Sri Lankan stocks near 8-week high on blue-chips, foreign buying

COLOMBO, Dec 30 (Reuters) - Sri Lankan stocks gained for a third straight session on Monday, hitting a near eight-week high, as foreign investors bought blue-chip shares.

The main stock index gained 0.38 percent, or 22.54 points, to 5,899.20, its highest close since Nov. 6. The index is poised for a yearly gain this year after recording annual losses for the last two years.

It has given a return of 1.98 percent so far this year measured in terms of U.S. dollars.

Blue-chips such as market heavyweight John Keells Holdings and Commercial bank of Ceylon helped the overall index to end firmer. John Keells rose 2.44 percent, while Commercial bank of Ceylon gained 1 percent.

Foreign investors bought a net 177 million rupees ($1.35 million) worth of shares on Monday, bringing the net foreign inflow to 22.67 billion rupees so far this year.

The day's turnover was 515.3 million rupees, less than this year's daily average of around 830 million rupees.

Analysts said many investors were not in the market due to a holiday mood, while large institutional funds were waiting for the new year to resume active trading.

They expect the market to rally early in the new year as the possibility of retail investors returning to risky assets is increasing due to falling interest rates, with yields on treasury bills dropping to their lowest since November 2011 at last week's auction..

($1 = 130.7500 Sri Lanka rupees)

(Reporting by Shihar Aneez; Editing by Anand Basu)

(shihar.aneez@thomsonreuters.com)(+94-11-232-5540)

(Reuters Messaging:shihar.aneez.thomsonreuters.com@reuters.net

twitter.com/shiharaneez)
http://www.xe.com/news/2013/12/30/3743157.htm?c=1&t=

Disclose or be damned!

In a further regulatory directive, the Securities and Exchange Commission (SEC) has asked Directors and CEOs of listed companies to make disclosure of dealings in shares within the T+5 (trade plus five days) time frame from 1 April 2014.

The latest directive comes hot on the heels of SEC taking a tougher stand on ensuring minimum public float of listed companies. See Daily FT’s story of last Monday (http://www.ft.lk/2013/12/23/sec-gets-tough-on-plcs/)

The fresh directive follows the Commissioners of the SEC at their meeting held on 10 December deciding to extend the disclosure requirements pertaining to dealings in shares, currently applicable to directors under the Listing Rules of the Colombo Stock Exchange, to Chief Executives Officers (CEOs) in addition and to specify the time period in which such disclosures shall be made.

A spokesman for SEC said at present due to interpretations of Section 200 of the Companies Act and scheduling of meeting dates by listed entities, time to inform directors’ share transactions to the market varies substantially and also the CEO is excluded.

The Section 200 of the Companies Act No 07 of 2007 states that a director who has a relevant interest in any shares shall forthwith disclose to the Board. According to Rule 7.8 of the CSE Listing Rules, a Listed Entity is required to make an immediate announcement to the Exchange of a disclosures made by a director in terms of Section 200 of the Companies in any acquisitions or disposal of relevant interest in shares.

“Listed entities currently comply with above, but a high degree of variation was observed in many of the circumstances. The SEC directive will bring in uniformity to the variation thereby making it fair by all listed entities when disclosing dealings of shares by directors/CEO,” the SEC spokesman said.

“Furthermore acquisitions or disposals of share by directors may reflect sensitive information privy to directors and CEO’s of companies which might not be known to shareholders and this will bridge the gap with increased transparency due to ‘timely’ disclosure,” the spokesman added.

All Listed Public Companies are directed to disclose dealings by its directors and CEOs on their relevant interests in shares and other classes of shares in the following circumstances within the specified time period given below;

1. A Listed entity shall make an announcement to the Exchange pertaining to the relevant interest in shares and other classes of shares held by its directors and CEO on the same date the entity is listed on the Colombo Stock Exchange (CSE).

Where such director or CEO has no relevant interest, such entity shall be required to disclose such fact to the market on the said date of listing on the CSE;

2. The Listed entity shall make an announcement to the Exchange pertaining to the relevant interests in shares and other classes of shares held by its directors or CEO not later than two market days immediately following the appointment or cessation of office of a director or CEO. Where such director or CEO has no relevant interest, such entity shall be required to disclose that fact to the market within the said period;

3. In the event a director or CEO of a listed entity makes an acquisition or disposal of shares or any class of shares, such listed entity shall make an announcement to the Exchange not later than five market days (T+5) upon such acquisition or disposal. Such disclosure shall contain;

a. the date on which such shares or other classes of shares were acquired or disposed;

b. the date on which such acquisition or disposal was notified to the Board of Directors of the listed entity as applicable in terms of Section 200 of the Companies Act No.07 of 2007 (Companies Act);

c. the disclosures specified in Section 200 of the Companies Act.

All Listed Companies are further directed to put in place a procedure to ensure that its directors and the CEO makes the abovementioned disclosures to the listed entity in a timely manner to enable it to comply with the requirements stipulated in this directive.

For the purposes of this directive;

A director or CEO of a listed entity shall be deemed to have a relevant interest in shares or other class of shares where a close family member of the director or CEO (not being himself a director or CEO of the listed entity) as the case may be, holds or has an interest in the said shares or other class of shares.

Close Family Member shall mean and include the spouse and a child below 18 years and any of the following persons provided such persons are financially dependent and/or acting in concert with the director or CEO of the listed entity:

a) child above 18 years;

b) grandparents;

c) parents;

d) brothers;

e) sisters;

f) grandchildren; and

g) spouse of the persons referred to (c), (d), (e) and (f) above

The time period referred to in the directive as two or three market days as the case may be shall be calculated excluding the relevant date the event occurred.

Relevant interest shall have the same meaning as Section 198 of the Companies Act;

Provided that the director and CEO shall be required to disclose the relevant interest irrespective of the percentage of shares or other classes of shares required to be disclosed under this directive.

The Colombo Stock Exchange has been directed to;

i. define the relevant provisions in the Listing Rules of the CSE in relation to “immediate” in line with the Rules provided herein;

ii. develop a mechanism to recognize Directors and CEOs of listed entities in the trading system for the purpose of identifying trading by the same;

iii. inform all Listed Public Companies of this directive;

iv. incorporate the Rules stipulated herein to the Listing Rules of the Colombo Stock Exchange.
http://www.ft.lk/2013/12/30/disclose-or-be-damned/

SEC in talks on attracting foreigners into stock market

Sri Lanka's Securities and Exchange Commission is talking to government funds about making large share parcels available to foreign investors to boost interest in the stock market, the SEC head told Reuters.

Lack of liquidity and concerns over the time it can take to sell shares on the island nation's 2.43 trillion rupees ($18.6 billion) bourse have deterred foreign funds from buying more than a few select stocks.

Nalaka Godahewa, the head of the SEC, said the regulator is in talks with large government funds on acquiring and building up stakes large enough to attract foreign interest.

"When foreigners come, there must be parcels to buy. This is one area I am talking about to government funds," Godahewa told Reuters in an interview on Thursday.

"They (government funds) must be more strategic and build up and create these parcels when the market prices are low and hold it.

Now when the foreigners come, there is a problem in finding (adequate shares). There are no parcels to buy.”

Sri Lanka has attracted a net 22.48 billion rupees (US$ 172 million) foreign inflows into stocks so far this year after a record 33.66 billion rupees last year.

But offshore investors have been buying shares in only around 10 firms, including top conglomerate John Keells Holdings and largest lender Commercial Bank of Ceylon, out of 288 listed firms.

Sri Lanka’s Government funds include Employees Trust Fund, the largest local fund with more than 1 trillion rupees (US$ 7.65 billion) in its portfolio, Employees’ Provident Fund, funds held by State-run banks and an insurance firm.

However, they do not invest heavily in stocks, preferring lower-risk investments. Government funds traded 36.1 billion rupees (US$ 276 million) worth of stocks last year, compared to 66.5 billion rupees in 2011.

In the first 11 months of this year, they have accounted for only 17 billion rupees.

Government funds are much bigger than private local equity funds, but they invest heavily in government securities. Economists say the government uses them to hold down market interest rates by accepting low yields.

The market boomed in 2009 and 2010 with respective annual growth of 125.3% and 96% in the main stock index , largely due to new retail investors flocking into risky assets on a surge of optimism after the end of a 26-year war.

Since 2011, however, insider dealing and market manipulation has dented retail investor sentiment and the index is down 25.6% from its record high of 7,863.74 points hit on Feb. 15, 2001.

Godahewa said that the SEC has dealt with all suspected market manipulation and the regulator aims to list two new firms per month from next year.

“We've something like 30 initial public offerings (IPO) earmarked right now which are likely to come to the market within next two years. But you can't allow too many IPOs coming at the same time. So we'd like to see two IPOs a month roughly next year.”

The regulator has already ordered the main listed companies to ensure that at least 20% of their shares are available to trade by the end of 2016 to raise liquidity, attract foreign funds and curb manipulation. (Reuters)

http://ceylontoday.lk/22-51382-news-detail-sec-in-talks-on-attracting-foreigners-into-stock-market.html