Sri Lanka stocks ease, ending 6-day winning streak

COLOMBO, Jan 6 (Reuters) - Sri Lankan stocks fell on Monday, snapping six straight sessions of gains, despite foreigners buying risky assets from an over-bought bourse. 

The main stock index slipped 0.48 percent or 28.81 points to 5,944.99. It had touched a 11-week closing high of 6,007.79 on Friday, gaining 1.65 percent last week. 

"It is a slow start. People are still getting in with not much of activity," a stockbroker said on condition of anonymity. However, stockbrokers said, there has been demand for select stocks, but they were not available in required quantity. 

They expect the market to gain in high turnover due to reduction in the market interest rate. 

The central bank slashed the standing lending facility rate or reverse repurchase rate by 50 basis points to a multi-year low of 8.00 percent on Thursday, in a move to reduce commercial banks' interest rate spreads. 

The day's turnover was 462.2 million rupees, less than last year's daily average of about 828.4 million rupees. Shares in Ceylon Tobacco Company PLC fell 0.16 percent to 1,186.30 rupees, while conglomerate John Keells Holdings fell 0.61 percent to 227.50 rupees a share. 

The index's 14-day relative strength index, which was in an over-bought region, fell to neutral territory, Thomson Reuters data showed. The index gained 4.8 percent in 2013 after losses in the previous two years, giving a return of 2.18 percent in dollar terms. 

Many investors locked their funds in risk-free debentures instead of risky assets due to a sluggish bourse amid falling interest rates. 

Foreign investors bought 70.6 million rupees ($540,200)worth of shares on Monday after buying a net 22.88 billion rupees worth of stocks last year, compared with a record 38.68 billion rupee net foreign inflow in 2011. 

($1 = 130.7000 Sri Lanka rupees) 

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

Source: http://in.reuters.com

Sri Lanka stocks end 0.4-pct lower

Jan 06, 2014 (LBO) – Sri Lanka stocks close down 0.48 percent Monday with diversified stocks losing ground amid net foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 28.81 points lower at 5,944.99, down 0.48 percent. The S&P SL20 closed 12.45 points lower at 3,282.37, down 0.38 percent.

Turnover was 462.20 million rupees, up from 349.63 million rupees last Friday, with stocks of 150 firms closing in the red against 52 gainers.

JKH topped the market turnover list with transactions of 46.67 million rupees contributing to 10 percent of turnover today.

Commercial Bank closed 80 cents higher at 120.90 rupees with an off market transaction of 56.15 million rupees contributing to 12 percent of turnover.

Madulsima Plantations closed flat at 12.40 rupees and Maskeliya Plantations closed 1.40 rupees higher at 12.40 rupees, attracting most number of trades during the day.

Foreigners bought 157 million rupees worth shares while selling 86 million rupees of shares.

Distilleries closed 4.90 rupees lower at 195.00 rupees and JKH closed 1.40 rupees lower at 227.50 rupees, contributing most to the index drop.

JKH’s W0022 warrants closed 1.50 rupees lower at 80.60 rupees and its W0023 warrants closed 3.40 rupees lower at 88.60 rupees.

Ceylinco Insurance closed 68.40 rupees lower at 1,276.60 rupees and A I A Insurance closed 30.20 rupees lower at 254.80 rupees.

Aitken Spence closed 1.90 rupees lower at 103.10 rupees and Carson Cumberbatch closed flat at 357.00 rupees.

Nestle Lanka closed 10 cents lower at 2,115.00 rupees and Ceylon Tobacco Company closed 1.90 rupees lower at 1,186.30 rupees.

Bukit Darah closed 3.00 rupees lower at 615.00 rupees and Cargills Ceylon closed 3.00 rupees lower at 148.00 rupees.

Asian Hotels and Properties closed flat at 64.50 rupees and Commercial Leasing and Finance closed 10 cents lower at 3.90 rupees.


DFCC closed 1.00 rupee lower at 134.00 rupees and Lanka Orix Leasing Company closed 10 cents lower at 71.90 rupees.

HNB closed 10 cents lower at 148.00 rupees.

www.lbo.lk

Brokers seek permission to close shop temporarily

Several struggling stock brokers have written to the Colombo Stock Exchange (CSE) requesting permission to temporarily halt their operations mainly due to low activity levels in the bourse, Mirror Business learns.

This was confirmed by Securities and Exchange Commission (SEC) Chairman Dr. Nalaka Godahewa during an inquiry.

“There is a proposal by several brokers requesting temporary deactivation of their operations. The CSE has forwarded it to us and we are considering it. We have not discussed it with the Commission yet, but at the secretariat level, we are looking at it positively,” Dr. Godahewa said.

He further said, it was not a “bad idea” as it has happened in many other markets as well.

“You allow those who are struggling to remain deactivate for a while. It will give more opportunities for others who will continue to operate in the market,” he noted. Altogether 29 stock brokers currently operate in the CSE, and many are of the opinion that the number is too high for all to sustain their businesses.

A number of new broking licenses were issued just after the conclusion of an almost three decade war in 2009—at a time when the market was undergoing a re-rating.

In 2010 and 2011, the daily average turnover stood over a couple of billion with the arrival of new set of retail investors into the market, providing ample opportunities to brokerages to make money.

However, in 2012, with the market undergoing a painful correction, the euphoria died down and many new retail investors burnt their fingers.

The daily average turnover in 2012 plunged to Rs.883.6 million, creating a highly competitive environment for brokers to operate. The daily average turnover in 2013, according to latest CSE figures, stands even lower at Rs.828.4 million.

“I think there are far too many brokers in our market. But like the Central Bank who has told the finance companies to consolidate, we have not told brokers to do so. The industry has to decide on its own. We are not going to tell them how to do business,” Dr. Godahewa stressed.
http://www.dailymirror.lk/

CSE to be demutualized

H D H Senewiratne

Sri Lanka is in the process of introducing demutualization to the Colombo Stock Exchange (CSE), Securities and Exchange Commission (SEC) sources said.

The SEC is in the process of finalizing the demutualization of the CSE to bring the Capital Market in line with those of more mature level, Former Executive Committee member of the SEC, Sujeewa Rajapakse told Daily News Business .

He said that since he was the President of the Sri Lanka Institute of Chartered Accountants in 2013, which holds the ex officio Commission member position of the SEC, was actively involved in introducing and promoting this concept to the country.

"During that period I handled the demutualization process, which is now about to be introduced to the country very soon. But now it is looking at quantifying the legal impediment and few other technicalities on this new concept," Rajapaksa said.

The Cabinet had approved a draft bill to be presented to parliament.

The SEC is an entity limited by guarantee, nominally owned by a group of legacy broking houses called full members.

Further they are now looking at the government, stock brokers and two other members to be main stakeholders.

In the case of demutualization they will get shares in the exchange.

The stock exchange also has trading members who were licensed later, he said.

The SEC had also drafted changes to the governing law of the agency to set up a clearing house.

Securities and Exchange Board of India has given suggestions which were given to technical consultants for review.

The demutualizing of the CSE would lead to it becoming competitive, bringing in technological innovations to the capital market and for the internationalization of membership and increase investor participation.

One of the main reasons of this initiative is to raise additional capital to expand and innovate.

The increased competition in the capital markets necessitates stock exchanges to invest in technological infrastructure that will speed up the processing of orders and reducing transaction costs for investors.

A mutually owned stock exchange is barely able to raise capital from anyone other than its members. Further a demutualized exchange operates in a more customer-focused manner and is able to take action more straightforwardly and speedily to changes the business environment and meet competitive challenges.

Source:http://www.dailynews.lk

Arpico Finance to raise Rs. 149 m via Rights

Arpico Finance Company Plc has announced a Rights Issue to raise Rs. 148.75 million to boost its capital.

The Rights Issue will be on the basis of two new shares for every three held and will be issued at Rs. 50 per share.

The company’s share last traded at Rs. 100 last week and its net asset value per share is Rs. 110 as at end September 2013.

The current stated capital of Arpico Finance Company Plc is Rs. 96.3 million.

The company said funds raised via Rights will be used to boost Tier 1, long term capital adequacy requirement.

Recently the Company raised Rs. 356 million via the issuance of five year listed debentures. The issue had an option of raising a total of Rs. 600 million with it wasn’t exercised.

The Rights is subject to regulatory and shareholder approval.

The Pratapkumar de Silva family controls Arpico Finance Plc. Alfinco Insurance Brokers Ltd. holds a 40.58% stake in the company whilst Alliance Finance Plc owns 19.53%. Other major shareholders include Dawi Investment Trust Ltd. (7.93%) and K.D.D. Perera (6.60%). Its public holding is 40%.

With 62 years in the finance industry, Arpico Finance Company PLC is a fully-fledged finance company.

For the six months ended on 30 September 2013, Arpico Finance Plc’s net interest income rose by 54% to Rs. 221.7 million whilst total operating income rose by 38% to Rs. 248.3 million.

Net operating income amounted to Rs. 214.3 million, up from Rs. 162.6 million a year earlier. Profit from operations rose by 158% to Rs. 37.5 million whilst first half net profit amounted to Rs. 29.7 million, up by 213% from a year earlier.

Total assets crossed the Rs. 5 billion mark by end September 2013, from Rs. 4.6 billion as at end FY13. Liabilities amounted to Rs. 4.5 billion, up from Rs. 4.1 billion.

Board of Directors of Arpico Finance Plc comprises of B. Ponnambalam (Chairman), H. Rajudin (Managing Director), R.E. Weerasinghe, L.D. Peiris and N.M. Peiris.
http://www.ft.lk/2014/01/06/arpico-finance-to-raise-rs-149-m-via-rights/