Sri Lankan shares hit two-week closing low; turnover down

Reuters: Sri Lankan shares closed at their lowest in two weeks on Tuesday as investors sold blue-chips such as John Keells Holdings Plc even as the market awaited directions on the country's economic policy.

The benchmark Colombo stock index ended down 0.14 percent at 6,387.85, its lowest since July 11.

"Market is down on retail trading in thin trade as the bigger players are waiting to see the prime minister's policy statement, while they also await directions from the central bank's announcement on policy rates," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

"We feel the rates will be unchanged, but if they push the rates up a bit, it will slow down the market."

Sri Lanka's central bank is expected to keep its key interest rates steady for a fifth straight month on Thursday, a Reuters poll showed, despite signs that inflation and private sector credit growth are picking up.

Prime Minister Ranil Wickremesinghe is expected to announce the country's economic policy next month.

Turnover stood at 265.1 million rupees ($1.82 million), the lowest since July 5, and well below this year's daily average of around 728.1 million rupees.

Overseas investors were net sellers of 4.04 million rupees worth of shares on Tuesday, extending the year-to-date net foreign outflow to 4.8 billion rupees worth of equities.

Shares in conglomerate John Keells Holdings Plc fell 0.77 percent, while Hemas Holdings Plc dropped 3.59 percent, and leading fixed line telephone operator Sri Lanka Telecom Plc lost 1.54 percent, dragging the overall index down. 

($1 = 145.6500 Sri Lankan rupees) 

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

Sri Lankan shares end down; turnover slumps

Sri Lankan shares fell on Monday as investors sold large-cap shares like Ceylon Tobacco Company Plc while turnover slumped to a near-three-week low as investors awaited directions on the country's economic policy.

The benchmark Colombo stock index ended down 0.49 percent at 6,397.09, slipping from its highest close since June 21 hit on Friday.

"Investors are taking a look at where the market is going. It's just the direction that is required right now," said Yohan Samarakkody, head of research, SC Securities (Pvt) Ltd.

"Investors are waiting for the prime minister's statement and any clues on the next budget. Quite a lot of uncertainty will be cleared off then."

Analysts said investors have been waiting for direction on the country's economic policy, expected to be announced by Prime Minister Ranil Wickremesinghe next month.

Turnover stood at 285.9 million rupees ($1.96 million), the lowest since July 5 and well below this year's daily average of around 731.6 million rupees.

Overseas investors bought a net 58.1 million rupees worth of shares on Monday, but have been net sellers of 4.8 billion rupees worth of equities so far this year.

Shares in Ceylon Tobacco Company Plc fell as much as 3.12 percent while food and beverage maker Nestle Lanka Plc fell 3.33 percent and leading mobile phone operator Dialog Axiata Plc fell 2.73 percent, dragging the overall index down. 

($1 = 145.5000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

IFC to guarantee export credit by Sri Lanka's Sampath Bank

ECONOMYNEXT - Washington-based International Finance Corporation will provide full and partial export credit risk guarantees for customers of Sri Lanka's Sampath Bank.

IFC said its Global Trade-Finance Program promotes trade among emerging markets, helping small and medium businesses, tap export markets.

"IFC’s trade-finance facility will support Sampath Bank’s capacity to help small businesses tap growth opportunities," Sampath Bank Managing Director Aravinda Perera said in a statement.

"Wider access to IFC’s global network of partner banks will facilitate trading transactions of our customers at competitive pricing."

Amena Arif, IFC Country Manager for Sri Lanka said the facility will help small exporters access over 100 emerging market countries. (Colombo/July21/2016)

“This trade finance facility with Sampath Bank is part of IFC’s continued commitment to strengthen Sri Lanka’s banking sector,” said.

Sri Lanka's Bairaha poultry group profits drop 18-pct

ECONOMYNEXT - Profits at Sri Lanka's Bairaha Farms group fell 18 percent to 118.8 million rupees in the June 2016 quarter from a year earlier, amid flat revenues and higher interest costs, interim accounts showed.

The group reported earnings of 7.43 rupees per share.

In the quarter group revenues rose 2.0 percent to 956 million rupees and cost of sales fell 3 percent to 698 million rupees, allowing gross profits to grow 19 percent to 257 million rupees.

But administration costs rose 21 percent to 47.2 million rupees and finance costs rose 72 percent to 14.9 million rupees.

US$1bn loan from Bank of Tokyo – Mitsubishi for Sri Lanka roads

ECONOMYNEXT – The Bank of Tokyo – Mitsubishi UFJ Ltd. (BTMU) has agreed to give a concessional yen loan equivalent to one billion US dollars to fund part of an expressway and Colombo city elevated road at an annualised cost of around 2.02% - 2.22% a year.

The loan will cover the cost of the 3rd phase of the Central Expressway section between Pothuhera and Galagedera and the elevated road from Kelani Bridge to Rajagiriya in the capital Colombo.

The Cabinet of ministers approved a proposal by Prime Minister Ranil Wickremesinghe as minister of national policies and economic affairs to go ahead with talks with BTMU.

The loan will be at an annual interest of 06 month LIBOR (London interbank offered rate) plus 0.95% with repayment over 15 years and a six-year grace period.

The ministry of national policies and economic affairs said the annualised financing cost of the loan would in the range of 2.02% - 2.22% a year.

The two road projects have been identified as priority development projects of the government with the Cabinet Committee on Economic Management recommending loan assistance from BTMU.

Thailand’s Siam City Cement to acquire Sri Lanka’s Holcim for USD400 Mln

(LBO) – Thailand’s Siam City Cement Public Company Limited will proceed with an acquisition of 98.95 percent shares in Holcim (Lanka) Limited, including its subsidiaries from cement giant LafargeHolcim.

LafargeHolcim said in a statement that the enterprise value of sale was 400 million dollars.

In a Thailand Stock Exchange filing, Siam City Cement said that the acquisition of the interest, comprising 164,065,201 ordinary shares, in HLL will be made by a wholly-owned subsidiary of the Company, INSEE Cement Holdings Company Limited, which is under the process of being incorporated.

The Company expects that the completion of the transaction will occur within two weeks following the date of the Agreement, while LafargeHolcim said the transaction would be completed in the third quarter.

Holcim Lanka operates one integrated plant and one grinding plant and is the country’s leading cement manufacturer. The proceeds from the sale of the divestment business will be used to further reduce debt, LafargeHolcim said.

Earlier this month, LarfargeHolcim announced the divestment of Lafarge India to Nirma Limited. The latest sales is a step for LafargeHolcim to reach its 3.5 billion Swiss francs divestment target for 2016. The Group has now secured three-quarters of the program.

With a presence in 90 countries and a focus on cement, aggregates and concrete, LafargeHolcim is the world leader in the building materials industry with 100,000 employees around the world and combined net sales of CHF 29.5 billion (USD 29.8 billion) in 2015.

Siam City Cement was first established in 1969 and began cement production after the completion of its cement plant in 1972, then became a listed company on the Stock Exchange of Thailand in 1977. The company embarked on an expansion strategy and has operations currently in Indonesia, Cambodia and Bangladesh outside of Thailand.

Mexican building materials company CEMEX, S.A.B. de C.V. said in May that it has closed the sale of its operations in Bangladesh and Thailand to Siam City Cement for approximately 53 million dollars.

Siam City Cement group company has approximately 4,000 employees.

It is engaged in the business of Cement, Ready-mixed Concrete and Aggregates, Fibre Cement based building and decorative materials, Autoclaved Aerated Concrete products as Lightweight Concrete, Environmentally-friendly Waste Management Solutions, Power generation from cement production process, Information technology and digitalization business services.

Sri Lanka’s NDB cancels EGM on concerns over required votes

(LBO) – Sri Lanka’s National Development Bank has cancelled its scheduled extraordinary general meeting on fears that it may not obtain the required number of votes at the meeting.

The scheduled EGM was convened by the Directors of NDB for the purpose of obtaining approval of the shareholders to amend Articles 36 (iii) and 49 of the Articles of Association of NDB.

The said Articles relate to the appointment of the Chairman, by way of a Special resolution.

“However, as several major shareholders have intimated their intention to vote against the proposed resolution, the Board is of the opinion that the bank would fail to obtain the requisite approval,” the bank said in a statement.

The board has consequently decided to cancel the EGM scheduled for the 27th July 2016.

Non Executive Director N.G Wickremeratne is the current Chairman of the NDB.

The NDB’s current articles require that its chairman is an “Independent Director’” whilst the Banking Act Direction No. 11 of 2007 on Corporate Governance for Licensed Commercial Banks in Sri Lanka does not impose such a restriction.

NDB proposing the EGM earlier said the requirement for the chairman to be an independent director is a requirement of NDB and not a regulatory requirement.

Articles 36 (iii) of the current Articles of Association of NDB states that an independent director shall mean a director who satisfies the criteria specified in the statutes for determining an independent director.

The article also states that an independent director shall mean a director who is not a shareholder of the company directly or indirectly holding in excess of 1 percent of the number of shares issued by the company.

Section (i) and (ii) of the article 49 says the Chairman of the company shall be an independent director and directors shall elect 1 of their number to be the Chairman of the board.