New Board to allow Maldivian companies to list

The Colombo Stock Exchange (CSE) will allow Maldivian non-resident foreign companies to list, buy and sell securities through the proposed, Multi-Currency Board, Colombo Stock Exchange CEO, Rajeeva Bandaranaike said.

He was speaking at the Maldives Stock Exchange (MSE), Capital Market Development Authority of Maldives (CMDA), CSE conducted road show for potential Maldivian Issuers and Investors held in Male. The event marked the first Issuer Forum conducted by CSE on foreign soil.

The MSE CEO, Hassan Manik said listing in the CSE will provide Maldivian listed companies an opportunity to achieve proper values for their shares. He noted that at present, shares of listed Maldivian companies do not have correct values, which is caused by the lack of liquidity in the market.

CSE Chairman Vajira Kulatilaka said that engaging Maldivian companies has long been an objective at CSE and that reaching out to them first, represents the trust and confidence placed in the Maldives and its business sector.

He stated “We have recently implemented a number of investment and policy measures to give the exchange world-class status. The CSE offers a unique opportunity to raise capital in one of the fastest growing economies in Asia, through an exchange that on average performed better than most major global indices in recent years.”

Maldives Economic Development Minister Mohamed Saeed commended Sri Lankan listed companies for effective capital market engagement and called on Maldivian companies to embrace the many opportunities available in the Sri Lankan capital market.

Softlogic Holdings Chairman and Managing Director, Ashok Pathirage said sourcing capital is just one benefit of listing on the CSE and outlined that listing also fosters good corporate governance, paves the wayfor an optimised company structure and helps in growing the organization through attracting quality talent.

The Issuer Forum comes against the backdrop of a strategic initiative by CSE to introduce a Multi-Currency Board to list and trade companies incorporated and operating outside Sri Lanka.

Over 30 representatives from 20 potential Issuers from the Maldives and seven investment banks from Sri Lanka were present at the event.
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Ceylinco Life declares Rs 2.9 bn as bonuses

Policyholders of Ceylinco Life will celebrate more than the Sinhala and Tamil New Year this April, as they are due to receive a mammoth Rs 2.9 billion as bonuses from the life insurance leader.

Benefitting more than 300,000 policyholders, this bonus pay-out comprises of annual bonuses and 'Avurudu Cash' bonuses, the company announced this week.

This year's annual bonus is the highest in Ceylinco Life's history, and is in respect of the surplus generated by the company's Life Fund in FY 2015. Even policyholders who purchased their policies in December 2015 will be eligible to receive a bonus, in line with the company's policy of declaring bonuses from the very first year of issue of a policy.

Annual bonus certificates totalling Rs 2.9 billion in value will reach entitled policyholders in the post in April and May, and some of them will be accompanied by an invitation to the policyholder from Ceylinco Life to increase his or her life cover, or obtain a retirement plan,to be eligible to win a package tour to Singapore or a smartphone. Meanwhile, some 16,000 Ceylinco Life policyholders will receive immediately encashable cheques to the value of Rs 66.2 million in the post in early April, the company disclosed.

These are the 'Avurudu Cash' bonuses unique to Ceylinco Life, with which the company rewards policyholders for their loyalty. These cash bonuses are presented to Life policyholders who have completed their 10th, 15th, 20thand 25thpolicy year as at 31st December 2015. Ceylinco Life is the only insurer in the industry that pays such cash bonuses.

The cash bonuses are computed at Rs 100 for every Rs 1,000 of the sum assured for policyholders who have completed 25 years, while policyholders who have completed 20 years are eligible to receive a cash bonus computed at Rs 75 per Rs 1,000 sum assured, those who have completed 15 years Rs 50 per Rs 1000 sum assured and those who have completed 10 years Rs 25 per Rs 1000 sum assured.

On this basis, a participating policy with a sum assured of Rs. 1 million will be entitled to a cash bonus of Rs 25,000 on completion of 10 years, Rs 50,000 on completion of 15 years, Rs 75,000 on completion of 20 years and Rs 100,000 on completion of 25 years.

With this year's cash bonus payments, the cumulative value of cash bonuses paid by Ceylinco Life will exceed Rs 410 million.
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NSB posts highest Profit of Rs.13 bn

The National Savings Bank (NSB) has recorded a 26.2% rise in profit after tax to reach Rs. 8.7 billion for the year ended December 31, 2015. The Bank reported an interest income of Rs. 78.1 billion whilst interest expenses marginally decreased by 2.8%. As a result the Net Interest Income rose to Rs. 27 billion. NSB’s total deposit base grew by 7.5% to reach Rs. 595.8 billion while ordinary savings recorded an impressive growth of 15.4% reaching Rs. 163.4 billion.

“I am delighted to be associated with the Bank in this momentous year of growth”, Chairman Aswin De Silva said. “The achievement is significant as it is attributed largely to an organic growth representing core business areas. As we forge ahead towards building a financial resilience in Sri Lanka, we are bolstered by trust and confidence placed in us by all our stakeholders”, he said. The Bank’s growth in profitability in 2015 has been attributed to five key factors: growth in co-business signifying a 26 percent increase in net interest income, improvement in asset quality through the reduction of the Bank’s non-performing loans ratio from 7.6 percent in 2014 to 3.5 percent, increased business volume through a clearer focus on under penetrated business areas such as inward foreign currency remittances, enhanced efficiency and productivity through a well managed operating cost structure and wider reach and accessibility.

“We are privileged to have contributed Rs. 11 billion to the Government by way of taxes, fees and dividend during 2015,” the General Manager and CEO S. D. N Perera said. “The strategic and operational action plan will assist continuity of growth and meeting targets” he added. NSB’s loans and advances grew by 22 percent, its retail lending portfolio increased by 16 percent and corporate lending by 29 percent. The total assets of the Bank stood at Rs. 848 billion indicating a growth of 9 percent. NSB’s Tier 1 capital adequacy ratio stood at 17.8 percent, while total capital adequacy for the reviewed period was at 16.3 percent which were well above the minimum regulatory requirements. The Bank added 9 new branches in 2015 increasing its total branch network to 245.

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Dankotuwa Porcelain to enter Indian market

Dankotuwa Porcelain will be expanding operations into the Indian markets, Dankotuwa Chief Executive Officer Wasaba Jayasekera said yesterday.

Speaking at the 33rd anniversary event he said that Dankotuwa Porcelain has a growing demand in India and the foundation has been laid to begin operations and are looking forward in expanding by the end of this year.

Jayasekera said that currently although Dankotuwa holds advantage over its quality, building relationship and the strength of employees it seems to be lagging in the basics of manufacturing.

“Lacking best practices in the local market has resulted in a stagnating position therefore the planting of the tree pallets marks a new beginning in our 33 porcelain lifespan”, he said. “Aggressively looking towards achieving a sustained manufacturing process with extra value added products which enables to increase profitability for all stakeholders involved”, Jayasekera said.

He added that we are looking forward in attaining higher growth markets locally and in new markets we have set foot in.

The CEO said all Dankotuwa showrooms will be transformed into signature showrooms and looks forward in bringing down cutting edge technological equipments to increase the standards of the manufacturing process. He added that leading science and research institutions have partnered with Dankotuwa Porcelain to develop nano-engineered materials which will lead to much higher value added porcelain products.

The company exports to 40 countries in five continents and now looks forward to further draw up franchises with several more companies in New Delhi and various other states of India.

He said that as a whole Dankotuwa Porcelain enters a new beginning with it’s commemoration of the 33rd anniversary by ensuring to attain agility and rebuild on the stagnation by giving due consideration to the stakeholders in the upcoming years.

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Monetary Policy Review – March 2016 - Policy rates unchanged

According to provisional estimates of the Department of Census and Statistics (DCS), the Sri Lankan economy grew by 4.8 per cent, in real terms, in 2015 compared to 4.9 per cent in the previous year. The expansion of the economy in 2015 was mainly supported by services related activities, which grew by 5.3 per cent during 2015. Agriculture and industry related activities also contributed positively to the growth during the year, expanding by 5.5 per cent and 3.0 per cent, respectively. The growth in 2015 was largely driven by an increase in consumption demand, while investment activities witnessed a deceleration. 

Headline inflation (year-on-year) based on the Colombo Consumer Price Index (CCPI, 2006/07=100) increased to 2.7 per cent in February 2016, compared to 0.9 per cent in January 2016, mainly due to the dissipation of the base effect. Annual average headline inflation also edged up to 0.9 per cent in February 2016 from 0.7 per cent in the previous month. In line with these movements, year-on-year headline inflation, based on the National Consumer Price Index (NCPI, 2013=100), also increased to 1.7 per cent in February 2016 from negative 0.7 per cent recorded in the previous month, and was 2.6 per cent on an annual average basis. Meanwhile, the increasing trend witnessed in CCPI based core inflation continued into February 2016 as well, with core inflation registering 5.7 per cent, on a year-on-year basis, in comparison to 4.6 per cent in the previous month. Going forward, with the policy measures already adopted by the Central Bank, inflation is expected to remain in low- to mid-single digit levels during the remainder of the year. 

On the external front, the deficit in the trade account narrowed by 9.1 per cent, year-on year, in January 2016 as the decline in expenditure on imports has been greater than the decline in earnings from exports. Earnings from tourism are estimated to have increased by 19.4 per cent in February 2016, while workers’ remittances, which declined by 0.5 per cent during 2015, recorded an increase of 8.0 per cent during January - February 2016. Gross official reserves, which stood at US dollars 7.3 billion at end 2015, are estimated to have decreased to US dollars 6.6 billion by end February 2016, mainly due to debt service payments and the supply of foreign exchange to the domestic foreign exchange market largely to cover the demand arising from foreign investors who moved their funds away from the government securities market. Meanwhile, the Sri Lanka rupee remained broadly unchanged against the US dollar thus far during 2016. 

In the monetary sector, market interest rates have risen, reflecting the tightening monetary conditions and the transmission of policy actions of the Central Bank. The year-on-year growth in broad money (M2b), which responds to monetary policy actions with a time lag, remained high at 19.1 per cent in January 2016 in comparison to 17.8 per cent recorded at end 2015. Private sector credit growth was 25.7 per cent in January 2016 compared to 25.1 per cent in December 2015 and 27.0 per cent in November 2015. In absolute terms, private sector credit grew by Rs. 43.6 billion during January 2016. Going forward, the growth of monetary aggregates is expected to decelerate gradually over the remainder of the year, reflecting the impact of the upward movement in market interest rates, while the envisaged fiscal consolidation path is expected to support the moderation of monetary expansion. 

Considering the above, the Monetary Board, at its meeting held on 29 March 2016, was of the view that the current monetary policy stance is appropriate and decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank unchanged at 6.50 per cent and 8.00 per cent, respectively.

Sri Lanka shares hit 2-wk closing low ahead of cbank rate review

Reuters: Sri Lankan shares closed at a two-week low in thin trade on Tuesday, led by blue chip shares, as concerns over economic growth and rising interest rates weighed on sentiment ahead of a decision on interest rates by the central bank.

The Central Bank of Sri Lanka is expected to raise key interest rates by at least 25 basis points late on Tuesday, a Thomson Reuters poll showed, as it seeks to reduce downward pressure on the fragile local currency.

The benchmark share index ended 0.5 percent, or 30.20 points, weaker at 6,031.85, its lowest close since March 16.

"There are no positive catalysts to push the market up. The index will come down further with foreign investors exiting intermittently and the expectation of further rate hike," said Yohan Samarakkody, head of research, SC Securities (Pvt) Ltd.

Rising debt, ratings downgrade and outlook revisions by rating agencies, slowing economic growth, a widening fiscal deficit, looming balance of payments crisis, and changes in budget proposals have dented investor sentiment, analysts said.

Rising yields on treasury bills following an unexpected rate hike by the central bank in mid-February have spurred investor appetite for fixed interest rate-bearing assets, dealers said.

Yields on t-bills are hovering near 29-month highs after jumping between 116 and 195 basis points since the central bank raised key policy rates by 50 basis points from a record low on Feb. 19.

Shares in conglomerate John Keells Holdings Plc fell 1.7 percent, while Distilleries Company of Sri Lanka Plc fell 2 percent.

Turnover was 273.6 million rupees ($1.85 million), its lowest since Feb. 11 and around a third of this year's daily average of 774.9 million rupees.

Foreign investors bought a net 52.8 million rupees worth of shares on Tuesday, but they have been net sellers of 2.06 billion rupees worth shares so far this year. 

($1 = 147.5000 Sri Lankan rupees) 

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

Sri Lanka shares fall ahead of policy meeting

Reuters: Sri Lankan shares fell on Monday from a more than three-week closing high hit in the previous session ahead of a central bank policy meeting, while concerns over economic growth and rising interest rates also dented sentiment.

The Central Bank of Sri Lanka is expected to raise its key interest rates by at least by 25 basis points on Tuesday, a Thomson Reuters poll showed, as it seeks to reduce downward pressure on the fragile local currency.

The benchmark share index ended 0.5 percent, or 30.40 points, weaker at 6,062.05, after posting its highest close since March 1 on Thursday. Sri Lankan markets were closed on Friday for a local holiday.

Foreign investors sold a net 58.3 million rupees ($396,060) worth of shares on Monday, extending their net selling so far this year to 2.12 billion rupees.

"Investors are very cautious and are waiting for the outcome of the policy meeting," said Reshan Kurukulasuriya, chief operating officer at Richard Pieris Securities Pvt Ltd.

Sri Lanka's economy is expected to expand 5.3 percent in 2016, government data showed last week, but analysts say tight monetary and fiscal policies may curb growth.

Rising yields on treasury bills following an unexpected interest rate hike by the central bank in mid-February, have spurred investor appetite for fixed interest rate-bearing assets, dealers said.

Yields on t-bills are hovering near 29-month highs after jumping between 116 and 195 basis points since the central bank raised key policy rates by 50 basis points from a record low on Feb. 19.

Lion Brewery Ceylon Plc shares fell 8.20 percent on Monday, while conglomerate John Keells Holdings Plc dropped 0.99 percent.

Turnover was 397.4 million rupees, a little more than half of this year's daily average of 784 million rupees.