Low rates push Sri Lanka stocks to over 33-month high

(Reuters) - Sri Lankan stocks hit more than 33-month highs on Wednesday, as investors bought into the island nation's risky assets after yields in risk free treasury bills further fell after the central bank kept policy rates at multi-year lows.

Continued foreign buying also boosted sentiment.

The main stock index rose 0.22 percent, or 14.77 points, to 6,742.56, its highest close since Oct. 3, 2011.

Yields in treasury bills fell further at the Wednesday's weekly auction.

"Though we don't see a galloping market, it will be stable and positive," said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

The central bank on Monday kept policy rates steady at multi-year lows for a sixth straight month, as expected, despite private sector credit growth slowing to a 4-1/2-year low.

The index is in the overbought region since July 3 as it has gained 5.71 percent so far this month, Thomson Reuters data showed.

Analysts said the profit-taking in the mid cap shares and penny stocks was overshadowed by the gains in large cap shares.

Turnover was 1.21 billion rupees ($16.82 million), more than this year's daily average of about 1.09 billion rupees. Foreign investors accounted for 37.4 percent of the day's turnover.

Foreign investors were net buyers of 326.3 million rupees worth of shares on Wednesday, extending net foreign inflows in stocks to 9.79 billion rupees so far this year.

Tuesday's gains were led by Carson Cumberbatch, which rose 2.27 percent to 460.20 rupees and Bukit Darah Plc , which gained 3.75 percent to 700 rupees.

Shares in the market heavyweight John Keells Holdings gained 1.03 percent to close at 244.90 rupees.

Lower interest rates have prompted local investors to buy shares and shift their savings from unattractive fixed assets, analysts said, as yields on treasury bills edged down further at a weekly auction on Wednesday.

Analysts said foreigners have been buying risky assets because they see value in them, while falling yields in fixed assets gradually prompt local investors to shift to equities.

The market has been on a rising trend since late February due to continued foreign buying and lower interest rates. 

($1 = 130.1800 Sri Lankan Rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)

Sri Lanka shares close up 0.2-pct

July 16, 2014 (LBO) - Sri Lanka's shares closed 0.22 percent higher on Wednesday with continued foreign inflows extending gains further, brokers said.

The Colombo benchmark All Share Price Index closed 14.77 points higher at 6,742.56, up 0.22 percent. The S&P SL20 closed 10.79 points higher at 3,761.05, up 0.29 percent.

Turnover was 1.21 billion rupees, down from 2.19 billion rupees a day earlier with 105 stocks closed positive against 98 negative.

Distilleries closed 1.20 rupees lower at 203.80 rupees with an off-market transaction of 81.60 million rupees changing hands at 204.00 rupees per share contributing 7 percent of the turnover.

John Keells Holdings closed 2.50 rupees higher at 244.90 rupees with market transactions of 374.35 million rupees contributing 31 percent of the turnover.

JKH’s W0022 warrants closed 50 cents higher at 64.70 rupees and its W0023 warrants closed 60 cents lower at 74.10 rupees.

The aggregate value of all off-the-floor deals represented 14 percent of the turnover.

PC Pharma closed 10 cents higher at 3.20 rupees and E-Channelling closed 2.10 rupees higher at 15.70 rupees, attracting most number of trades during the day.

Foreign investors bought 452.04 million rupees worth shares while selling 125.62 million rupees worth shares.

Bukit Darah closed 25.30 rupees higher at 700.00 rupees, contributing most to the index gain.

Carson Cumberbatch closed 10.20 rupees higher at 460.20 rupees and Lion Brewery Ceylon closed 21.70 rupees higher at 673.80 rupees.

Piramal Glass posts Rs. 86 m PAT in 1Q

Piramal Glass Ceylon PLC has announced its results for the first quarter of FY 2015 with Rs. 1,245 million of revenue and Rs. 86 million profit after tax (PAT) showing a growth of 13% at operating profit and 41% growth at PAT level when compared with the profitability of FY2013 (excluding profit from land sale).

The total revenue generated during the quarter under review stood at as Rs. 1,245 mn as against Rs.1,233 mn depicting a 2% overall growth.

"We were happy to note that the domestic sales in Q1 showed positive signs with a growth of 8% by achieving Rs.994 mn during the current quarter as against Rs. 916 mn of the previous year similar quarter.

The Export Market sale was Rs. 251 mn as against Rs. 307 million of the previous year saw a decline of 18%. The Exports to Indian market which was effected during the past few quarters due to the currency fluctuation in India has recovered to some extent and the company was able to achieve its expected sales in India.

The Gross Profit saw a marginal decrease from 22% in Q1 F2014 to 21% in Q1 F2015, while the operating profit increased from 10% in first quarter of F2014 to 11% during the quarter under review.

The company saw a substantial increase in the direct and indirect costs during the quarter.The main increases were seen in Raw Material and Packing Material costs which has directly impacted the production costand the gross profit margins.

The Finance Cost too showed a 41% reduction from Rs. 54 mn in the 1st quarter of F 2014 to Rs. 32 mn in the first Quarter of F 2015 due to decline of interest rates and as most of the long term loan debts are now settled.
www.dailynews.lk

LB Finance mulls Vallibel merger

H.D.H Senewiratne (hsenewiratne@gmail.com)

Sri Lanka's third largest finance company LB Finance is exploring options of merging with Vallibel Finance as part of the Central Bank directive to create strong financial sector in the country, market sources said.

LB Finance's major loan impairment came down last year in the gold loan business due to the gold price slash. This year with the rise in gold prices, low bank interest rates and high GDP growth, its position has improved and is expected to improve in the coming year, Research Manager First Capital Research Dimantha Mathew told the Daily News Business.

At present there are 58 financial companies in the country. Under the Central Bank of Sri Lanka ruling the number is to be reduced to 20 financial entities as part of the consolidation programme.

Mathew said that these two entities are looking at the option of merging with Vallibel Finance Plc. However, Vallibel Finance is owned by Vallibel investment. The entities high performance it has the largest deposit base out of all the finance companies with a deposit base of Rs 46 billion in financial year 2014 and to Rs 51 billion in next year, he said. Mathew also said that total asset base of the entity was Rs 60 billion in financial year 2014, while its asset base to reach Rs 69 billion next year with these new development in the company.

Further the company's current profitability has topped Rs 2 billion and it will increase 49 percent growth or Rs 2.3 billion for the financial year 2016.

LB Finance was incorporated in May 1971 as a private limited liability company and subsequently converted to a public limited liability company in 1982. The Company was listed on the Colombo Stock Exchange in 1998 and was re-registered in June 2008 under the new Companies Act No. 7 of 2007.

At the beginning, the majority shareholding was held by Lewis Brown and Company Limited. In 1994, Vanik Incorporation Limited acquired the controlling interest of the Company. Dhammika Perera,took over the company in 2003 and turned it around to be the vibrant and leading finance company that it is today.

LBF is a company in the Group of Vallibel One which is a diversified holding Company with strategic investments in financial services, tile and sanitary ware manufacturing and leisure. 

www.dailynews.lk

Sri Lanka bourse at 33-month high on low rates

(Reuters) - Sri Lankan stocks hit 33-month highs on Tuesday, led by diversified shares such as Carson Cumberbatch Plc and John Keells Holdings Plc a day after the central bank left policy rates steady at multi-year low.

Continued foreign buying also boosted sentiment.

The central bank kept policy rates steady at multi-year lows for a sixth straight month, as expected, despite private sector credit growth slowing to a 4-1/2-year low.

The main stock index rose 0.43 percent, or 28.76 points, to 6,727.79, its highest close since Oct. 3, 2011.

The index is in overbought region since July 3 as it has gained 5.47 percent so far this month, Thomson Reuters data showed.

"There can be profit-taking here and there, but the market will continue to gain with lowinterest rates and continued foreign buying. Investors are awaiting to see how the foreigners are reacting (in an overbought situation)," said a stockbroker asking not to be named.

Turnover was 2.19 billion rupees ($16.82 million), twice this year's daily average of around 1.09 billion rupees. Foreign investors accounted for 45.7 percent of the day's turnover.

Foreign investors were net buyers of 48.6 million rupees worth of shares on Tuesday, extending net foreign inflows in stocks to 9.46 billion rupees so far this year.

Tuesday's gains were led by Carson Cumberbatch, which rose 7.14 percent to 450 rupees, and Bukit Darah Plc, which gained 4.60 percent to 674.7 rupees.

Shares in conglomerate John Keells Holdings gained 1.29 percent to close at 243.4 rupees.

Lower interest rates have prompted local investors to buy shares and shift their savings from unattractive fixed assets, analysts said, as yields on treasury bills edged down further at a weekly auction on Wednesday.

Analysts said foreigners have been buying risky assets because they see value in them, while falling yields in fixed assets gradually prompt local investors to shift to equities.

The market has been on a rising trend since late February due to continued foreign buying and lower interest rates.

($1 = 130.1800 Sri Lankan Rupees)

(Reporting by Ranga Sirilaland Shihar Aneez; Editing by Anand Basu)

Sri Lanka shares close up 0.4-pct

July 15, 2014 (LBO) - Sri Lanka's stocks closed 0.43 percent higher with diversified stocks gaining despite strong foreign buying and selling, brokers said.

The Colombo benchmark All Share Price Index closed 28.76 points higher at 6,727.79, up 0.43 percent. The S&P SL20 closed 29.03 points higher at 3,750.26, up 0.78 percent.

Turnover was 2.19 billion rupees, up from 597.19 million rupees a day earlier with 107 stocks closed positive against 87 negative.

Distilleries closed 80 cents higher at 205.00 rupees with two off-market transactions of 816.00 million rupees changing hands at 204.00 rupees per share contributing 37 percent of the turnover.

The aggregate value of all off-the-floor deals represented 56 percent of the turnover.

PC Pharma closed 30 cents higher at 3.10 rupees and PCH Holdings closed 20 cents higher at 3.80 rupees, attracting most number of trades during the day.

Foreign investors bought 1.00 billion rupees worth shares while selling 952.31 million rupees worth shares.

Carson Cumberbatch closed 30.00 rupees higher at 450.00 rupees and Bukit Darah closed 29.70 rupees higher at 674.70 rupees, contributing most to the index gain.

Nestle Lanka closed 18.60 rupees higher at 2,090.00 rupees and John Keells Holdings closed 2.10 rupees higher at 242.40 rupees.

JKH’s W0022 warrants closed 30 cents higher at 64.20 rupees and its W0023 warrants closed 80 cents higher at 74.70 rupees.

Lion Brewery Ceylon closed 32.10 rupees lower at 652.10 rupees and Ceylon Tobacco Company closed 5.00 rupees lower at 1,102.30 rupees.

Jegatheesan Durairatnam has been appointed as the new managing director and chief executive officer of the Commercial Bank, the company said in a stock exchange filing.

CBSL Press Release - Monetary Policy Review – July 2014

The low inflation environment has continued, with year-on-year inflation remaining benign in June 2014 recording its lowest level since February 2012, while the annual average inflation has trended downwards. Headline inflation (y-o-y) for June 2014 recorded 2.8 per cent from 3.2 per cent in the previous month, while core inflation remained low at 3.5 per cent in June, although marginally higher than 3.3 per cent in May 2014. Prices of some items in the food category increased, but the base effect and the decline in non-food prices have contributed to the low inflation. Looking ahead, year-on-year inflation is expected to remain comfortably within mid-single digit levels during the remainder of the year in spite of weather related variations in agricultural produce.

In the external sector, the trade deficit has contracted for the eighth consecutive month in May 2014 led by a contraction in expenditure on imports while an increase in earnings from exports was observed mainly as a result of higher industrial and agricultural exports. Inflows from workers’ remittances and earnings from tourism have continued to grow. In the meantime, increased foreign inflows, on a net basis, were recorded due to investments in Government securities and inflows to the Colombo Stock Exchange and the private sector. Given the substantial foreign inflows, the Central Bank has absorbed around US dollars 735 million from the domestic foreign exchange market by 10 July 2014. Gross Official Reserves as at end May 2014 remained strong at US dollars 8.8 billion, equivalent to 5.9 months of imports.

Broad money (M2b) recorded a y-o-y growth of 13 per cent in May 2014. The improvement in net foreign assets (NFA) of the banking system largely contributed to the growth of broad money supply during the month. Indicating a positive trend, net credit to the government (NCG) contracted by around Rs. 11.5 billion during the month, while credit to public corporations also recorded a marginal decrease.

Nevertheless, lower credit disbursements to the private sector by commercial banks along with the decline in pawning advances resulted in a deceleration of the growth of private sector credit by the banking sector to 2.2 per cent (y-o-y) in May 2014. As markets remained sufficiently liquid, the continued moderation of growth of credit to the private sector is deemed temporary in view of gradually adjusting bank lending rates. At the same time, given the continued low inflation environment, the Central Bank would continue to encourage the banks to utilise the available space to reduce market lending rates further while tightening their spreads to provide further stimulus to the private sector to demand credit from the banks. Further, in support of credit granted on gold backed loans, the Central Bank introduced a new credit guarantee scheme for pawning advances in June 2014 for Licensed Commercial Banks and Licensed Specialised Banks engaged in pawning activities, to provide enhanced levels of credit to their customers. This scheme would assist farmers, small business owners and the SME sector entrepreneurs who use pawning advances for their economic and business activities.

Meanwhile, the Central Bank has also noted with satisfaction, the recent steps adopted by several bank and non-bank financial institutions supervised by the Central Bank, to introduce a number of investment instruments providing long term benefits aimed at senior citizens who rely on interest income. Such innovative financial products and schemes would provide the essential comfort to this segment of the population in a sustained low inflation environment. At the meeting held on 11th July 2014, the Monetary Board also noted the ongoing downward adjustments in market lending rates, which would result in the expected benefits of low cost of finance being fully transmitted to productive sectors of the economy.

In the above background, the Monetary Board decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank unchanged at their current levels of 6.50 per cent and 8.00 per cent, respectively.

The date for the release of the next regular statement on monetary policy would be announced in due course. http://www.cbsl.gov.lk/pics_n_docs/latest_news/press_20140714.pdf