Sri Lanka stocks edge up; correction seen

(Reuters) - Sri Lankan stocks hovered around 33-month highs on Monday, as local investors took advantage of low interest rates to shift funds from fixed income assets to risk assets despite foreign outflows, brokers said.

The main stock index ended up 0.51 percent, or 34.32 points, at 6,756.52, near its highest close since Oct. 3, 2011 hit on Wednesday.

"There would be miner corrections here and there, but we see continued buying," said a stockbroker asking not to be named.

"There is stability in the market. With the positive outlook, investors are holding on."

The share index has gained 5.92 percent so far this month.

Turnover was 904 million rupees ($6.94 million), slightly below this year's daily average of about 1.09 billion rupees.

Foreign investors were net sellers for the first time in the last eight sessions, selling 215.13 million rupees worth of shares on Monday. But they have been net buyers of shares worth 9.8 billion rupees so far this year.

Shares of Lion Brewery (Ceylon) Plc rose 4.05 percent to 667.60 rupees, while Commercial Bank of Ceylon Plc rose 1.99 percent to 143.30 rupees.

The market is on the rise because investors have little options in other instruments as yields of treasury bills and the central bank's key monetary policy rates have fallen to multi-year lows amid continued foreign buying.

Yields on treasury bills edged down further at a weekly auction on Wednesday.

The index is in the overbought region since July 3. It has risen 14.27 percent so far this year.

Lower interest rates have prompted local investors to buy shares and move away from unattractive fixed assets, analysts said.

Analysts said foreigners have been buying risky assets because they see value in them.

($1 = 130.2300 Sri Lankan Rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)

Sri Lanka stocks close up 0.5-pct

July 21, 2014 (LBO) - Sri Lanka's stocks closed 0.51 percent higher with diversified stocks gaining despite net foreign selling, brokers said.

The Colombo benchmark All Share Price Index closed 34.32 points higher at 6,756.52, up 0.51 percent. The S&P SL20 closed 29.17 points higher at 3,768.15, up 0.78 percent.

Turnover was 904.71 million rupees, down from 1.30 billion rupees last Friday with 132 stocks closed positive against 66 negative.

DFCC Bank closed 30 cents lower at 165.40 rupees with an off-market transaction of 162.00 million rupees changing hands at 162.00 rupees per share contributing 18 percent of the daily turnover.

The aggregate value of all off-the-floor deals represented 35 percent of the turnover.

George Steuart Finance closed 1.80 rupees lower at 45.90 rupees, attracting most number of trades during the day.

Foreign investors bought 210.69 million rupees worth shares while selling 363.41 million rupees worth shares.

Commercial Bank closed 2.80 rupees higher at 143.30 rupees and Lion Brewery Ceylon closed 26.00 rupees higher at 667.60 rupees, contributing most to the index gain.

Carson Cumberbatch closed 10.00 rupees higher at 468.00 rupees and John Keells Holdings closed 1.70 rupees higher at 246.70 rupees.

JKH’s W0022 warrants closed 2.90 rupees higher at 66.90 rupees and its W0023 warrants closed 1.50 rupees higher at 74.50 rupees.

Rs 14B fund to make NBFIs pretty

Financial consolidation
By Charumini de Silva

Ceylon FT: Sri Lanka's banking watchdog – the Central Bank – will provide funds to a few non-bank financial institutions (NBFIs) via Sri Lanka Deposit Insurance Scheme (SLDI) in order to make them attractive to investors for mergers and acquisitions.

Speaking to Ceylon FT Central Bank Deputy Governor, Ananda Silva said, "During the financial consolidation process we saw that there were a few NBFIs that needed further financial support to attract investors for mergers and acquisitions. Hence, the Monetary Board approved providing such financial support to those entities."

He said Sri Lanka Deposit Insurance Scheme had grown to Rs 14 billion to date. Refusing to reveal the amount the Central Bank would provide to these companies Silva said, "Depending on the requirement of the entities we will allocate funds to strengthen their financial condition."

Central Bank formulated the scheme on 2 October 2010, where the member institutions paid the premium on a monthly or quarterly basis. However the liability was allowed after 1 January 2012. The main reason for this gap was to allow the fund to grow substantially by 2012.

According to the Central Bank the deposits of the funds were re-invested on government papers.

The premium levied on eligible deposits ranges between 0.10% and 0.15% per annum. 

These premiums are credited to the Deposit Insurance Fund (DIF) operated and managed by the Monetary Board of the Central Bank.

The DIF is separate from the Central Bank and its liability is limited to the level of fund balance and the DIF will be audited by the Auditor General.

Silva said the setting up of the deposit insurance scheme had a positive impact on the industry. The scheme improved depositors' confidence and has a self-corrective mechanism where companies would not have to take it as a burden. Having this kind of scheme would also help to strengthen the financial system, he said.
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Sinhaputhra profits up by 13.5% despite industry slump of 50%

Sinhaputhra recorded a growth in profitability in FYE 2014 vs. FYE 2013, despite the industry's profitability falling from Rs. 14 billion to Rs. 7 billion.

Managing Director Ravana Wijeyeratne said that Sinhaputhra's conservative expansion on credit growth allows it to steadily maintain its growth momentum without large variations that could be extremely damaging. Although, Sinhaputhra faces the same market conditions, the fact that they had not accelerated beyond their means and also thanks to its time tested product - loans, they have always been able to steady themselves during a lackluster performance in the vehicle market. Hence while the industry loan book growth shrunk from 21.6% to 12.1% in FYE 2013 vs FYE 2014, Sinhaputhra's loan book grew around the same space, at 16% and 15%, which explains a growth in profitability against the industry norms.

Sinhaputhra's growth in profits for the last three years have been from Rs. 52 million to Rs. 74 million and this year Rs. 84 million. www.island.lk