Tourist arrivals reach 2.1 mln in 2017

Sri Lanka ended 2017 at 2.1 million arrivals, marginally higher than 2016 but below an earlier target of 2.5 million tourist arrivals for reasons including flash-floods, outbreak of dengue and the partial 3-month closure of the main international airport.

Arrivals in January to November 2017 reached 1.87 million, a marginal 2.5 per cent rise from 1.82 million in the same 2016 period. Arrivals last month reached 244,536 against 224,791 visitors recorded in December 2016.

The latest figures are available in the Sri Lanka Tourism new-look, user-friendly website which was launched recently. The website also has a new feature, a Chinese-language segment, catering to Sri Lanka’s soon-to-be second largest source market.

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Treasury to meet SEC, brokers to hasten demutualisation

By Duruthu Edirimuni Chandrasekera

Treasury officials will meet the Securities and Exchange Commission and stockbroker representatives next week to discuss fast-tracking demutualisation (the process through which a member-owned company becomes shareholder-owned) of the Colombo Stock Exchange (CSE), top Treasury officials said.

This process has been progressing slowly for a while owing to dissent between the SEC and brokers over the percentage that the latter should own after demutualisation, Treasury officials said. “The stockbrokers want more than 60 per cent in CSE (which is what the SEC is willing to part with) and argue that they deserve more as they started the CSE more than three decades ago without any assistance. But the regulator is adamant that 60 is the number. Each broker will get a maximum of 5 per cent if they agree to the 60 per cent,” one official said.

Demutualisation has been discussed for nearly a decade, Treasury officials say noting that it’s about time something actually happened.

The SEC Bill is to be presented to Parliament on January 25 and if passed will expedite demutualisation and establish a central counterparty clearing and settlement mechanism, provide for the development of new capital market products, and enhance investor protection.

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Sri Lankan shares climb to near 2-month closing high

Reuters: Sri Lankan shares rose on Friday, closing the first week of the new year on a firm note, on the back of heavy foreign buying in blue chips.

The Colombo Stock Index ended 0.85 percent firmer at 6,514.73, its highest close since Nov. 11.

It rose 2.3 percent this week, in its second consecutive weekly rise.

Foreign investors net bought shares worth 357.1 million rupees ($2.33 million) on Friday, extending the net foreign inflow in this year to 1.96 billion rupees.

They had net bought 18.5 billion rupees worth equities in 2017 and 633.5 million rupees in 2016.

Turnover stood at 1.4 billion rupees on Friday, more than last year’s daily average of 915.3 million rupees.

Shares in conglomerate John Keells Holdings Plc rose 2.6 percent, Dialog Axiata Plc gained 3.1 percent and Melstacorp Ltd climbed 3.1 percent.

There was continued buying interest with an added interest in blue chips, said Dimantha Mathew, head of research at First Capital Holdings.

“There is renewed interest from foreign investors which is a good sign,” said Mathew, adding that he expected the positive trend to continue due to declining market interest rates.

Treasury bill rates fell 188 basis points to 216 basis points between March and end-December 2017, mainly driven by foreign investors buying treasury bonds, resulting in declining market interest rates.

The country’s 2018 economic growth trajectory is likely to help boost market sentiment, analysts said.

Sri Lanka’s economic growth in 2018 is forecast at 5-5.5 percent, bouncing back from an anticipated four-year low of less than 4 percent last year, central bank Governor Indrajit Coomaraswamy said on Wednesday.

The central bank kept its benchmark interest rates unchanged last week, saying inflation and private sector credit growth have cooled to a manageable level as policy makers focus on supporting a slowing economy. 

($1 = 153.4500 Sri Lankan rupees) 

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

DFCC Bank to raise Rs 7 bn via debenture issue

DFCC Bank PLC has decided to raise Rs 7 billion via a debenture issue.

Accordingly, the bank will issue 50 million Basel III compliant, subordinated, listed, rated, unsecured, redeemable debentures with a non - viability conversion option, each at an issue price (par value) of Rs. 100 with a term of up to 7 years (“Debentures”), with an option to issue a further 20 million of said debentures in the event of an over-subscription, subject to obtaining all necessary regulatory and other approvals.

DFCC Bank PLC is a fully-fledged Commercial Bank that offers an array of seamless retail banking solutions. This includes Savings and Deposit products that give customers unmatched value and unique benefits.

The Bank has been rapidly growing its footprint across the country with a network of 138 service points and 95 fully fledged branches.

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Renuka Capital acquires shares of ONAL

Renuka Capital PLC, acquired by way of a crossing transaction on the Colombo Stock Exchange, 2,143,035 ordinary shares of On’ally Holdings PLC (“ONAL”) at a price of Rs. 48 per share representing 12.245% of the voting rights in ONAL.

Renuka Capital PLC therefore now owns a total of 6,175,790 shares in ONAL representing 35.29% of the voting rights of ONAL.

Pursuant thereto, a mandatory offer at a price of Rs. 48 per share will be made by Renuka Capital to the remaining shareholders of ONAL in terms of Rule 31(1) (a) of the Company Takeovers and Mergers Code 1995 as amended in 2003, to acquire the ordinary shares held by such shareholders in ONAL.

Accordingly, in compliance with the provisions of the Code, Renuka Capital will make a detailed announcement on the mandatory offer in terms of Rule 8(1) read together with Rule 9 of the Code shortly.
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Sri Lankan shares edge down amid high turnover

Reuters: Sri Lankan shares ended slightly weaker on Thursday amid heavy buying by foreign investors, but traders said sentiment was likely to remain positive after the central bank kept key policy rates unchanged last week.

The Colombo Stock Index ended 0.06 percent weaker at 6,459.66, snapping an eight-session win streak.

Shares in Ceylon Tobacco Company Plc fell 1.3 percent, while DFCC Bank Plc dropped 2.9 percent.

Losses were, however, capped by gains in Melstacorp Ltd , which climbed 1.9 percent, and conglomerate John Keells Holdings Plc, which rose 0.3 percent.

“Small volume of selling in CTC dragged the market down,” said Dimantha Mathew, head of research at First Capital Holdings.

“The positive trend due to declining market interest rates will continue.”

Turnover stood at 1.5 billion rupees ($9.77 million), more than last year’s daily average of 915.3 million rupees.

Foreign investors net bought shares worth 1.3 billion rupees on Thursday. Foreign investors net bought 18.5 billion rupees worth equities in 2017, and 633.5 million rupees worth stocks in 2016.

The index rose 2.26 percent in 2017, posting its first annual increase in three years. It fell 9.7 percent in 2016.

Since March 2017, treasury bill rates have fallen between 188 and 216 basis points though end-December, mainly driven by foreign investors buying treasury bonds, resulting in declining market interest rates.

The country’s 2018 economic growth trajectory is likely to help boost market sentiment, analysts said.

Sri Lanka’s economic growth in 2018 is forecast at 5-5.5 percent, bouncing back from an anticipated four-year low of less than 4 percent last year, central bank Governor Indrajit Coomaraswamy said on Wednesday. 

($1 = 153.6000 Sri Lankan rupees) 

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

FC Research forecasts steady phase for banking sector

First Capital Research (FC Research) expects the banking sector to have a steady phase during 2018E-20E with stable credit growth, improving GDP growth supporting lower Non Performing loans and lower interest rate volatility leading to stable NIMs, it said in a statement issued yesterday.

First Capital Research expects the banking sector universe to provide 25% average return over a one-year period exceeding the expected market return.

Credit growth to stabilize at 16%-18%: FC Research expects private sector credit growth to slow down to remain stable at 16% during 2018E gradually increasing to 18% through 2019E-2020E on improving GDP growth backed by progressing external sector performance levels and lower impairment due to better credit quality resultant to more business-related credit compared to consumer credit.

Interest rate stability to be mirrored in spreads: First Capital Research expects the banking sector interest spreads to stabilize in 2017E and thereon backed by the implementation of Inflation Targeting Framework, improved government revenue streams, increased foreign inflows into government securities market, introduction of Liability Management Bill to stabilize the interest rate and rate of inflation while the flexible exchange rate policy further supports it.

BASEL III Capital requirements satisfied:

Core and total capital adequacy ratios were maintained at 12.2% and 15% where the regulatory minimums were 5% and 10% respectively. Larger banks in the sector have already taken necessary steps to raise capital thus meeting the BASEL III capital requirement. This move ensures more stability and paves way for the industry to be more resilient and better poised for future growth.
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