Sri Lankan stocks gain slightly on expectation of better earnings

(Reuters) - Sri Lankan stocks rose for a fourth straight session on Thursday to their near three-year closing high on expectation of strong corporate earnings, while declining interest rates and continued foreign buying also buoyed sentiment.

The main stock index ended 0.18 percent, or 12.06 points, firmer at 6,813.90, its highest close since Sept. 20, 2011. It rose 6.82 percent in July, extending the year-to date gain to 15.24 percent.

"Earning hopes are still driving the market. Lower interest rates and foreign buying also help," a stockbroker said on condition of anonymity.

"We still do not see any overheating because there is holding capacity and healthy credit in the system."

Brokers said the market expects better earnings for the June quarter after market heavyweight and bellwether John Keells Holdings' upbeat results.

Lower interest rates have prompted local investors to buy shares and move away from unattractive fixed assets, analysts said. Yields on treasury bills edged down further by 7-10 basis points at a weekly auction on Wednesday.

The International Monetary Fund urged Sri Lanka on Wednesday to keep key interest rates on hold for the near term and said a cautious approach is warranted.

Turnover was 1.05 billion rupees ($8.06 million), around this year's daily average of about 1.09 billion rupees.

Foreign investors were net buyers of 112.7 million rupees worth of shares, extending the year-to-date net foreign inflow in shares to around 11 billion rupees.

The index has been in the overbought region since July 3, as local investors moved funds from fixed income to riskier assets because of low interest rates and foreign buying.

Gains were led by insurance firm Union Assurance, which jumped 11.54 percent to 145 rupees after Japan-based Fairfax Financial Holdings Limited announced the signing of a share purchase agreement to acquire 78 percent of the company. 

($1 = 130.2000 Sri Lankan Rupees) 

(Reporting by Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lanka inflation accelerates to 3.6-pct in July

July 31, 2014 (LBO) - Sri Lanka's consumer prices rose 3.6 percent in the 12 months to July 2014, with inflation accelerating from 2.8 percent in June, official data showed.

July 31, 2014 (LBO) - Sri Lanka's consumer prices rose 3.6 percent in the 12 months to July 2014, with inflation accelerating from 2.8 percent in June, official data showed. During the month the Colombo Consumer Price Index jumped 1.0 percent on top a 1.1 percent rise in June, the state statistics office said.

Since December the index had risen 3.8 percent or higher than the 12 month inflation.

The increase came from food prices which were up 2.1 percent during the month on top of a 2.4 percent rise a month earlier. The food sub-index was up 5.1 percent during the past 12 months.

Non foods however were up only 2.4 percent.

Sri Lanka's credit growth has been slow in the past year with pawning loans in particular shrinking, but the government has been borrowing abroad and excess liquidity has been high in money markets.

Meanwhile speculative activity has also started in the Colombo Stock Exchange.

Sri Lanka's Central Bank wants to keep inflation in mid single digits this year.

The International Monetary Fund said yesterday credit has been slow, but inflation has to be watched and the Central Bank should be prepared to raise rates if necessary.

Sri Lanka stocks close up 0.2-pct

July 31, 2014 (LBO) - Sri Lanka's stocks closed 0.18 percent higher Thursday amid strong foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 12.06 points higher at 6,813.90, up 0.18 percent. The S&P SL20 closed 4.33 points higher at 3,772.51, up 0.11 percent.

Turnover was 1.05 billion rupees, up from 973.71 million rupees a day earlier with 97 stocks closed positive against 98 negative.

Access Engineering closed 10 cents lower at 25.50 rupees with an off-market transaction of 218.47 million rupees changing hands at 24.40 rupees per share contributing 21 percent of the daily turnover.

The aggregate value of all off-the-floor deals represented 39 percent of the turnover.

Guardian Capital Partners closed 4.70 rupees higher at 43.20 rupees, attracting most number of trades during the day.

Foreign investors bought 202.28 million rupees worth shares while selling 89.63 million rupees worth shares.

Union Assurance closed 15.00 rupees higher at 145.00 rupees and CT Holdings closed 5.30 rupees higher at 144.00 rupees, contributing most to the index gain.

Sri Lanka Telecom closed 50 cents higher at 54.10 rupees and Dialog Axiata closed 10 cents lower at 10.80 rupees.

Ceylon Tobacco Company closed 2.10 rupees lower at 1,148.30 rupees and Distilleries closed 1.80 rupees lower at 203.00 rupees.

Union Assurance to divest a 78% in its General Insurance

http://www.cse.lk/cmt/upload_cse_announcements/1051406775391_.pdf

Haycarb records turnover Rs. 2.4 Billion and PBT of Rs. 170 Million for Q1 2014/15

http://www.cse.lk/cmt/upload_report_file/494_1406775159741.pdf

Capital market gets boost with launch of first-ever Ceylon Dollar Bond Fund

By Shabiya Ali Ahlam / Pix by Upul Abayasekara

* New initiative licensed by SEC to help attract foreign investments into Sri Lanka



The capital market yesterday saw the launch of the first-ever ‘Ceylon Dollar Bond Fund,’ which will further help attract foreign investments into Sri Lanka.

Conceptualised by Ceylon Asset Man-agement (CAM), the dollar bond is the first to be licensed by the Securities and Exchange Commission (SEC). The dollar denominated unit trust has been licensed with the approval of the Central Bank and the Ministry of Finance.

With the launch of such a product considered a giant step towards internationalising the local investment industry, which has thus far been restricted to rupee investments, foreign investors and BOI companies are now able to invest in the high-yielding Sri Lankan dollar bond, avoiding exposure to currency risk. The bond, for which Deutsche Bank AG is the trustee and custodian, is rated by Fitch Ratings.

Regulated by the SEC Act, Unit Trust Code, Regulations Directives and Guidelines issued from time to time, the product offers an attractive US Dollar net return of approximately 4% to 5% per annum, making it attractive for investments is the absence of barriers to entry and repatriation.

The important initiative was launched at a ceremony chaired by SEC Chairman Dr. Nalaka Godahewa as the Chief Guest.

Calling the CDBF a revolutionary product, Dr. Godahewa said: “The SEC has been ambitious about building the capital market but there have been some issues when launching new products. The lack of infrastructure has been a barrier. To overcome such we need innovative products, similar to the CBDF, to be introduced. If we want to make the capital market a game changer in the development in the economy, we need more companies to aggressively look at bringing out innovative products. That is what will help us go forward.”

CAM Managing Director Dulindra Fernando told the ceremony that the bond is for US Dollar investors who wish to achieve capital appreciation, income growth over a period of time and targets foreign institutions along with BOI-approved companies in Sri Lanka and foreign retail investors.

According to him, the open-ended fund allows withdrawal at any given time and investment without the requirement of a Securities Investment Account (SIA). The minimum investment for the fund is $ 1,000.

However, he pointed out that although the product has been packaged to make Sri Lanka look attractive, bringing it up to scale remains a challenge.

The dollar bond fund is expected to assist enhance current investor base of the local unit trust industry and enable benefits of dollar investment scale which was previously limited to Sri Lankan Rupee.

Sharing the benefits the CDBF brings to Sri Lanka, CAM Director Michael Preiss pointed out that while the product will improve access to international capital, it also helps in terms of name recognition for Sri Lankan issuers.

“The CDBF will assist in the improvement of liquidity and yield curve for Sri Lankan bonds on the Singapore Exchange (SGX) and will lower the borrowing cost for future Sri Lankan Dollar issuers. Also to some extent the rupee will benefit from the CDBF as it allows investors from around the world to participate,” he added. Ceylon Asset Management currently manages the Ceylon Income Fund which is rated ‘A-‘, the Ceylon Gilt Edged Fund rated ‘AAA’ by Fitch Ratings, and three equity index funds, Ceylon Index Fund, Ceylon Tourism Fund and Ceylon Financial Sector Fund.
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