Sri Lankan shares slip on profit-taking; Keells leads fall

COLOMBO, Feb 3 (Reuters) - Sri Lankan shares slipped to a near-one-week low on Monday due to profit-taking led by top conglomerate John Keells Holdings despite foreign buying ahead of a holiday. 

Stockbrokers, however, expect the bourse to gain in the near future due to lower interest rates. 

The main stock index fell 0.46 percent, or 28.74 points, to 6,219.34, its lowest level since Jan. 28. 

"We expect the market to rise in the near future due to the simple reason that our interest rates are low. Keeping the funds at normal saving will be a loss for value for their money," a stockbroker said on condition of anonymity. 

Stockbrokers said retail and institutional investors were active in the market after interest rates on treasury bills eased at a weekly auction on Wednesday to multi-year lows, making fixed-income assets unattractive. 

The stock and currency markets will be closed on Tuesday for a holiday for the island nation's 66th Independence Day. 

Trading will resume on Wednesday. 

Shares in Conglomerate John Keells Holdings PLC fell 2.08 percent to 235 rupees. 

Stockbrokers said investors will shrug off political risks from renewed pressure by the U.S. to bring a fresh resolution against Sri Lanka at a U.N. Human Rights Council meeting in March, because the market had been expecting the worst. 

"Based on the U.S. embassy's communique, we don't expect any economic or trade embargoes against Sri Lanka in the forthcoming UNHRC session," Danushka Samarasinghe, head of TKS Securities Research, told Reuters. 

"Therefore it is unlikely that any adverse impact would result for the market following the UN session and sometimes the market could get stronger since much more adverse measures were expected." 

Foreign investors were net buyers of 290.3 million rupees ($2.22 million) worth of shares on Monday, extending the year-to-date net foreign inflow to 1.32 billion rupees. 

They bought 22.88 billion rupees worth of stocks last year. 

The index, which was in an overbought region since Jan. 7, touched the neutral region on Monday, Thomson Reuters data showed. It has risen 5.18 percent so far this year, following a 4.8 percent gain in 2013, after having fallen in the previous two years. 

The day's turnover was 1.1 billion rupees, more than last year's daily average of about 828.4 million rupees. 

($1 = 130.7500 Sri Lanka rupees) 

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

Dipped Products Group demonstrates continued resiliance

Sri Lanka stocks close 0.4-pct lower

Feb 03, 2014 (LBO) – Sri Lanka stocks close lower Monday with diversified and finance stocks losing ground, brokers said.

The Colombo benchmark All Share Price Index closed 28.74 points lower at 6,219.34, down 0.46 percent. The S&P SL20 closed 12.03 points lower at 3,431.22, down 0.35 percent.

Turnover was 1.10 billion rupees, down from 1.33 billion rupees last Friday, with stocks of 104 firms closing in the red against 74 gainers.

JKH topped the turnover contribution with five off market transactions of 188.00 million rupees contributing to 17 percent of the turnover.

The aggregate value of all off market deals accounted for 23 percent of the daily market turnover.

Nation Lanka Finance closed 30 cents higher at 9.60 rupees and Trade Finance and Investments closed 10 cents higher at 19.80 rupees, attracting most number of trades during the day.

Foreigners bought 523 million rupees worth shares while selling 233 million rupees of shares.

JKH closed 5.00 rupees lower at 235.00 rupees and George Steuart Finance closed 70.90 rupees lower at 376.10 rupees, contributing most to the index drop.

JKH’s W0022 warrants closed 1.20 rupees lower at 72.90 rupees and its W0023 warrants closed 60 cents lower at 77.50 rupees.

Ceylon Tobacco Company closed 4.30 rupees lower at 1,283.60 rupees and SLT closed 50 cents lower at 36.00 rupees.

Carson Cumberbatch ended 4.40 rupees higher at 349.40 rupees and Distilleries closed 1.10 rupees higher at 211.10 rupees.

John Keells Hotels ended 30 cents higher at 12.80 rupees and Cargills Ceylon closed flat at 153.90 rupees.

Nestle Lanka ended 6.60 rupees lower at 2,175.00 rupees and Bukit Darah ended 30 cents lower at 612.30 rupees.

Aitken Spence closed 1.90 rupees lower at 101.50 rupees and LOLC closed 50 cents higher at 75.00 rupees.

Mel Gunasekera

By Rohan Samarajiva
Feb 02, 2014 (LBO) - On the morning of the first Sunday of February 2014 I felt as though the ground I stood on suddenly disappeared.

I learned from a tweet that my friend and leading economic journalist Mel Gunasekera had been murdered in her home. How could this happen?

She was in the prime of her life. She was not sick. She was not run over by a bus.

She was stabbed and killed in her home, a place I had dropped her off at. How could this happen? Let posterity settle the why question. But how could this happen to someone so good, so vivacious, with so much to give?

I met Mel in 1998. I had come from the US and just started work at the Telecom Regulatory Commission. She was also recently returned from the UK after her degree and was working at the Sunday Times.

I recall her telling me how she walked home from work preferring the exercise to being groped in the bus.

I got to know a lot of journalists during my time at the TRC, but she and Asantha Sirimanne were special. In these young people I saw the possibility of an enlightened public discourse on economics, a subject sadly neglected by our media.

She then moved to Lanka Business Online to become its editor. She kept suggesting that I should write a column when we met on and off after my return in 2002.

And finally, a month after the 2004 tsunami over dinner at my house, I said yes. Thus began my Choices column in LBO, now going for almost nine years. What she told me in the nicest possible way about keeping it short and having lots of paragraphs, I followed. Mel will live on in my head, telling me to keep it short.

She should be writing my eulogy, not me hers. The young should not predecease the old. We should have built a country where a young journalist could take the bus with no fear and spend a Sunday morning in her own house without getting murdered. The war brutalized us. Killing became nothing.

We built fortified houses that were death traps should the perimeters be breached. What should we do? Put electric fences and fortify them further like my friends in South Africa have done? Or break down the walls and encourage eyes on the street?

I would have so loved to have this and many other conversations with Mel. Why were we too busy to enjoy her company while she was alive?

You lived well, Mel. We are bereft.

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Inflation declines further in January 2014

Inflation, as measured by the year-on-year (YoY) change in the Colombo Consumers’ Price Index (CCPI) (2006/07=100), which is computed by the Department of Census and Statistics, declined further to 4.4 per cent in January 2014, for the third consecutive month, from 4.7 per cent in December 2013. Annual average inflation, which followed a declining trend since June 2013, moderated further to 6.5 per cent in January 2014, from 6.9 per cent in December 2013.

The marginal increase in the CCPI by 0.6 per cent in January 2014 over the previous month was mainly due to the price increase in the Non-food category by 1.7 per cent which, however, was partly off-set by the decline in price of Food category by 0.9 per cent. Within the Food category, prices of up-country vegetables, big onions, red onions, potatoes, limes and fruits decreased. In the Non-Food category, price increases were reported in the sub-categories of Health (by 8.0 per cent); Communication (by 3.9 per cent); Transport (by 3.3 per cent); Furnishing, Household Equipment and Routine Household Maintenance (by 0.7 per cent); Miscellaneous Goods and Services (by 0.2 per cent); Housing, Water, Electricity, Gas and Other Fuels (by 0.1 per cent); and Clothing and Footwear (by 0.1 per cent). Meanwhile, the prices in the sub categories of Recreation and Culture; and Education remained unchanged during the month.

Annual average core inflation continuously decelerated to 4.1 per cent in January 2014, for the eighth month in succession, from 4.4 per cent in December 2013, reflecting the demand driven inflation in check. YoY core inflation increased to 3.5 per cent in January 2014 from 2.1 per cent in December 2013.

Source: Central Bank of Sri Lanka - Press Release

CIFL case: Court further extends interim order till 24 February

Depositors of Central Investment & Finance Ltd. (CIFL) brought to the cognisance of the Court of Appeal that though the Directors of CIFL have sought permission from the Court to carry out certain functions of the CIFL, these activities are, in fact, not prevented.

When their Writ petition was taken up last week before the Bench comprising Justices Anil Goonerathne and Malinie Gunaratne, they moved the Court to record the functions indicating the paragraph 22 of the objections of the existing Directors in order to grant permission for (a) collecting monies due to the CIFL, (b) exercising the mortgages under the properties given as securities to CIFL and liquidate the same and (c) to recover the funds which had been siphoned out of CIFL to the subsidiary Companies of ASPIC Corporation by perpetuating a fraud on CIFL.

The Court further extended till 24 February the Interim Order issued on 27 September against Central Investment & Finance Ltd., staying the operation of the Monetary Board’s direction to convert its 60% deposit liabilities into Non-Voting Shares. The matter is fixed to be taken up on 21 February.

Depositors filed their Writ petition complaining of alleged unlawful and activities in breach of Finance Business Act by CIFL.

Deputy Solicitor General Janak de Silva undertook to obtain information from the Central Bank in relation to the minute paper of the Monetary Board decision in respect of the implementation of the appropriate regulatory measures to encourage cash-strapped institutions to revive and be restructured.

The Depositors cited the Monetary Board, Central Bank Governor Ajith Nivard Cabraal, Finance Ministry Secretary Dr. P.B. Jayasundera, the Central Bank, Director of the Department of Supervision of Non-Bank Financial Institutions, Chairman of CIFL Roscue A. Maloney, and its Directors.

Faisz Musthapha PC with Mangala Niyarapola instructed by Derrick Samarasekara Associates appeared for the Petitioners.

The Petitioners are seeking a Writ order from the Court compelling and/or directing the Monetary Board, the Central Bank Governor, the Finance Ministry Secretary, the Central Bank and the Director of Supervision of Non-Bank Financial Institutions to take steps to have the CIFL to pay the depositors the deposited monies in CIFL, the capital and interest.

They state CIFL represented that it was established in 1966 and registered with and/or licensed by the Monetary Board and that it was revealed from the Notes of the Auditors of the Annual Report of the CIFL the presence of certain irregular dealings of CIFL.

They complain that commencing from February 2013 CIFL has started refusing to release the deposits and the relevant interest payments of those deposits which had matured.

They allege they had been deliberately and fraudulently deceived and cheated by CIFL, which was facing severe liquidity issues.

They bemoan the true picture of unlawful activities, which were in clear breach of the Finance Business Act, began to emerge as the depositors intervened by demanding their investments and lament that they found CIFL severely experiencing liquidity problems due to unwise and reckless investments in properties and mismanagements and irregularities.

They state that they believe that CIFL Chairman Roscoe Maloney, Directors J.G.S. Maloney and D.A. Hettiarachchi have already left Sri Lanka despite repeated promises by the Director of the Department of Supervision of Non-Bank Financial Institutions to impound their passports preventing the Directors leaving the country.

They state CIFL, which made a profit of Rs 7.9 million as at 31 March 2012, was making a shocking loss of Rs. 330 million as at 31 March 2013 which was reflected online in the company network system and visible to the Account Manager working under the Central Bank who was directly responsible for monitoring the activities of CIFL.

They charge the Central Bank failed to take prompt action to rectify the situation immediately, as a result of which the CIFL too collapsed within less than two years.

They maintain it is the duty and responsibility of the Central Bank to penalise CIFL and its Board of Directors for resorting to unlawful and illegal practices by eroding billions of investors’ money, instead of allowing them to continue to operate as Registered Finance Company.

They allege the Monetary Board has failed to examine the maintenance of CIFL’s capital, liquid assets, and classification of investment schemes, provisions for bad loans, etc.

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