Sri Lanka shares dip from over 1-yr high; John Keells boosts turnover

(Reuters) - Sri Lankan stocks slipped on Tuesday from their highest close in more than a year, ending a five-session winning streak, as gains in diversified shares were offset by falls, mainly in palm oil shares.

Foreign buying in John Keells Holdings PLC boosted the turnover and net inflows from offshore investors to a more- than-7-week high.

The main stock index fell 0.04 percent, or 2.61 points, to close at 6,376.01. On Monday, the index had hit its highest since June 5, 2013.

Turnover stood at 4.72 billion rupees, the highest level since May 9 and four times this year's daily average of 1.03 billion rupees.

The bourse saw net foreign inflows for the sixth straight session. Foreign investors were net buyers of 1.03 billion rupees ($7.91 million) of stocks on Tuesday, extending foreign inflows so far this year to 7.28 billion rupees.

Conglomerate John Keells Holdings PLC, which accounted 58.03 percent of the day's turnover, rose 1.09 percent to 222.30 rupees. Foreign investors bought 5.03 million shares in Keells.

Shares in palm oil firm Shalimar Estates fell 8.88 percent to 2,227.50 rupees a share.

Analysts, however, said the market would move sideways in the short term with lesser risk due to lower interest rates.

Analysts said foreign buying could continue due to lower inflation after government data showed annual inflation eased to 2.8 percent in June, its lowest since February 2012, edging down from 3.2 percent a month ago

However, analysts said investors are concerned over the recent ethnic violence and possible implications of a government spokesman saying Sri Lanka bought Iranian crude via third parties.

The market has been on a rising trend since late February due to continued foreign buying and lower interest rates. 

($1 = 130.2800 Sri Lankan rupees) 

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

Sri Lanka shares close lower

July 01, 2014 (LBO) - Sri Lanka's shares closed 0.04 percent lower on Tuesday boosting turnover to an eight-week high amid strong foreign buying mainly into John Keells Holdings, brokers said.

The Colombo benchmark All Share Price Index closed 2.61 points lower at 6,376.01, down 0.04 percent. The S&P SL20 closed 9.13 points higher at 3,543.56, up 0.26 percent.

Turnover was 4.72 billion rupees, up from 1.45 billion rupees a day earlier with 85 stocks closed positive against 89 negative.

John Keells Holdings closed 2.40 rupees higher at 222.30 rupees with nineteen off-market transactions of 2.07 billion rupees changing hands at 220.00 rupees per share contributing 44 percent of the daily turnover.

The diversified conglomerate also had market transactions of 667.87 million rupees contributing 14 percent of the turnover.

JKH’s W0022 warrants closed 2.30 rupees higher at 62.20 rupees and its W0023 warrants closed 30 cents higher at 71.40 rupees.

The aggregate value of all off-the-floor deals represented 65 percent of the turnover.

Adam Investments closed 40 cents lower at 5.50 rupees, attracting most number of trades during the day.

Foreign investors bought 2.04 billion rupees worth shares, extending the year-to-date net foreign inflows to 7 billion rupees.

Foreign investors sold 1.01 billion rupees worth shares.

Ceylon Tobacco Company closed 10.60 rupees lower at 1,053.30 rupees and oil palm firm Shalimar (Malay) closed 217.10 rupees lower at 2,227.50 rupees, contributing most to the index drop.

Sri Lanka Telecom closed 80 cents lower at 47.20 rupees and Dialog Axiata closed 10 cents lower at 10.40 rupees.

Ceylinco Insurance closed 42.30 rupees lower at 1,307.70 rupees and Commercial Bank closed 1.40 rupees higher at 142.00 rupees.

Nestle Lanka closed 18.90 rupees higher at 1,999.00 rupees.

Sri Lanka's TKS Finance acquires Asian Finance

July 01, 2014 (LBO) - Sri Lanka's TKS Finance Limited said it was acquiring Asian Finance Limited under a financial sector consolidation initiated by the regulator.

The merged entity would operate under the TKS Finance Limited brand.

Rasika Kaluarachchi, Chief Executive Officer of TKS Finance will head the firm.

Commenting on the move, DatoSeri Abdul AzimZabidi, Deputy Chairman of TKSF said,

"The consolidation of the finance business into a single merged company will help the TKS Group better leverage the strengths of both entities and deliver greater value to our customers," TKS Deputy Chairman Abdul Azim Zabidi said in a statement.

The company said its shareholder planned to inject more capital to the merged entity. It would have a branches in Colombo, Ratnapura, Matara, Negombo, Nugegoda, Kandy, Kiribathgoda, Kurunegala, Galle, Ambalangoda and Trincomalee. The board of TKS F is Tiong King Sing (chairman), Abdul AzimZabidi (Deputy Chairman), Ling Chui Zhen (Executive Director), Lee Chong Pa (Executive Director), T Dharmarajah (Director), S H A M Abeyratne (Director) and I.D. Weerasena (Director).

Inflation drops further in June 2014

Inflation, as measured by the change in the Colombo Consumers’ Price Index (CCPI) (2006/07=100), which is computed by the Department of Census and Statistics, decreased to 2.8 per cent in June 2014, on a year-on-year (YoY) basis, from 3.2 per cent in the previous month. It is noteworthy to mention that inflation continues to remain at single digit levels for the 65th consecutive month in June 2014. Annual average inflation also continued its decelerating trend since June 2013 and reached 4.9 per cent in June 2014 from 5.3 per cent in May 2014. 

The relatively low increase in prices of items in the Non-food category and the base effect contributed substantially to contain inflation at low levels in June 2014. Stable prices of items in many sub-categories, namely, Furnishing, Household Equipment and Routine Household Maintenance; Health; Transport; Communication; Recreation and Culture; and Education, and the marginal increase in prices of items in the sub categories of Miscellaneous Goods and Services; Clothing and Footwear; and Housing, Water, Electricity, Gas and Other Fuels contributed to this favourable development.

The increase in prices of items in the Food and Non-alcoholic beverages sub-category contributed to the monthly increase (1.1per cent) in the CCPI. Within the Food category, price increases were recorded in almost all the varieties of vegetables, fresh fish, potatoes, red onion, big onion, green chilies and some varieties of rice. However, prices of many varieties of fruits, eggs and coconut decreased significantly during the month.

Core inflation, being a more reliable predictor of future outlook for inflation, declined on an annual average basis to 3.0 per cent in June 2014 from 3.1 in the previous month, recording the lowest level since its inception. Meanwhile, YoY core inflation increased slightly to 3.5 per cent in June from 3.3 per cent in May 2014. The achievement of commendable low level of inflation was effectively influenced by the prudent demand management policies conducted by the Central Bank.

www.cbsl.gov.lk

Financial Sector Consolidation Update – June 2014

The consolidation process had made progress as planned, and during June 2014, almost all banks and finance and leasing companies (NBFIs) had finalized their consolidation plans and submitted their proposed merger/acquisition plans to the Central Bank. These plans will now be reviewed by the Central Bank with a view to facilitating the respective companies to proceed further.

 Banks and NBFIs, while negotiating with the shortlisted merger/acquisition counterparts, also maintained a close dialogue with the special unit of the Central Bank. In addition, as requested by the Central Bank, the Panel of Audit Firms continued their transaction management activities to facilitate the negotiation process between financial institutions in an independent manner.

 Work relating to the mergers that have already commenced, i.e., DFCC Bank and the National Development Bank PLC, and Merchant Bank of Sri Lanka PLC, MBSL Savings Bank Ltd. and MCSL Financial Services Ltd. continued to progress with the assistance of external consultants, where necessary. In the meantime, formal approval of the Monetary Board was granted for Assetline Leasing Company Ltd. to acquire Lisvin Investments Ltd., and for TKS Finance Ltd to acquire Asian Finance Ltd. At the same time, several NBFIs falling within the same group also continued the consolidation process while initial approval was granted for the mergers of a few other NBFIs as well.

 The Monetary Board also approved of providing funding support to certain NBFIs through the Sri Lanka Deposit Insurance and Liquidity Support Scheme in order to further strengthen the financial condition of those entities. Such support is expected to enable these entities to attract suitable merger/acquisition counterparts or strategic investors.

 The Guidelines on taxation in terms of the Inland Revenue (Amendment) Act No 8 of 2014 and Value Added Tax (Amendment) Act No 7 of 2014 on the tax incentives to promote the consolidation process were also finalized, and discussions with the Ministry of Finance and Planning are currently underway.

These guidelines are expected to be released to banks and NBFIs shortly.

 During the month, the Central Bank continued to maintain a close dialogue with all stakeholders of the process, including having a discussion with the representatives of the Ceylon Bank Employees’ Union. 
http://www.cbsl.gov.lk/pics_n_docs/latest_news/press_20140630eb.pdf