told Reuters on Monday. 

 ** However, investors maintained a cautious stance, awaiting cues about the government's borrowing and repayment of foreign loans, analysts told Reuters. The government paid $1 billion five-year sovereign bond borrowing this month. 

** Worries over heavy debt repayment after a 51-day political crisis have dented investor sentiment as the county is struggling to repay its foreign loans, with a record $5.9 billion due this year, including $2.6 billion in the first three months. The central bank chief on Jan. 14 said about $5 billion borrowing in the pipeline could help debt repayments. 

 ** The International Monetary Fund on Jan. 16 said it would resume discussions for further disbursal of part of a $1.5 billion loan amid investor worries of heavy debt repayments. 

** The rupee dropped 16 percent in 2018, and was one of the worst-performing currencies in Asia due to heavy foreign outflows. 

** The rupee has declined 3.5 percent since a political crisis started in October. The political crisis had dented investor sentiment and delayed Sri Lanka's borrowing plans. 

** Sri Lanka was plunged into political turmoil when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved parliament. A court later ruled the move was unconstitutional. Wickremesinghe was reinstalled as premier. 

** A series of credit rating downgrades after the political crisis made it tough for the island nation to borrow as it faces record high repayments. 

** The Colombo Stock Index ended 0.1 percent weaker at 5,991.29 on Wednesday. The bourse dropped 0.16 percent last week, while the benchmark index lost 5 percent in 2018. 

** Turnover was 736.7 million rupees ($4.11 million), more than last year's daily average of 834 million rupees. 

** Foreign investors net bought 23.4 million rupees worth shares on Wednesday. But they have been net sellers of 2.2 billion rupees worth of stocks so far this year and 15.6 billion rupees since the political crisis began on Oct. 26, 2018. 

** The bond market saw an inflow of 4.7 billion rupees in the week ended Jan. 23. But the market saw an outflows of 81.9 billion rupees between Oct. 25 and Jan. 23, the latest central bank data showed.  

($1 = 179.2000 Sri Lankan rupees) 

 (Reporting by Ranga Sirilal and Shihar Aneez)

Sri Lanka rupee firmer on dollar sales; stocks climb

Reuters : ** Sri Lanka's rupee closed firmer on Tuesday on banks' dollar sales from inward remittances and on behalf of foreign investors who are purchasing short-term bills, while stocks ended firmer. 

 ** The rupee closed at 180.90/15 per dollar, compared with Monday's close of 181.40/60, market sources said. On Jan. 3, the rupee dropped to an all-time low of 183.00 against the dollar. 

** The currency has appreciated 1.05 percent so far this year. 

 ** Investor confidence in Sri Lanka is stabilising after the country repaid a $1 billion sovereign bond in mid-January, Central Bank of Sri Lanka Governor Indrajit Coomaraswamy told Reuters on Monday. 

 ** However, investors maintained a cautious stance, awaiting cues about the government's borrowing and repayment of foreign loans, analysts told Reuters. The government paid $1 billion five-year sovereign bond borrowing this month. 

 ** Worries over heavy debt repayment after a 51-day political crisis have dented investor sentiment as the county is struggling to repay its foreign loans, with a record $5.9 billion due this year, including $2.6 billion in the first three months. The central bank chief on Jan. 14 said about $5 billion borrowing in the pipeline could help debt repayments. 

 ** The International Monetary Fund on Jan. 16 said it would resume discussions for further disbursal of part of a $1.5 billion loan amid investor worries of heavy debt repayments. 

** The rupee dropped 16 percent in 2018, and was one of the worst-performing currencies in Asia due to heavy foreign outflows. 

** The rupee declined 4.3 percent since a political crisis started in October. That crisis had dented investor sentiment and delayed Sri Lanka's borrowing plans. 

 ** Sri Lanka was plunged into political turmoil when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved parliament. A court later ruled the move was unconstitutional. Wickremesinghe was reinstalled as premier. 

 ** A series of credit rating downgrades after the political crisis made it tough for the island nation to borrow as it faces record high repayments. 

 ** The Colombo Stock Index ended 0.4 percent firmer at 5,997.46 on Tuesday. The bourse dropped 0.16 percent last week, while the benchmark index lost 5 percent in 2018. 

** Turnover was 841.9 million rupees ($4.66 million), more than last year's daily average of 834 million rupees. 

 ** Foreign investors net sold 382.1 million rupees worth shares on Tuesday. They have been net sellers of 2.3 billion rupees worth of stocks so far this year and 15.6 billion rupees since the political crisis began on Oct. 26, 2018. 

 ** The bond market saw an inflow of 4.7 billion rupees in the week ended Jan. 23. But the market saw an outflows of 81.9 billion rupees between Oct. 25 and Jan. 23, the latest central bank data showed. 

($1 = 180.7000 Sri Lankan rupees) 

 (Reporting by Ranga Sirilal and Shihar Aneez, Editing by Sherry Jacob-Phillips)

Sri Lanka’s USD200mn development bond issue undersubscribed

LBO – The issue of Sri Lanka development bonds amounting to 200 million US dollars have been undersubscribed with only 182 million dollars of bids received from investors.

Sri Lanka car registrations fell sharply amid currency, political crises

ECONOMYNEXT - New vehicle registrations had fallen sharply November and December when a political crisis gripped Sri Lanka and the rupee came under severe pressure, official data showed.

Sri Lanka's vehicle registration fell to 4,990 in September from 7,003 in August when the rupee came under pressure for a second time in 2018 amid a build-up of unsterilized excessive liquidity mainly from foreign asset purchases after the peg strengthen from a run triggered in April.

Sri Lanka imposed restrictions on car and other goods imports as the currency came under pressure. (Sri Lanka controls imports in 'Nixon-shock' move to protect soft-pegged rupee.)

In October, registrations rose to 5,826 motor cars, while motor cycle registrations rose to 30,889 from 23,914 a month earlier. Motor cycle registrations had averaged around 28,000 to 30,000 in the preceding months.

A political crisis was triggered on October 26, by President Maithripala Sirisena generating uncertainty in the economy and money markets.

In November when the largest foreign exchange market interventions on 500 million US dollars were made and the statutory reserve ratio was also cut injecting liquidity, motor car registrations fell to 3,354 units.

In December motor registrations had dropped to 2,669. Registrations may not correspond exactly to imports, though car dealers attempt not to keep large stocks.

Total vehicle registrations had fallen from 44,036 units in October to 31,358 units in November and to 30,327 units in December.

Motor cycle registrations fell from 30,889 units in October to 22,373 units in November and 22,943 in December.

Sri Lanka's rupee came under pressure from around April 2018 as the central bank stopped mopping up inflows in the first quarter and pumped the banking system of liquidity by an expansion of domestic assets purchases.

The rupee fell from 153 to 161 to the US dollars in the first run, and to 182 in the second run which followed a liquidity spike in August/September.

The falling rupee makes imports expensive compared wages and reduces living standards.

IOC Sri Lanka unit December quarter loss widens to Rs987mn

ECONOMYNEXT – Losses at Indian Oil Corporation’s Sri Lankan unit widened sharply to 987 million rupees in the December 2018 quarter from a year ago, interim accounts filed with the stock exchange showed.

Quarterly sales of Lanka Indian Oil Corporation (LIOC) rose 4.5 percent to 23 billion rupees while cost of sales rose 5.7 percent to 23 billion rupees, during the period.

LIOC lost 1.85 rupees per share in the December 2018 quarter compared with a loss of 64 cents per share a year ago.

LIOC’s share was trading at 21.50 rupees Monday morning, down 1.50 rupees or 6.5 percent from last week.

In the nine months to 31 December 2018, LIOC’s loss per share fell to one rupee from 1.22 rupees the year before with net loss down to 533 million rupees from 652 million rupees.

The December quarter accounts showed LIOC’s was carrying stock worth 10.5 billion rupees, down from 18.8 billion rupees in the September 2018 quarter.

Sri Lanka plantation stocks fall after new pay deal

ECONOMYNEXT- Sri Lanka's publicly traded commercial farms which grow tea, rubber and oil palm, saw prices fall after a new pay deal which industry spokesman said may increase wages by 350 million to 450 million a year on average for each company.

The regional plantation companies announced a collective agreement with trade unions over the weekend which will raise the daily wage of a plantation worker from 500 rupees to 700 rupees.

Voting shares of 10 of 18 listed plantation companies fell Monday.

Udapussellawa Plantations share closed at 29.40 rupees on Monday, down 2.50 rupees from Friday's close, after trading as low as 28.50 rupees

Talawakelle Tea Estate share fell 6.39 percent or 3.70 rupees to 54.20 rupees.

Hatton Plantation shares fell 60 cents to 7.20 rupees, Bogawantalawa Tea Estates down 70 cents to 12.90 rupees and Balangoda Plantations down 1 rupee to 16.20 rupees at Monday's close.

Plantation companies which currently have on average around 7,000-8,000 workers each, are expected to pay out an extra 350-450 million rupees annually after the pay deal, a spokesperson for the Planters' Association which represents estate managers said.

The twenty plantation companies, employing around 154,000 workers, may have to pay up to 9 billion rupees more in labour costs under the new agreement, the association said. Eighteen are publicly traded.

The latest agreement was signed at 11am Monday.

Unions had initially demanded 1,000 rupees in daily wages. Some unions had blocked roads in plantation areas in protest on Sunday and Monday morning, demanding the 1,000 rupees.

In the previous deal, workers got a basic salary of 500 rupees, an attendance allowance of 60 rupees, a productivity incentive of 140 rupees and a price share supplement of 140 rupees.

The new deal has 700 rupees in basic salary, and 50 rupees price share supplement.

A worker would also get 40 rupees for every extra kilo plucked above the 18 kilogramme 'plucking norm' of the field, up from 28.75 rupees in the earlier deal.

The farms grow a mix of crops including, tea, rubber, oil palm and coconut. Tea is the most labour intensive.

There were some concerns that incentive payments aimed at boosting productivity and attendance had been dropped.

Children of plantations worker families are leaving the sector to areas including services where labour is scarce or there had been productivity gains and pay is higher.

Sri Lanka's rupee had been depreciated from 149.80 at the end of 2016, to 182 by the end of 2018, which tends to increase the nominal price of commodities helping offset part of the increase in wages.

Sri Lanka's small holder tea farmers, who own farms and not driven by unions, produce the bulk of tea in the island now. Plantations firms are also trying out models involving contracting out fields.

Tea is mostly exported and is subject to global demand and and also the underlying strength of the US dollar to which Sri Lanka's rupee is loosely pegged.

The rupee however depreciates permanently due to the lack of a consistent monetary policy to support any exchange rate targeting.

Sri Lanka rupee ends firmer on dollar sales; stocks drop

Reuters: ** Sri Lanka's rupee closed slightly firmer on Monday as foreign banks sold dollars, while offshore investors started purchasing government bonds. Stocks snapped a three-day winning streak to end lower. 

** The rupee closed at 181.40/60 per dollar, compared with Friday's close of 181.60/80, market sources said. On Jan. 3, the rupee dropped to an all-time low of 183.00 against the dollar. 

** The currency has appreciated 0.66 percent so far this year. 

 ** Investor confidence in Sri Lanka is stabilising after the country repaid a $1 billion sovereign bond in mid-January, Central Bank of Sri Lanka Governor Indrajit Coomaraswamy told Reuters on Monday. 

 ** "We see signs of stabilisation in investor confidence specially after we paid the loan without much difficulty. But there is much more to be done," Coomaraswamy had said via a text message. 

** However, investors maintained a cautious stance, awaiting cues about the government's borrowing and repayment of foreign loans, analysts told Reuters. 

 ** Worries over heavy debt repayment after a 51-day political crisis have dented investor sentiment as the county is struggling to repay its foreign loans, with a record $5.9 billion due this year, including $2.6 billion in the first three months. The central bank chief on Jan. 14 said about $5 billion borrowing in the pipeline could help debt repayments. 

 ** The International Monetary Fund on Jan. 16 said it would resume discussions for further disbursal of part of a $1.5 billion loan amid investor worries of heavy debt repayments. 

** The rupee dropped 16 percent in 2018, and was one of the worst-performing currencies in Asia due to heavy foreign outflows. 

** The rupee declined 4.7 percent since a political crisis started in October. That crisis had dented investor sentiment and delayed Sri Lanka's borrowing plans. 

 ** Sri Lanka was plunged into political turmoil when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved parliament. A court later ruled the move was unconstitutional. Wickremesinghe was reinstalled as premier. 

 ** A series of credit rating downgrades after the political crisis made it tough for the island nation to borrow as it faces record high repayments. 

 ** The Colombo Stock Index ended 0.08 percent weaker at 5,973.46 on Monday. The bourse dropped 0.16 percent last week, while the benchmark index lost 5 percent in 2018. 

** Turnover was 465.3 million rupees ($2.56 million), less than last year's daily average of 834 million rupees. 

 ** Foreign investors were net buyers of 192.2 million rupees on Monday. They sold a net 22.9 million rupees worth of shares on Friday. They have been net sellers of 2.07 billion rupees worth of stocks so far this year and 15.5 billion rupees since the political crisis began on Oct. 26, 2018. 

 ** The bond market saw an inflow of 4.7 billion rupees in the week ended Jan. 23. But the market saw an outflows of 81.9 billion rupees between Oct. 25 and Jan. 23, the latest central bank data showed. 

($1 = 181.4500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez)

Sri Lanka rupee ends steady; stocks extend gains

Reuters: ** Sri Lanka’s rupee closed steady on Friday as dollar selling by exporters offset importer demand for the greenback, while stocks edged higher for a third straight session. 

** The rupee closed at 181.60/80 per dollar, unchanged from Thursday’s close, market sources said. On Jan. 3, the rupee fell to an all-time low of 183.00 against the dollar. 

** The currency has appreciated 0.55 percent so far this year. 

** Investors have been waiting for some cues over the government’s borrowing and repayment of foreign loans, analysts have told Reuters. 

** Worries over heavy debt repayment after a 51-day political crisis have dented investor sentiment as the county is struggling to repay its foreign loans, with a record $5.9 billion due this year including $2.6 billion in the first three months. 

** The central bank chief last week said around $5 billion borrowing in the pipeline could help debt repayments.

** The International Monetary Fund last week said it would resume discussions for further disbursal of part of a $1.5 billion loan amid investor worries of heavy debt repayments. 

** The rupee fell 16 percent in 2018 and was one of the worst-performing currencies in Asia due to heavy foreign outflows. 

** The rupee has declined 4.7 percent since a political crisis started in October. That crisis had dented investor sentiment and delayed Sri Lanka’s borrowing plans. 

** A series of credit rating downgrades after the political crisis have made it harder for Sri Lanka to borrow as it faces record high repayments. 

** The Colombo Stock Index ended 0.3 percent firmer at 5,978.30 on Friday. The bourse fell 0.16 percent for the week. The benchmark index lost 5 percent in 2018. 

** Turnover was 460.8 million rupees ($2.54 million), less than last year’s daily average of 834 million rupees. 

** Foreign investors were net sellers for the first time in four sessions. They sold a net 22.9 million rupees worth of shares on Friday. They have been net sellers of 2.07 billion rupees worth of stocks so far this year and 15.5 billion rupees since the political crisis began on Oct. 26. 

** The bond market saw outflows of 86.7 billion rupees between Oct. 25 and Jan. 16, the latest central bank data showed. 

($1 = 181.5000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lanka rupee edges up on exporter dollar sales; stocks gain

Reuters: ** Sri Lanka’s rupee closed slightly firmer on Thursday due to dollar selling by exporters, while stocks edged higher for a second straight session, moving away from an eight-week closing low hit early this week. 

** The rupee closed at 181.60/80 per dollar, compared with 182.15/25 in the previous session, market sources said. On Jan. 3, the rupee fell to an all-time low of 183.00 against the dollar. 

** The currency has appreciated 0.6 percent so far this year, Refinitiv data showed. 

** Worries over heavy debt repayment after a 51-day political crisis have dented investor sentiment as the county is struggling to repay its foreign loans, with a record $5.9 billion due this year including $2.6 billion in the first three months. 

** The central bank chief last week said around $5 billion borrowing in the pipeline could help debt repayments.

** The International Monetary Fund last week said it would resume discussions for further disbursal of part of a $1.5 billion loan amid investor worries of heavy debt repayments. 

** The rupee fell 16 percent in 2018, according to the central bank data. It was one of the worst-performing currencies in Asia, Refinitiv data showed, due to heavy foreign outflows. 

** The rupee has declined 4.9 percent since a political crisis started in October. That crisis had dented investor sentiment and delayed Sri Lanka’s borrowing plans. 

** A series of credit rating downgrades after the political crisis have made it harder for Sri Lanka to borrow as it faces record high repayments. 

** The Colombo Stock Index ended 0.15 percent firmer at 5,960.34 on Thursday. The benchmark index lost 5 percent in 2018. 

** Turnover was 725.2 million rupees, less than last year’s daily average of 834 million rupees. 

** Foreign investors were net buyers for a third straight session on Thursday, buying a net 310.7 million rupees worth of shares. But they have been net sellers of 2.05 billion rupees worth of stocks so far this year and 15.4 billion rupees since a political crisis began on Oct. 26. 

** The bond market saw outflows of 86.7 billion rupees between Oct. 25 and Jan. 16, the latest central bank data showed. 

($1 = 182.0000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Fitch downgrades HDFC Bank to ‘BB+(lka)’ as government support weakening

LBO – Fitch Ratings has downgraded the National Long-Term Rating and senior unsecured debentures of Housing Development Finance Corporation Bank (HDFC Bank) to ‘BB+(lka)’ from ‘BBB-(lka)’ reflecting the weakening of the sovereign’s ability to provide support.

“The downgrade reflects Fitch’s assessment of HDFC Bank’s standalone strength, as we believe timely support from the sovereign cannot be relied upon,” Fitch Ratings said.

“Our assessment takes into consideration that the state, as a major shareholder, has not injected new capital into HDFC that the bank would need to meet the minimum regulatory capital requirement of LKR5 billion that came into force in 1 January 2016.”

All ratings have been removed from Rating Watch Negative, and the Outlook is Stable.

Key Rating Drivers

NATIONAL RATINGS

The downgrade reflects Fitch’s assessment of HDFC Bank’s standalone strength, as we believe timely support from the sovereign cannot be relied upon. Our assessment takes into consideration that the state, as a major shareholder, has not injected new capital into HDFC that the bank would need to meet the minimum regulatory capital requirement of LKR5 billion that came into force in 1 January 2016. Our view also reflects the weakening of the sovereign’s ability to provide support following the downgrade of the sovereign rating to ‘B’/Stable from ‘B+’/Stable on 3 December 2018.

HDFC Bank’s current rating reflects its high risk appetite and potential challenges in accessing capital, when required. The rating also captures asset quality and profitability which is weaker than its peers. This reflects a large exposure to low- and middle-income customers, who are particularly susceptible to economic and interest-rate cycles.

HDFC Bank’s reported non-performing loan (NPL) ratio has been increasing over the past few years – standing at 20.5% at end-3Q18, well above the industry average. This has been due mainly to defaults from housing finance backed by the Employees’ Provident Fund (EPF), which contributed more than half of the bank’s total housing NPLs at end-3Q18. Nevertheless, the Central Bank of Sri Lanka reimburses HDFC Bank annually for EPF-backed loans in arrears for more than three months. The bank’s NPL ratio remained high even without the EPF-backed housing loans, at 10.0% (9.0% at end-2017), which reflects the concentration of its credit risk in the low- and middle-income housing-finance market.

The bank’s Fitch Core Capital ratio improved marginally in 3Q18 to 17.3% owing to muted balance-sheet expansion. Nevertheless, we see capitalisation as weak because of its substantial unreserved NPLs. Profitability is likely to remain soft in light of its high cost structure and rising credit costs.

Fitch expects HDFC Bank’s asset and liability mismatches to persist due to its longer-tenor loan book and short-tenor deposit base, exerting pressure on liquidity. Dependence on high-cost term deposits also weighs on the net interest margin and profitability.

SENIOR DEBT RATINGS

The bank’s outstanding senior unsecured debentures are rated in line with its National Long-Term Rating, and rank equally with the claims of other senior unsecured creditors.

Rating Sensitivities

NATIONAL RATINGS AND SENIOR DEBT

HDFC Bank’s rating could be downgraded if there is a sustained deterioration in capitalisation, either through aggressive loan growth or higher unprovisioned NPLs. An upgrade would be contingent on moderation of its risk appetite and a sustained improvement in asset quality and profitability.

The ratings of the senior unsecured debentures will move in tandem with HDFC Bank’s National Long-Term Ratings.

Sri Lanka’s First Capital Holdings [SL]A- rating confirmed

ECONOMYNEXT - ICRA Lanka has confirmed the [SL]A- rating of First Capital Holdings, which controls primary dealer First Capital Treasuries, noting it would be crucial for the firm to reduce inter-group lending and improve liquidity levels.

The rating agency, a subsidiary of ICRA Limited, a group company of Moody’s Investors Service, retained the stable outlook for First Capital Holdings PLC (FCH), a statement said.

“Rating also takes cognizance of FCH’s exposure to group and related parties that have a modest credit profile, although it is envisaged that such exposures will reduce in the future,” it said.

“Going forward, it would be crucial for FCH to further bring down its inter-group exposures, improve liquidity profile, as well as maintain satisfactory leverage indicators.”

The full statement follows:

Rating action

ICRA Lanka Limited, subsidiary of ICRA Limited, a group company of Moody’s Investors Service, has reaffirmed the issuer rating of [SL]A- (pronounced SL A minus) with stable outlook for First Capital Holdings PLC (FCH or the Company).

ICRA Lanka has also reaffirmed the issue rating of [SL]A- (pronounced SL A minus) with stable outlook for balance outstanding LKR 185 Mn senior unsecured redeemable debenture programme of the company. ICRA Lanka has also reaffirmed the [SL]A2+ (pronounced SL A two plus) rating for the LKR 1,500 Mn commercial paper programme of FCH.

ICRA Lanka has also withdrawn the outstanding issue rating of [SL]A-(stable) on the LKR 129 Mn senior unsecured redeemable debentures of the Company, as the said debentures matured and there is no amount outstanding against the rated instruments.

Rationale

The ratings continue to factor in FCH’s status as the holding company of First Capital Treasuries PLC (FCT), a leading standalone primary dealer in Sri Lanka (Issuer rating of [SL]A- with stable outlook); FCH is also the holding company for other financial services entities in the First Capital group, although the contribution from these entities remains modest, at present.

As observed in the past, FCH’s performance is dependent on the performance of FCT, making it susceptible to the risks inherent to the primary dealer.

The ratings take cognizance of the recent increase in the non-treasury related investments and lending by FCH, through its subsidiary First Capital Limited (FCL); this has also impacted FCH’s liquidity position as funding was largely via short term borrowings.

ICRA Lanka however, notes that the non- treasury and inter-group exposures have moderated during Q3FY2019 from the peak in September 2018.

FCH was also faced with a moderate increase in reported net leverage to 2.13 times as in September 2018 from 1.59 times as in March 2016 (same witnessed some improvement from 2.23 times in March 2018).

Rating also takes cognizance of FCH’s exposure to group and related parties that have a modest credit profile, although it is envisaged that such exposures will reduce in the future.

Going forward, it would be crucial for FCH to further bring down its inter-group exposures, improve liquidity profile, as well as maintain satisfactory leverage indicators.

Outlook: Stable

The outlook may be revised to “Positive” based on FCH’s ability to improve its liquidity profile and leverage indicators. The outlook may be revised to “Negative” in case of higher leverage going forward or further weakening in its liquidity or exposure profile.

Key rating drivers

Credit strengths

Holding company of FCT: FCT is a leading stand-alone primary dealer in Sri Lanka and is 94% owned by FCH. FCH is expected to continue benefitting from the dividend flow from FCT.

Good market position offering diverse financial services: Presence of group entities offering various financial services augurs well with the initiative of the group to diversify its income sources; the same however is quite modest presently, as group performance continues to be driven by the performance of its primary dealer business, FCT. First Capital Limited (FCL), which is 100% held by FCH and involved in corporate debt structuring, corporate finance advisory services and investments reported a total fee income of LKR 84 Mn in FY2018 (LKR 42 Mn in FY2017) from transaction advisory activities. The company also generated about LKR 1.4 Bn investment income from proprietary lending and investment activities. The asset management arm of the group, First Capital Asset Management Limited (FCAM) reported a total income of LKR 38 Mn in FY2018 (LKR 38Mn in FY2017), with total assets under management of about LKR 5.1Bn as in 31 March 2018. First Capital Equities (PVT) Limited (FCE), which is a licensed stock broker on the Colombo Stock Exchange, made a total income of LKR 58 Mn in FY2018 (LKR 47 Mn in FY2017). During FY2018, company has decided to discontinue its margin trading services business undertaken by First Capital Markets Limited (FCM); it reported a total income of LKR 44Mn in FY2018 (LKR 70 Mn in FY2017).

Strong senior management team and the risk management processes reduce market and operation risks: FCH has a fairly well-experienced management team and a healthy governance structure, with 7 of the 9 board directors being non-executive and 5 directors being independent. The ratings take note of steps taken to improve the governance framework, risk management systems and policies. Notwithstanding, the recent increase in related party lending, ICRA Lanka is cognizant that the same were done at arms-length terms.

Credit challenges

Increase in credit risk due to exposure to group companies with weaker credit profile: As a group, FCH’s (consolidated) exposures are largely towards treasury backed investments, through its primary dealer subsidiary, FCT. However, ICRA Lanka notes the recent increase in the exposure to non-treasury related investments during FY2018, mainly in the form of lending to various group and related parties. These lending activities are done through its direct subsidiary, FCL and ICRA Lanka takes cognizance of the modest credit profile of these group entities. As in September 2018, FCL’s short term lending and investment portfolio stood at about LKR 13.2 Bn (net exposure adjusted for cash backed transactions was about LKR 9.7 Bn), out of which about 27% (LKR 2.6 Bn) comprised of lending to group and related companies; exposure to group entities stood at about 3.5 times of the cost-based net worth (Adjusted for the equity-based accounting and deferred tax asset) of FCH (about 0.7 times based on reported net worth) as in September 2018. However, ICRA Lanka takes note of the recent moderation of these exposures during Q3FY2019 and further moderation of the same is expected over the next 3-4 months. Going forward, ICRA Lanka will continue to monitor the movement of FCH’s group/ related party exposures.

Deteriorating ALM position in short term buckets: The stand-alone funding profile of FCH largely comprises of short-term borrowing in the form of commercial papers and short-term loans, against which FCH has extended credit to FCL (about LKR 7.4 Bn as in March 2018, LKR 9.8 Bn in September 2018), which in turn has undertaken various non-treasury related lending and investments. As in October 2018, the combined short-term asset and liability mis-match (<1 year) for FCH and FCL stood at about negative 50% of the total earnings assets, while the same adjusted for repo borrowings on long term treasury securities stood at about negative 38%. As in December 2018, the liquidity profile of the company has somewhat improved with recovery of certain related party exposures; the short-term asset and liability mis-match (<1 year) stood at negative 15% as in December 2018. While ICRA Lanka takes comfort from group’s access to funding from banks and other financial institutions (as in December 2018, group had unutilised facilities in excess of LKR 1 Bn from financial institutions), it would be crucial to maintain a healthy liquidity profile, going forwards.

High leverage over the last two fiscals: Combined leverage of FCH and FCL (Adjusted for deferred tax, deposit-based lending) stood at about 2.90 times in September 2018 as compared to 2.91 times in March 2018 (2.30 times in March 2016). Leverage based on the consolidated cost-based net worth of FCH and FCL is estimated to be about 8 times (after adjusting for deposit-based lending) as in September 2018 and close to 9 times as in March 2018; same has somewhat improved to about 7.8 times by December 2018. Going forward, it will be crucial for the company to further bring-down its leverage from current levels and reduce its inter-group lending and exposures to entities with weaker credit risk profile.

Modest operating income being a holding company: Notwithstanding the efforts to diversify the operating income, overall performance of FCH is highly dependent on the performance of the primary dealer, FCT. Stand-alone operating profitability of FCH stood modest at 3.1% and 3.4% respectively for FY2018 and FY2017.

About the company:

Incorporated in year 1992, FCH is a public limited company listed on the Colombo Stock Exchange. FCH is the holding company for the financial services businesses of Dunamis Capital PLC (DCP), which holds 78.14% in FCH. Janashakthi PLC (JPLC) is the ultimate parent of FCH via DCP. The company is engaged in making investments and managing its subsidiaries i.e. First Capital Treasuries PLC (FCT) which is an authorized Primary Dealer in Government Securities, First Capital Limited (FCL) involved in structuring and placement of corporate debt and corporate finance advisory services and investments, First Capital Asset Management Limited (FCAM) involved in unit trust and portfolio management, First Capital Trustee Services (Pvt) Limited (FCTS) which is a trustee services provider for corporate debt securities and First Capital Equities (Pvt) Limited (FCE) which is engaged in stock broking activities.

On September 13, 2018, JPLC announced the acquisition of 31.14% of the shareholding in DCP, for a total purchase consideration of LKR 1.4 Bn (price per share of LKR 36.6). With the said acquisition, JPLC increased its stake in DCP to 41.14%, representing 50.6 Mn shares (previously, JPLC held a 10% stake in DCP as of June 30, 2018). On October 19, 2018, JPLC announced a voluntary offer to acquire the remaining ordinary shares of DCP (72.4 Mn shares at LKR 36.6 per share). The said offer subsequently resulted in increase in stake of the investee company from 41.14% to 98.08%. Thus, JPLC became the ultimate parent of FCH.

For the financial year ended March 31, 2018 FCH on a stand-alone basis reported a net profit of LKR 1,872 Mn, on a total asset base of LKR 10.8 Bn, vis-à-vis net profit of LKR 212 Mn on a total asset base of LKR 10.2 Bn during the previous fiscal. For the financial year ended March 31, 2018 FCH group (consolidated) reported a net profit of LKR 1,966 Mn, on a total asset base of LKR 35.2 Bn, vis-à-vis net profit of LKR 232 Mn on a total asset base of LKR 31.7 Bn during the previous fiscal. For the 6M ended September 30, 2018, FCH reported a stand-alone net loss of LKR 64.6 Mn on a total asset base of LKR 13.1 Bn and a consolidated loss of LKR 64.9 Mn on a total asset base of LKR 39.4 Bn.

Sri Lanka’s Talawakelle Tea December quarter profit up 16-pct

ECONOMYNEXT – Sri Lanka’s Talawakelle Tea Estates said net profit rose 16 percent to 178 million rupees in the December 2018 quarter from a year ago.

Sales rose 11 percent to 969 million rupees, according to interim accounts filed with the Colombo stock exchange.

December quarter earnings per share were 7.50 rupees. The share last traded at 49 rupees.

In the nine months to December 2018 EPS fell to 9.82 rupees from 12.16 rupees the year before with net profit at 233 million rupees. Sales fell two percent to 2.89 billion rupees.

The accounts of the Hayleys group firm showed that earnings from tea fell slightly while rubber made a loss.

Profits doubled in the firm’s mini hydro power business to 34 million rupees compared from a year ago.

Sri Lanka’s MTD Walkers shifts subsidiaries to Malaysian parent to settle debt

ECONOMYNEXT – Sri Lanka’s MTD Walkers, which is carrying heavy losses, has transferred three subsidiaries including a shipyard, to its Malaysian parent for 19 million US dollars with a buy back deal, to help a subsidiary settle debt.

The group has transferred full ownership of Walkers Shipyard, Northern Power Company, and Colombo Fort Heritage Company to MTD Capital Berhad, a stock exchange filing said.

MTD Capital Berhad, an investment holding company with interest from civil engineering and real estate to energy, ports, and manufacturing of construction related materials, owns 90.78 percent of MTD Walkers, a construction group.

The aim of the deal is to help MTD Walkers settle an outstanding loan of 19 million US dollars payable by its subsidiary CML-MTD Joint Venture Ltd. to Export-Import Bank of Malaysia
Berhad as part of a group restructuring.

The stock exchange filing said MTD Walkers has the option to buy back the shares in its three subsidiaries for the same amount under a call option agreement with the Malaysian parent firm.

MTD Walkers said the transfer took place on January 11, 2019 and was not prejudicial to the interests of minority shareholders.

On January 17, the company told the stock exchange, in response to a query, that it had not engaged in any undisclosed price sensitive business activities or transactions to raise its share price and that it was unware of the reason for the increase in its share price.

Sri Lanka's Hayleys Fabric profits surge in December quarter

ECONOMYNEXT - Profits at Sri Lanka's Hayleys Fabrics Plc surged to 107.6 million rupees in the December 2018 quarter, compared to a 10.8 million rupee-loss a year earlier on improving sales, interim results showed.

Earnings were 52 cents a share in the December quarter, interim results filed with the stock exchange showed.

The reinstatement of GSP Plus and directly marketing its own brands of fabric has helped Hayleys Fabric achieve better margins, and recover losses of 105.6 million rupees sustained the previous financial year.

In the nine months to end December 2018, earnings were 93 cents a share on a profit of 193.8 million rupees, up 1,017 percent from a 21.1 million loss a year earlier with sales growing 32 percent in the period to 8.6 billion rupees.

The stock closed Monday down 10 cents to 9.40 rupees.

In the December quarter, revenue grew 64 percent from a year earlier to 3.5 billion rupees, and cost of sales also increased 64 percent to 3.1 billion rupees leading to gross profits of 374 million rupees, up 63 percent from a year earlier.

In US dollar terms, revenue had increased 41 percent to 19.5 million US dollars.

Administrative expenses grew 2 percent to 192.2 million rupees and distribution costs increased 121 percent to 31 million rupees.

Net finance costs fell 38 percent to 23.8 million rupees.

Sri Lanka's Keells Food Products Dec net down 5-pct

ECONOMYNEXT - Profits at Sri Lanka's Keells Food Products Plc fell 5 percent from a year earlier to 82.4 million rupees in the December 2018 quarter on higher costs despite sales growth, interim accounts showed.

Earnings at the meat processing company, a unit of listed John Keells Holdings Plc, amounted to 3.23 rupees a share in the quarter, interim results filed with the Colombo Stock Exchange showed.

The share last traded at 136 rupees.

In the nine months to end December 2018 earnings were 4 rupees a share as profits grew 15 percent from a year earlier to 204.4 million rupees while revenue increased 11 percent to 2.6 billion rupees.

In the December quarter, revenue grew 9 percent from a year earlier to 940.2 million rupees. Cost of sales grew 10 percent to 658.5 million rupees leading to gross profits increasing 6 percent to 281.7 million rupees.

Selling and distribution expenses grew 31 percent to 105.5 million rupees and administrative expenses increased 10 percent to 43 million rupees.

Net finance income rose 88 percent to 3.3 million rupees.

Sri Lanka's Anilana Hotels says to get more cash from Singapore’s SOMAP

ECONOMYNEXT – Singapore’s SOMAP International Pte Ltd. is to pump in funds to revive Sri Lanka’s loss-making Anilana Hotels & Properties, which was transferred to the stock exchange’s watch list after auditors gave a qualified opinion on its accounts.

Anilana Hotels said in a stock exchange filing its controlling shareholder Somap has given a written undertaking to support it financially and will infuse more capital to turn it around within three months.

The company is also repaying outstanding loans to reduce interest costs and operational costs, the statement said.

Anilana Hotels & Properties was transferred to the Colombo stock exchange’s watch list on December 14 after auditors Amarasekera & Company gave a qualified opinion on its annual report for 2017-18.

The stock last traded at 1.10 rupees.

Anilana Hotels & Properties also said it was in the process of appointing two independent directors to comply with the stock exchange listing rules.

The company and group have run up accumulated losses of 2.78 billion rupees and 2.28 billion rupees, with current liabilities exceeding total assets by 890 million rupees and one billion rupees, the auditors said.

They said there was uncertainty over the company’s and group’s ability to continue as a going concern.

Anilana Hotels & Properties said the losses were mainly due to finance costs incurred by the group arising from related

Sri Lanka’s 01-year Treasury yield falls to 10.70-pct

ECONOMYNEXT – Sri Lanka’s one-year Treasury Bill yield fell 05 basis points to 10.70 percent at Wednesday’s auction, according to data from the public debt department of the central bank.

The 06-month bill yield was steady at 9.87 percent while 03-month bills were not offered.

The public debt department accepted 21 billion rupees of 01-year bills, having offered bills worth 18.5 billion rupees and getting bids worth 51 billion rupees.

It also accepted 2.6 billion rupees of 06-month bills, having offered bills of 05 billion rupees and getting bids of 7.6 billion rupees.

Sri Lanka’s Kelani Valley Plantations profits soar on capital gain

ECONOMYNEXT - Sri Lanka’s Kelani Valley Plantations said net profit soared to 354 million rupees in the December 2018 quarter from 27 million rupees a year ago, as it booked a gain from selling a stake in a tea extracting unit.

According to interim accounts filed with the stock exchange, sales of the firm, part of Hayleys group, rose 16 percent to 2.2 billion rupees.

Quarterly earnings per share were 10.42 rupees. The stock closed at 93 rupees, up 6.10 rupees or 7.02 percent, Tuesday.

In the nine months to December 2018, EPS was 9.97 rupees with sales up seven percent to 6.8 billion rupees.

A note to the accounts said that on 1st November 2018, Martin Bauer Group of Germany joined Hayleys Global Beverages (Pvt) Ltd. as a strategic partner by investing in a 51 percent stake of the company.

This reduced Kelani Valley Plantations PLC‘s shareholding in Hayleys Global Beverages, now renamed Martin Bauer Hayleys (Pvt) Ltd., to 10 percent.

The subsidiary has ceased to be accounted as an equity accounted investment resulting in a gain on disposal of 205 million rupees.

Sri Lanka’s Singer Finance Dec profit growth flat, deposits fall

ECONOMYNEXT - Sri Lanka’s Singer Finance reported net profit growth for the December 2018 quarter was flat at 131 million rupees from a year ago and there was a fall in customer deposits.

Net interest income rose 25 percent to 550 million rupees with interest income up 27 percent to 984 million rupees while interest costs rose 29 percent to 434 million rupees, interim accounts filed with the stock exchange showed.

Earnings per share for th quarter were 65 cents. The stock was trading at 13.90 rupees Thursday.

Net fee and commission income rose 28 percent to 61 million rupees while other income fell 68 percent to 16 million rupees.

Value added tax shot up 71 percent to 78 million rupees.

Customer deposits as at 31 December 2018 fell to 4.8 billion rupees from 5.4 billion rupees at the end of the 2018 financial year.

Sri Lanka's EPF loses most from Laugfs, Dockyard, Carsons; gains from banks

ECONOMYNEXT - Sri Lanka's Employees Provident Fund, managed by the central bank has lost 9.2 billion rupees on its stock portfolio up to June 2018 despite investments in banks gaining it about 9 billion rupees led by Sampath Bank, a report from the agency said.

The stocks have been bought at different times, but among the most controversial were those made at the height of a stock market bubble which ended around 2011.

The Employees' Provident Fund (EPF) Department on January 16 said the 2 trillion rupee fund made up of private sector employee retirement savings has lost 8.4 billion rupees in the value of stocks held for investment, since it first purchased each stock, up to June 2018.

This was a fall of 10.9 percent to 68.88 billion rupees.

Stocks held for trading lost 24.9 percent of their value, or 742.7 million rupees, with the biggest hit coming from Aitken Spence and its hotel subsidiary.

The EF had lost about 2.0 billion rupees on Colombo Dockyard shares which It had bought for 2,791 million rupees and was in its books at 765 million rupees, losing about three fourths of the value.

Market value of Laugfs Gas Plc voting and non-voting stocks fell 56.9 percent or 1.9 billion rupees. Voting stock the EFP bought for 2.68 billion rupees was worth 1.15 billion rupees, by June 2018.

A 1.7 billion rupee fall in value came through Carsons Cumberbatch Plc, which is currently attempting to delist most of its companies from the stock exchange, with the initial investment value down 64.5 percent compared to the market value in June 2018.

The EPF had bought Carsons Cumberbatch, which owned several Malaysian oil palm firm, for 2.59 billion rupees, but it was now worth 919 million rupees.

Another 1.7 billion hit came from Carsons oil palm unit Bukit Darah Plc. Bukit stock had been bought for 2.3 billion rupees and was now worth 577 million rupees.

Over a billion rupees each were also slashed from market values of Browns & Co Plc, the troubled The Finance Company Plc and the John Keells hotel subsidiary Asian Hotels & Properties Plc.

In total 43 stocks lost value for EPF shareholders after being bought, out of 66 stocks held in the investment portfolio.

Five of the six bank stocks, adding 9 billion rupees to market value of the investment equity portfolio.

Sampath Bank, Hatton National Bank and Commercial Bank, three of the country's systemically important banks, contributed 88.8 percent to the gain.

Sampath stock bought for 4.8 billion rupees were worth 8.4 billion rupees.

DFCC was the sole bank to lose market value after being purchased by the EPF, devaluing by 842.1 million rupees or 24.8 percent.

The central bank has been criticized for buying bank shares through the EPF, as the central bank then becomes both a controlling shareholder and the regulator, but had bought the most gains.

The EPF had invested 10.8 billion rupees in companies not listed publicly, most of which had generated had not paid dividends up to end-2017, the central bank said in a disclosure under the right to information law in 2018.

Sri Lanka's stock market is now at lower price to earnings multiples, unlike the 2011 bubble, leading to some making a cases for it to enter the market.

Current governor Indrajit Coomaraswamy had said that corporate Sri Lanka was going at 'fire sale' prices.

Coomaraswamy had said he was setting up a more transparent framework for stock market investments.

He had said stock investments make up around 2.5 percent of EPF assets, and the central bank plans to increase this to around 5 percent.

The EPF dealers had earlier made controversial 'pump and dump' deals with some market participants in the run up to 2011, earning it the sobriquet 'buyer of last resort.'

Some critics suspect that the relationships made at the time made the so-called 'bondscam' possible.

Sri Lanka rupee edges down on importer, state bank dollar demand

Reuters: ** Sri Lanka’s rupee closed slightly weaker on Wednesday due to dollar demand from importers and state banks, while investors remained cautious over debt repayment by the government. 

** Stocks edged higher from an eight-week closing low hit in the previous session. 

** The rupee closed at 182.15/25 per dollar, compared with 182.00/20 in the previous session, market sources said. On Jan. 3, the rupee fell to an all-time low of 183.00 against the dollar. 

** The currency has depreciated 0.3 percent so far this year, Refinitiv data showed. 

** Worries over heavy debt repayment after a 51-day political crisis have dented investor sentiment as the county is struggling to repay its foreign loans, with a record $5.9 billion due this year including $2.6 billion in the first three months. 

** The central bank chief last week said around $5 billion borrowing in the pipeline could help debt repayments.

** The International Monetary Fund last week said it would resume discussions for further disbursal of part of a $1.5 billion loan amid investor worries of heavy debt repayments. 

** It fell 19 percent in 2018, making it one of the worst-performing currencies in Asia, according to Refinitiv data, due to heavy foreign outflows. 

** The rupee has declined 4.9 percent since a political crisis started in October. That crisis had dented investor sentiment and delayed Sri Lanka’s borrowing plans. 

** A series of credit rating downgrades after the political crisis have made it harder for Sri Lanka to borrow as it faces record high repayments. 

** The Colombo Stock Index ended 0.1 percent firmer at 5,951.56 on Wednesday. The benchmark index lost 5 percent in 2018. 

** Turnover was 202.5 million rupees ($1.11 million), well below last year’s daily average of 834 million rupees. 

** Foreign investors were net buyers for a second straight session on Wednesday, buying a net 20.9 million rupees worth of shares. But they have been net sellers of 2.4 billion rupees worth of stocks so far this year and 15.7 billion rupees since a political crisis began on Oct. 26. 

** The bond market saw outflows of 86.7 billion rupees between Oct. 25 and Jan. 16, the latest central bank data showed. 

($1 = 182.0000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lanka rupee falls on importer dollar demand; stocks post 8-week closing low

Reuters: ** Sri Lanka’s rupee closed weaker on Tuesday due to dollar demand from importers, while stocks fell to an eight-week closing low amid concerns over debt repayment by the government. 

** The rupee closed at 182.00/20 per dollar, compared with 181.75/90 in the previous session, market sources said. On Jan. 3, the rupee fell to an all-time low of 183.00 against the dollar. 

** The currency has depreciated 0.3 percent so far this year, Refinitiv data showed. 

** It fell 19 percent in 2018, making it one of the worst-performing currencies in Asia, according to Refinitiv data, due to heavy foreign outflows. 

** Worries over heavy debt repayment after a 51-day political crisis have dented investor sentiment as the county is struggling to repay its foreign loans, with a record $5.9 billion due this year including $2.6 billion in the first three months. 

** The central bank chief last week said around $5 billion borrowing in the pipeline could help debt repayments.

** The International Monetary Fund last week said it would resume discussions for further disbursal of part of a $1.5 billion loan amid investor worries of heavy debt repayments. 

** The rupee has declined 4.9 percent since a political crisis started in October. That crisis had dented investor sentiment and delayed Sri Lanka’s borrowing plans. 

** A series of credit rating downgrades have made it harder for Sri Lanka to borrow as it faces record high repayments. 

** The Colombo Stock Index ended 0.24 percent weaker at 5,944.17 on Tuesday. The benchmark index lost 5 percent in 2018. 

** Turnover was 206.6 million rupees ($1.14 million), well below last year’s daily average of 834 million rupees. 

** Foreign investors were net buyers for the first time in 11 sessions, buying a net 18.7 million rupees worth of shares. But they have been net sellers of 2.4 billion rupees worth of stocks so far this year and 15.8 billion rupees since the political crisis began on Oct. 26. 

** The bond market saw outflows of 86.7 billion rupees between Oct. 25 and Jan. 16, the latest central bank data showed. 

($1 = 182.0000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez;Editing by Subhranshu Sahu)

Sri Lanka rupee slips on importer, bank dollar demand; stocks down

Reuters: ** Sri Lanka’s rupee closed slightly weaker on Monday, snapping two straight sessions of gains, due to dollar demand from banks and importers. 

** Stocks fell 0.5 percent to their lowest close in eight weeks. 

** The rupee ended at 181.75/90 per dollar on Monday, compared with 181.50/65 in the previous session, market sources said. On Jan. 3, the rupee fell to an all-time low of 183.00 against the dollar. 

** The currency has appreciated 0.6 percent so far this year, Refinitiv data showed. 

** It fell 19 percent in 2018, making it one of the worst-performing currencies in Asia, according to Refinitiv data, due to heavy foreign outflows. 

** The International Monetary Fund last week said it would resume discussions for further disbursal of part of a $1.5 billion loan amid investor worries of heavy debt repayments. 

** Sri Lanka is struggling to repay its foreign loans, with a record $5.9 billion due this year including $2.6 billion in the first three months. The central bank chief said around $5 billion borrowing in the pipeline could help debt repayments.

** The rupee has declined 4.8 percent since a political crisis started in October. That crisis had dented investor sentiment and delayed Sri Lanka’s borrowing plans. 

** A series of credit rating downgrades have made it harder for Sri Lanka to borrow as it faces record high repayments. 

** The Colombo Stock Index ended 0.49 percent weaker at 5,958.47 on Monday. The benchmark index lost 5 percent in 2018. 

** Turnover was 793.3 million rupees ($4.37 million), less than last year’s daily average of 834 million rupees. 

** Foreign investors sold a net 46.9 million rupees worth of shares on Monday. They have been net sellers of 15.8 billion rupees worth of stocks since a political crisis began on Oct. 26. The bond market saw outflows of 86.7 billion rupees between Oct. 25 and Jan. 16, the latest central bank data showed. 

** Foreign investors pulled a net 22.8 billion rupees out of stocks last year, while they net sold 159.8 billion rupees from government securities from January through Dec. 26, bourse and central bank showed data. 

($1 = 181.5500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez)

Sri Lanka rupee extends gains on dollar sales by bank; stocks steady

Reuters:  ** Sri Lanka’s rupee closed firmer for a second straight session on Friday, helped by dollar selling by banks and after the IMF said it would resume discussions with the island nation for further disbursal of part of a $1.5 billion loan and the central bank chief said around $5 borrowing in the pipeline could help debt repayments. 

** Sri Lanka will receive a loan of $1 billion from Bank of China before the end of the January-March quarter, Central Bank Governor Indrajit Coomaraswamy told Reuters on Thursday, and is in discussions to borrow nearly $5 billion to help the country meet repayments in the coming months. 

** Sri Lanka is struggling to repay its foreign loans, with a record $5.9 billion due this year including $2.6 billion in the first three months. 

** After a meeting with Sri Lanka’s Finance Minister Mangala Samaraweera, the International Monetary Fund (IMF) said on Wednesday the discussions would resume in February, after a political crisis led to talks being delayed by three months. 

** The rupee ended at 181.50/65 per dollar on Friday, compared with 181.60/75 in the previous session, with a foreign bank selling dollars, market sources said. On Jan.3, the rupee fell to an all-time low of 183.00 against the dollar. 

** The rupee fell 19 percent in 2018, making it one of the worst-performing currencies in Asia, according to Refinitiv data, due to heavy foreign outflows. 

** Coomaraswamy on Thursday said the sharp depreciation was a powerful “pro-growth inducement” for the country’s exports. 

** The rupee has declined 4.7 percent since a political crisis started in October. That crisis had dented investor sentiment and delayed Sri Lanka’s borrowing plans. 

** A series of credit rating downgrades have made it harder for Sri Lanka to borrow as it faces record high repayments. 

** The Colombo Stock Index ended 0.02 percent weaker at 5,988.07 on Friday. The benchmark index lost 5 percent in 2018. 

** Turnover was 660.8 million rupees ($3.64 million), less than last year’s daily average of 834 million rupees. 

** Foreign investors sold a net 410.5 million rupees worth of shares on Friday. They have been net sellers of 15.7 billion rupees worth of stocks since a political crisis began on Oct. 26. The bond market saw outflows of 77.9 billion rupees between Oct. 25 and Jan. 9, the latest central bank data showed. 

** Foreign investors pulled a net 22.8 billion rupees out of stocks last year, while they net sold 159.8 billion rupees from government securities from January through Dec. 26, bourse and central bank showed data. 

** For a report on major currencies, cli($1 = 181.4000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Insurance Industry records 9.9% growth in GWP in Q3, 2018

Sri Lanka Insurance industry was able to achieve a growth of 9.96% in terms of overall Gross Written Premium (GWP), during the third Quarter of 2018,recording an increase of Rs. 11,757 million when compared to the same period in the year 2017. The GWP for Long Term Insurance and General Insurance Businesses for the period ending September 30, 2018 was Rs. 129,773 million

compared with the same period in 2017 amounting to Rs. 118,016 million posting a growth of 9.96% (Q3, 2017: 15.53%).

The GWP of Long Term Insurance Business amounted to Rs. 58,150 million (Q3, 2017:Rs. 51,893 million) recording a growth of 12.06% (Q3, 2017: 11.50%). The GWP of General Insurance Business amounted to Rs. 71,622 million (Q3, 2017: Rs. 66,123million) recording a growth of 8.32% (Q3, 2017: 18.89%).

The value of total assets of insurance companies has increased to Rs. 588,746million as at 30th September2018, when compared to Rs. 548,361millionrecorded as at end of 30th September 2017, reflecting a growth of 7.36% (Q3, 2017: 10.14%). The assets of Long Term Insurance mounted to Rs. 417,347 million (Q3, 2017:Rs. 387,461 million) indicating a growth rate of 7.71% year-on-year.

However, the growth of assets of long term insurance business has significantly dropped compared to 13.27% growth recorded during3rd quarter of 2017. The assets of General Insurance Business amounted to Rs. 171,400 million (Q3, 2017: Rs. 160,900 million) depicting a growth rate of 6.53%(Q3, 2017: 3.28%) at the end of 3rd quarter 2018. Accordingly, the growth of assets of general insurance business has shown a significant increase compared to the same period of 2017.

www.dailynews.lk

All Sri Lanka's Hunas Falls stockholders get offer from Japan-backed Serenity Lake Leisure

ECONOMYNEXT - Serenity Lake Leisure (Private) Limited which gained control of Sri Lanka's Hunas Falls Hotel Plc on January 14 made an offer to purchase all remaining shares at 187 rupees, the company said.

Serenity Lake Leisure (SLL) said it will buy any shares purchase Hunas Falls shares for 187 rupees per share, which was the price at which the firm was bought over.

On Thursday, 11.4 percent of the firm's shares changed hands in negotiated trades for 187 rupees per share, which was the same price as the controlling shares.

Serenity Lake Leisure is owned by TAD Lanka Holdings (Private) Limited, which was founded in 2016 by Toshiaki Tanka, Atheeq Ansar and Dhanuka Samarasinghe with Japanese funds to invest in diverse interests.

SLL bought 66.20 percent of Hunas Falls shares from the Hayleys Group for 696.4 million rupees, paying more than double the price of 79 rupees on January 02.

At 187 rupees per share, Hunas Falls is now valued at 1.05 billion rupees, compared to a market value of 444.4 million rupees before the take-over.

The firm has an asset base of 402 million rupees.

Sri Lanka Tea Smallholder Factories Dec net up 47-pct

ECONOMYNEXT – Sri Lanka’s Tea Smallholder Factories said net profit rose 47 percent to 13.7 million rupees in the December 2018 quarter from a year ago although it was still in the red for the nine months.

The company, in which John Keells Holdings has a 37.62 percent stake, reported earnings per share of 46 cents for the quarter in which sales fell 27 percent to 481 million rupees. .

Interim results filed with the stock exchange showed that for the nine months to December 2018 it made a loss per share of 50 cents compared with earnings of 1.82 rupees the year before.

In the December quarter, Tea Smallholder Factories, which makes black tea from leaves bought from small farmers, made lower profits in the southern Galle low country district where it has the bulk of sales.

The loss from its factories in the Ratnapura region rose to 12 million rupees while profits rose from its factories in the hill country Nuwara Eliya district.

The other two main shareholders of the firm are Akbar Brothers Limited with 24.39 percent and Central Finance Company with 22.85 percent.

Sri Lanka rupee, stocks rise after IMF statement

Reuters: ** Sri Lanka’s rupee and shares closed firmer on Thursday, a day after the International Monetary Fund (IMF) said it would resume discussions with the island nation for further disbursal of part of a $1.5 billion loan. 

** After a meeting with Sri Lanka’s Finance Minister Mangala Samaraweera, the global lender said the discussions would resume in February, after a political crisis led to talks being delayed by three months. 

** The rupee ended at 181.60/75 per dollar on Thursday, compared with 182.30/40 in the previous session, with a foreign bank selling dollars, market sources said. On Jan.3, the rupee fell to an all-time low of 183.00 against the dollar. 

** The rupee fell 19 percent in 2018, making it one of the worst-performing currencies in Asia, according to Refinitiv data, due to heavy foreign outflows. 

** Central Bank Governor Indrajit Coomaraswamy on Thursday said the sharp depreciation was a powerful “pro-growth inducement” for the country’s exports. 

** The rupee has declined about 5 percent since a political crisis started in October. That crisis had dented investor sentiment and delayed Sri Lanka’s borrowing plans. 

** A series of credit rating downgrades have made it harder for Sri Lanka to borrow as it faces record high repayments of $5.9 billion this year, with $2.6 billion of it due in the first three months. 

** Sri Lanka will receive a loan of $1 billion from Bank of China before the end of the March quarter, the chief of the central bank said on Thursday, to help the country meet repayments in the coming months. 

** The central bank on Jan.9 said that the Reserve Bank of India (RBI) had agreed to provide $400 million to it under a regional swap facility and it had also requested a further bilateral swap arrangements of $1 billion. 

** The Colombo Stock Index ended 0.26 percent firmer at 5,989.12 on Thursday. The benchmark index lost 5 percent in 2018. 

** Turnover was 341.7 million rupees, less than half of last year’s daily average of 834 million rupees. 

** Foreign investors sold a net 7.2 million rupees worth of shares on Thursday. They have been net sellers of 15.3 billion rupees worth of stocks since a political crisis began on Oct. 26. The bond market saw outflows of 77.9 billion rupees between Oct. 25 and Jan. 9, the latest central bank data showed. 

** Foreign investors pulled a net 22.8 billion rupees out of stocks last year, while they net sold 159.8 billion rupees from government securities from January through Dec. 26, bourse and central bank showed data. 

** Sri Lanka President Maithripala Sirisena appointed a cabinet of ministers from his rival party on Dec. 21 after he was forced to reinstate Ranil Wickremesinghe as prime minister, 51 days after he was sacked. 

(Reporting by Shihar Aneez and Ranga Sirilal; Editing by Subhranshu Sahu)