Sri Lanka Treasuries yields ease at auction

ECONOMYNEXT - Sri Lanka's Treasury bill yields eased at Wednesday's action with the 12-month yield falling 21 basis points to 10.99 percent, the state debt office said.

The debt office, which is a unit of the Central Bank, offered 7 billion rupees of 60month bills and accepted 4,705 million dollars of bids at a weighted average yield of 9.95 percent down from 9.99 percent on December 19.

The debt office offered 8.5 billion rupees of 12-month bills and accepted 10,795 million rupees of bids.

There were no sales of 3-month bills. (Colombo/Jan02/2018)

Sri Lankan rupee ends near record low; shares edge higher

Reuters: ** The Sri Lankan rupee ended near record low on Wednesday due to continued outflows of foreign funds mainly from government bonds, as political uncertainty dented investor sentiment.

** The currency fell 19 percent in 2018, making it one of the worst performing currencies in Asia, as heavy foreign outflows from government securities weighed on the local currency.

** The rupee traded at an all-time low of 183.00 hit on Monday against the dollar before ending at 182.80/183.00 per dollar, compared with 182.70/90 in the previous session, market sources said.

** The local currency has weakened about 5.4 percent since Sri Lanka’s political crisis began on Oct. 26.

** The country’s central bank will continue to adopt an exchange rate policy, with cautious interventions at times of excessive volatility in the forex market, central bank chief Indrajit Coomaraswamy said on Wednesday, launching 2019’s economic policies.

** The policy is designed to maintain the competitiveness of the exchange rate and support the rebalancing of the current account, thereby supporting a gradual buildup of foreign exchange reserves as an external buffer, he added.

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

** The political crisis is expected to ease, though uneasy relations between the two men could cause fiscal problems, analysts have said. Parliament has approved 1.77 trillion rupees ($9.39 billion) to meet the first four months of expenditures in 2019 and avert a government shutdown from Jan. 1.

** Foreign investors were net buyers of 19.2 million rupees ($105,032.82) worth of shares on Wednesday but they have been net sellers of 13.4 billion rupees worth of stocks since the political crisis began. The bond market saw outflows of about 67.6 billion rupees between Oct. 25 and Dec. 26, central bank data showed.

** Last year, there were 22.8 billion rupees of outflows from stocks, while government securities suffered a net 159.8 billion rupees of outflows through Dec. 26, the latest data from the bourse and central bank showed.

** The Colombo stock index ended 0.16 percent firmer at 6,062.20 on Wednesday, The bourse lost 5 percent in 2018. Turnover was 211.5 million rupees, well below last year’s daily average of 834 million rupees.

** Credit agencies Fitch and S&P downgraded Sri Lanka’s sovereign rating in early December, citing refinancing risks and an uncertain policy outlook.

($1 = 182.8000 Sri Lankan rupees)

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Rashmi Aich)

New senior leadership at JKH

With the retirement of chairman Susantha Ratnayake on December 31st 2018, further to 4 decades of service at John Keells Group, JKH announced the following appointments, with effect from January 1, 2019.

Krishan Balendra as chairman of John Keells Holdings PLC and Gihan Cooray will assume office as deputy chairman in addition to his role as Group Finance Director of John Keells Holdings PLC.

Krishan Balendra was appointed as deputy chairman of JKH on January 1, 2018 and as an Executive Director of JKH in November 2016. He is also the former chairman of Nations Trust Bank PLC and was previously the president of the Leisure and Retail Industry Groups of JKH. Balendra joined JKH in 2002 as Head of Corporate Finance after stints at UBS Warburg, Hong Kong in Investment Banking and Aitken Spence Sri Lanka in Corporate Finance. Balendra, a former chairman of the Colombo Stock Exchange, holds a law degree (LLB) from the University of London and an MBA from INSEAD. He is also the Honorary Consul General of the Republic of Poland in Sri Lanka and a Member of the Main Committee of the Ceylon Chamber of Commerce

Gihan Cooray appointed as Group Finance Director of JKH on January 1st 2018. He is the chairman of Nations Trust Bank PLC and is an Executive Director of JKH since November 2016. Cooray holds an MBA from the Jesse H. Jones Graduate School of Management at Rice University, Houston, Texas. He is an Associate Member of the Chartered Institute of Management Accountants, UK, a Certified Management Accountant of the Institute of Certified Management Accountants, Australia and a diploma holder in Marketing from the Chartered Institute of Marketing, UK. He serves as a Member of the Sub-Committee on Economic, Fiscal and Policy Planning of the Ceylon Chamber of Commerce. www.island.lk

MBSL Midcap Index released

In a pioneering move, Merchant Bank of Sri Lanka & Finance PLC (MBSL) constructed a Stock market Index: the ‘MBSL MIDCAP Index’, which measures the aggregate price level and price movements of medium size companies listed on the Colombo Stock Exchange (CSE).

The index which came into operation in the Year 1999 is revised annually and looks at the Middle Range Market Capitalization, Liquidity and the Profitability of the firms to be included in the MBSL MIDCAP Index.

MBSL MIDCAP Index is used as the benchmark index by individuals and institutional investors who prefer growth but are prepared to with stand only conservative levels of volatility in their equity investments.

It can be used as the benchmark index for the introduction of MBSL MIDCAP linked index funds. MBSL MIDCAP Index generate valuable signals for portfolio managers for switching from larger-cap more sensitive stocks to midcap less sensitive stocks with more growth potential in response to changing capital market conditions.

The MBSL MIDCAP Index focus in profitability helps to screen stocks with better future prospects that will cross to higher market capitalization in the coming year. MBSL MIDCAP Index which is in effect from January 1, 2019 and the criteria for selecting the 25 stocks of the index remained unchanged.

They are; Middle Range Market Capitalization as at November 30, 2018, Liquidity based on number of trades during the year and Profitability within the last two years.

When calculating the midcap index for the previous year (2018), stocks were selected from the market capitalization range of Rs. 2.38 billion to Rs.23.85 billion and with the changes of ASPI the midcap range is defined for the year 2019 as Rs. 2.24 billion to Rs. 22.39 billion.

Based on the above criteria the MBSL MIDCAP index 2019 includes the following stocks representing 09 sectors.
www.dailynews.lk

Sri Lankan rupee ends 19 pct down in 2018; bond outflows weigh

Reuters: ** The Sri Lankan rupee fell 19 percent in 2018, making it one of the worst performing currencies in Asia, as heavy foreign outflows from government securities weighed on the local currency.

** The rupee hit a record low for a seventh straight session on Monday on continued outflows of foreign funds mainly from government bonds as political uncertainty dented investor sentiment.

** The rupee hit an all-time low of 183.00 against the dollar in early trade, surpassing its previous record of 182.90 marked in the prior session, Refinitiv Eikon data showed. ** It has weakened about 5.4 percent since Sri Lanka’s political crisis began on Oct. 26, and lost 19 percent this year.

** The rupee ended at 182.80/183.00 per dollar, compared with 182.75/183.25 in the previous session.

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

** The political crisis was expected to ease, though uneasy relations between the two men could cause fiscal problems, analysts have said. Parliament has approved 1.77 trillion rupees ($9.39 billion) to meet the first four months of expenditures in 2019 and avert a government shutdown from Jan. 1.

** Foreign investors have been net sellers of 13.3 billion rupees worth of stocks since the political crisis began. The bond market saw outflows of about 67.6 billion rupees ($370.21 million) between Oct. 25 and Dec. 26, central bank data showed.

** This year, there have been 22.8 billion rupees of outflows from stocks, while government securities suffered a net 159.8 billion rupees of outflows through Dec. 26, the latest data from the bourse and central bank showed.

** The Colombo stock index ended 0.62 percent firmer at 6,052.37 on Monday, but lost 5 percent for this year. Turnover was 288.5 million rupees, less than half of this year’s daily average of 834 million rupees.

** Credit agencies Fitch and S&P downgraded Sri Lanka’s sovereign rating in early December, citing refinancing risks and an uncertain policy outlook.

($1 = 182.6000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Subhranshu Sahu)

Colombo Stock Exchange (CSE) nearly 6% down in 2018

By Duruthu Edirimuni Chandrasekera

The Colombo Stock Exchange (CSE) this year has seen a near 6 per cent index drop compared to 2017, data show.

CSE’s main All Share Price Index was down 5.51 per cent as at Thursday compared to a 2.26 per cent increase in 2017. There was a net foreign outflow with frantic foreign selling in the second half of this year. Foreign selling as at Thursday stood at Rs. 22.8 billion as opposed to foreign buying last year at Rs. 17.7 billion. Compared to last year, the net turnover had dropped to Rs. 199.4 billion against Rs. 220.6 billion in 2017, Thursday’s figures from the CSE show. Trading volumes at CSE have trimmed down drastically in line with the stock price plunges. This year the CSE was recording only a handful of big transactions.

So what’s in store for next year? Unless the same song is to be played next year, the government needs to intervene and administer this situation, analysts note.

“The Employees’ Provident Fund (EPF) must come back to the market as valuations are extremely attractive. This is a priority for next year,” Ray Abeywardena, President Colombo Stock Brokers Association told the Business Times. He pointed out that for the last four years none of the captive funds has invested in the CSE. Major share transactions by the EPF weren’t done since the current government came into power in 2015 for the first time. “Now this has to happen. This is my fervent wish for next year.”

The EPF has Rs. 2 trillion in assets under management. The current investment in the stock market by the EPF is around 2.5 per cent of the portfolio. The EPF bought Rs. 10.8 billion worth of shares during 2010 to 2015, the dark pump and dump era. Of this, Rs. 9.8 billion hadn’t to-date made any returns. So the new government treaded cautiously.

Foreign investors bought into Sri Lankan equities last year more than any other year in CSE’s history. This is a strong endorsement of the value proposition the stock market offers at present. Sri Lanka is presently being pegged by investors and market commentators around the world, as one of the most attractive frontier markets. “And the investment case for the Sri Lankan market is only getting stronger,” Mr. Abeywardena added.

The Central Bank (CB) in October has said that trade and investment guidelines have been agreed upon as preparation for the EPF becoming more active in the CSE. Then with the brief government change on October 26, CB met with trade unions to discuss this as some had opposed it.

Despite the Government signing an agreement with the Asian Development Bank in 2016 to facilitate the funds of the EPF to be invested in the CSE, nothing has happened so far. Some unions in August had urged the Government to go before the EPF members to verify their views on the ADB proposals to move the EPF to the private sector. “We wish to point out that the mechanism available with the Department of Labour to conduct (a) workplace level referendum could be made use of to ascertain the wish of the individual members of the fund,” the unions said in a joint statement.

www.sundaytimes.lk

Sri Lankan rupee hits record low; investors shrug off cenbank rate decision

Reuters: ** The Sri Lankan rupee fell to a record low for a sixth straight session on Friday on continued outflows of foreign funds mainly from government bonds as political uncertainty dented investor sentiment. 

** The central bank’s decision to keep the key monetary policy rates steady failed to boost the currency, which is hit by uncertainties after a 51-day political crisis.

** The rupee hit an all-time low of 182.90 against the dollar in early trade, surpassing its previous record of 182.35 marked in the prior session, Refinitiv Eikon data showed. It has weakened about 5.4 percent since Sri Lanka’s political crisis began on Oct. 26, and lost 19.1 percent so far this year. 

** The rupee ended at 182.75/183.25 per dollar, compared with 182.10/60 in the previous session.

** President Maithripala Sirisena appointed the cabinet of ministers from his rival party last week after he was forced to reinstate Ranil Wickremeinghe as prime minister, 51 days after he was sacked.

** The political crisis was expected to ease, though uneasy relations between the two men could cause fiscal problems, analysts have said. Parliament approved 1.77 trillion rupees ($9.39 billion) to meet four months of expenditures and avert a government shutdown from Jan. 1. 

** The Colombo stock index ended 0.05 percent weaker at 6,015.23 on Friday. Turnover was 389.2 million rupees ($2.13 million), less than half of this year’s daily average of 840 million rupees.

** Foreigners were net sellers of 69 million rupees of stocks on Friday. They have been net sellers of 13.4 billion rupees since the political crisis began. The bond market saw outflows of about 56.7 billion rupees between Oct. 25 and Dec. 19, central bank data showed. 

** Five-year government bond yields have risen 30 basis points since the political crisis began. 

** Credit agencies Fitch and S&P downgraded Sri Lanka’s sovereign rating in early December, citing refinancing risks and an uncertain policy outlook.

($1 = 182.7000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Subhranshu Sahu)