Sri Lanka stocks at over-3-year high; more gains seen

(Reuters) - Sri Lankan stocks closed at their highest in more than three years on Thursday led by large-caps on improved sentiment due to lower interest rates, higher foreign buying and a positive economic outlook.

Stockbrokers said they expected the index to gain further.

The main stock index ended up 0.39 percent, or 27.70 points, at 7,206.90, its highest close since June 10, 2011.

"There is a lot of buying demand. Sellers are hiding until they get a premium price," said Jaliya Wijeratne, CEO at First Capital Equities (Pvt) Ltd. "We expect the index to gain further due to lower interest rates and positive outlook."

Institutional investors were very active on Thursday, while retail participation was also high due to an optimistic outlook, analysts said.

The cut in energy prices on Tuesday also enthused the market.

Sri Lanka is aiming for a higher economic growth of 8.2 percent and a lower fiscal deficit target of 4.4 percent of gross domestic product next year, a government document showed on Thursday.

Yields on treasury bills fell 3-4 basis points at a weekly auction on Wednesday.

The index has gained 21.89 percent so far this year.

The bourse has been in an overbought region since July. The Relative Strength Index, a momentum indicator tracked by chartists, rose to 81.562 on Thursday compared with Wednesday's 80.087, Thomson Reuters data showed.

Shares in Ceylon Tobacco Company, which led the overall gain in the index, rose 0.85 percent to 1,180 rupees, while large-cap Nestle Lanka Plc rose 1.03 percent to 2,100.10 rupees.

The day's turnover was 2.9 billion rupees ($22.26 million), more than this year's daily average of over 1.25 billion rupees.

Foreign investors were net buyers of 29 million rupees worth of shares on Thursday, extending the year-to-date net foreign buyers of 10.91 billion rupees. 

(1 US dollar = 130.2600 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Sunil Nair)

Sri Lanka stocks close 0.4-pct

Sep 18, 2014 (LBO) - Sri Lanka's stocks closed 0.39 percent higher with tobacco and beverage stocks gaining amid strong foreign participation, brokers said.

The Colombo benchmark All Share Price Index closed 27.70 points higher at 7,206.90, up 0.39 percent. The S&P SL20 closed 12.79 points higher at 3,989.60, up 0.32 percent.

Turnover was 2.90 billion rupees, up from 2.18 billion rupees a day earlier with 129 stocks closed positive against 68 negative.

Access Engineering closed 60 cents higher at 28.50 rupees with ten off-market transactions of 356.23 million rupees changing hands at 28.00 rupees per share contributing 12 percent of the turnover.

John Keells Holdings closed 20 cents lower at 257.80 rupees with three off-market transactions of 283.72 million rupees changing hands at 257.80 rupees per share contributing 10 percent of the turnover.

The aggregate value of all off-the-floor deals represented 42 percent of the daily turnover.

First Capital Holdings closed 4.10 rupees higher at 42.80 rupees, attracting most number of trades during the day.

Foreign investors bought 995.22 million rupees worth shares while selling 966.21 million rupees worth shares.

Ceylon Tobacco Company closed 10.00 rupees higher at 1,180.00 rupees and Nestle Lanka closed 21.50 rupees higher at 2,100.10 rupees, contributing most to the index gain.

Hayleys closed 13.60 rupees higher at 353.40 rupees.

BOC’s Rs. 8 b debenture issue oversubscribed

By Shabiya Ali Ahlam
The Bank of Ceylon’s (BOC) first debenture issue for the year worth Rs. 8 billion was oversubscribed on its official opening day on Tuesday following an oversubscription.

“The issue took place just as expected. With BOC having a strong position in the market, we were confident the debenture would be oversubscribed on the opening day itself,” BOC Senior Deputy General Manager International, Treasury and Investment P. A. Lionel told the Daily FT.

He said the first trench of Rs. 4 billion was reached within an hour of opening and was oversubscribed by 2 p.m. the same day. The exact number of applications for the issue which comprised five and eight year tenure, and the basis of allotment will be notified in due course. Fund raised from the issue will be used to strengthen BOC’s Tier 2 capital base and reduce asset and liability maturity mismatches.

BOC offered involved 40 million unsecured, subordinated, redeemable debentures at Rs. 100 each with an option to issue an equal amount in the event the initial figure of Rs. 4 billion was oversubscribed.

The debenture is the sixth to be issued by BOC, and its first for the year.

Rated ‘AA’ by Fitch, the public issue was attractively structured giving investors the opportunity to select from five types of debentures: Type A with a five year tenure and 8% payable annually, Type B with a five year tenure and 7.75% (Annual Equivalent Rate, AER 7.98%) payable quarterly, Type C with a tenure of five years and six months gross T-bill rate +0.50% payable bi-annually, Type D with a tenure of eight years and 8.25% payable annually and Type E with a tenure of eight years and six months gross T-bill rate +0.50% payable bi-annually. The managers and registrars for the issue was BOC’s Investment Banking Division.

According to a report released by NDB Securities, the fund raised will help strengthen BOC’s liquidity position while taking advantage of the comparatively low interest rates in the market and manage the gap exposure in the bank’s asset and liability portfolios.

While the debenture offered a lower premium to prevalent Treasury Bond yields in comparison to debentures with similar tenures issued in the recent past, BOC’s credit rating is the highest among the comparable listed debentures justifying the lower premium, NDB Securities said.

BOC, in its last debenture that was issued on October 2013, raised Rs. 8 billion with it being oversubscribed also on the official opening day. It drew applications worth Rs. 11.69 billion. It was valued at Rs. 4 billion, with an option to increase the size up to Rs. 8 billion in the event of oversubscription.

The debenture was priced at Rs. 100 each. The unsecured, subordinated, redeemable debentures were divided into nine choices and had tenures in the range of five to 10 years, with both fixed and floating coupon rates.

The interest rates offered ranged from 13% payable annually to 12.6% semi annually, on five-year fixed rate debentures, as well as one with five-year floating rate payable semi annually, and eight-year fixed at 13.25% payable annually, an eight-year floating rate payable semi annually, nine-year fixed rate of 13.25% payable annually and 10-year fixed rate of 13.75 payable annually.
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Citi delighted with success of NSB’s $ 250 m Bond Issue

* American banking giant’s Sri Lanka branch acts as Joint bookrunner and Joint Lead Manager


Citi has expressed its delight over the recent success of the National Savings Bank’s (NSB) US$ 250 million Bond Issurance.

Citi acted as Joint Bookrunner and Joint Lead Manager for this transaction that represented the lowest yield outside of the sovereign itself.

NSB raised $ 250 million from the international debt market via a five-year bond. NSB is a policy bank wholly-owned by the Government of Sri Lanka. The transaction had over $ 2 billion in orders, underlining the strength of demand for NSB and strong investor interest in Sri Lanka. The coupon of 5.15% represented the lowest coupon by a Sri Lankan institution in the international debt capital markets.

“Citi Sri Lanka is extremely proud to be associated with NSB in achieving this significant outcome, which was the lowest yield attracted by a Sri Lankan issuer outside of the sovereign. The incredible pricing outcome was achieved due to an overwhelming demand from a high-quality investor base,” Citi Sri Lanka Country Officer Ravin Basnayake said.

“Citi acted as Joint Lead Manager for all recent bond issuances by the Government of Sri Lanka, inaugural Bank of Ceylon Bond in 2012, National Savings Bank’s initial $ 750 million bond offering and DFCC Bank’s Bond issuance in 2013. Our role in these deals augurs well with our strategy in Sri Lanka in using the strong Citi global franchise and presence to broaden the reach of our local clients,” Basnayake added.

Citi Sri Lanka Financial Institutions Head Dinithi Ratnayake added: “This is a fantastic outcome for both NSB and Sri Lanka, and Citi is proud to be a part of it. The deal closed with a high demand resulting in an orderbook in excess of $ 2 billion and an 8.4 times oversubscription. This is testament to the continued interest we have received from global investors for high quality bond issuances out of Sri Lanka. The bonds were issued in the Reg S/144 format given the significant interest from US investors, which continues to be a key investor base for Sri Lankan issuers, and a market of geographic strength for Citi.”

Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management.
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Balance of Payments surplus tops $ 2 b

• Gross official reserves at $ 9.2 b by end August

The Central Bank said yesterday that the Balance of Payments (BOP) surplus in the first seven months is estimated to be $ 2.015 billion as against a deficit of $ 180 million a year earlier.
The estimate was disclosed in the release of July external trade data yesterday. “The improved BOP position strengthened the international reserves and stabilized the exchange rate further,” the Central Bank added.
It said as at end July 2014, Sri Lanka’s gross official reserves amounted to $ 9 billion, while the same is estimated to have increased to $ 9.2 billion by end August.
Total foreign assets, which include foreign assets of the banking sector, amounted to $ 10.5 billion at end July 2014. Gross official reserves were equivalent to 5.9 months of imports, while total foreign assets were equivalent to 6.9 months of imports.
A healthy level of reserves was maintained amidst foreign exchange outflows on account of debt service payments amounting to $ 1,478 million and repayment of the IMF-SBA of $ 433 million during the first seven months of the year.
The Central Bank said long term loan inflows to the Government amounted to $ 1,100.3 million during the first seven months of the year compared to $ 1,050.5 million during the same period of 2013.
Net inflows to the Government securities market stood at $ 231.8 million by end July 2014, which included Treasury bills and Treasury bonds amounting to $ 81.7 million and $ 150.1 million, respectively. Foreign investments in the Colombo Stock Exchange (CSE) up to end July 2014 recorded a net inflow of $ 84.3 million.
Foreign Direct Investments, including loans to BOI companies, amounted to $ 850 million during the first half of 2014 recording a growth of 54.8% from $ 549.1 million in the first half of 2013. Meanwhile, inflows to licensed commercial banks and licensed specialised banks amounted to $ 125 million during the first seven months of 2014.
Commenting on the exchange rate behaviour, the Central Bank said the rupee remained stable against the US dollar during the period up to 15 September, with a marginal appreciation of 0.36%.
Based on cross currency exchange rate movements, the Sri Lankan rupee appreciated against the euro by 6.85%, the Canadian dollar by 4.54%, the Chinese renminbi by 1.65%, the Japanese yen by 2.57%and the pound sterling by 1.87%. Meanwhile, the Sri Lankan rupee depreciated against the Indian rupee by 1.69%and the Australian dollar by 0.60%.

Exports maintains growth momentum in July Apparel leads in Industrial exports growth of 12%; agriculture exports up 8% First seven months total exports up 16% to $ 6.4 b Sri Lanka’s exports remained on the up in July thanks to positive contribution from all categories and more significantly from the industrial sector. The Central Bank said yesterday earnings from exports grew by 11.1% to $955 million in July 2014, recording a cumulative growth of 15.9% to $ 6.4 billion during the first seven months of 2014. “All major export categories contributed to the growth in exports, while the largest contribution came from industrial exports,” the Central Bank said. Reflecting the impact of seasonal demand, textile and garment exports grew at a higher rate (by 11% to $ 414.5 million) while the exports of rubber products also increased by 17%, helped by an enhanced level of exports of rubber tyres. However, export earnings from bunkering and aviation fuel which account for a major share in petroleum products declined due to lower volume although an increase in prices was recorded. “This partly reflects the heightened competition in the industry from major regional players such as India and Singapore,” the Central Bank said. Exports earnings from gems and diamonds dipped while jewellery exports increased in July 2014. However, the overall sector saw a decline of 31% in July. Earnings from agricultural exports rose by 7.8% mainly due to enhanced performance in coconut and tea exports. The growth in kernel product exports drove the increase in earnings on coconut exports. Meanwhile, earnings from tea exports recorded a healthy growth of 8.5% supported by favourable prices despite declined volumes. Export earnings from seafood and minor agricultural products also contributed significantly to the growth in agricultural exports. However, in July 2014, earnings from rubber exports declined mainly due to adverse weather conditions and continuous drop in rubber prices in the international market, while earnings from export of spices declined mainly due to lower production.

Oil spikes July imports, trade deficit A sharp rise in oil purchases in July as opposed to a year ago saw a spike in imports for the first time in three months apart from widening the trade deficit by 55%. Import expenditure on fuel increased by 93.3%, year-on-year, to $516 million in July 2014 mainly due to the base effect of non-importation of crude oil in July 2013 and 6.5% increase in imports of refined petroleum products. Expenditure on overall imports increased by 29% to $1,845 million in July 2014 reflecting an increase in all major import categories, but were particularly in fuel, the Central Bank said. “Expenditure on imports also recorded an increase in July 2014 compared to the decline recorded in the preceding three months,” it added. Spike in July imports dwarfing exports growth saw trade deficit widened by 55% to $891 million, compared to $574 million in July 2013. However, on a cumulative basis, trade deficit in first seven months of 2014 is lower by 11.5% $ 3.96 billion compared to the corresponding period in 2013. On a cumulative basis, expenditure on imports increased by 2.9% to $ 10.8 billion during the first seven months of 2014. Import expenditure on base metals increased by 137.9%, year-on-year to $56 million mainly due to an increase in iron, steel and copper imports. Import expenditure on consumer goods increased due to an increase in both food and non-food consumer good categories. A substantial increase in imports of sugar and confectionery, cereals and milling industry and dairy products led the increase in import expenditure on food and beverages, while non-food consumer goods imports increased mainly due to the significant increase in clothing and accessories and vehicle imports. Expenditure on imports of investment goods grew in July 2014 supported by imports of machinery and equipment and building materials.

www.ft.lk

Colombo Port City work commences

* President Xi and President Rajapaksa flag off construction work of city that will change Colombo skyline

The Colombo Port City project, the largest foreign-funded investment on record in Sri Lanka, commenced yesterday with the commissioning of construction of Phase 1 by Chinese President Xi Jinping and President Mahinda Rajapaksa.

The Chinese-financed $ 1.4 billion Colombo Port City project is its largest foreign-funded investment on record.

The Port City will be built by a unit of state-controlled China Communications Construction Co. on 233 hectares of reclaimed land, an area slightly larger than Monaco. 

The offices, hotels, apartments and shopping centres will draw as much as $ 20 billion in investment over about 15 years, according to Ports Authority Chairman Priyath Wickrama. 

“The Government wants to convert Sri Lanka into a maritime centre,” Wickrama said in an interview. “We can give some competition to Singapore and Dubai, which are running out of capacity.”

Sri Lanka will own rights to 125 hectares of the reclaimed land and 20 hectares will be held by China Communications, with the remaining 88 hectares leased to the company for 99 years.

Colombo’s port is the only one in South Asia that can accommodate 18-metre deep draft vessels, putting it in position to serve the Indian subcontinent, the Middle East and some African states, said Parakrama Dissanayake, former Chairman of the Chartered Institute of Logistics and Transport in Sri Lanka.

Chinese Government lending to the island nation has increased 50-fold over the past decade to $ 490 million in 2012, compared with $ 211 million combined from Western countries and lending agencies.

Unlike previous infrastructure projects undertaken by Chinese companies in Sri Lanka, the port city is financed by equity from China Communications or funds raised through it, with no commitment or guarantee from the Sri Lankan Government.

Besides Sri Lanka, President Xi also visited the Maldives on this trip, which he called “an important stop of the ancient maritime silk road” in an article published in local media, and is visiting India.

The Chinese President last year unveiled plans to build a maritime Silk Road, referring to an ancient series of land routes that connected China to the Mediterranean Sea, linking traders, priests, artists and explorers. Details on the project are short and may be fleshed out at the Asia-Pacific Economic Cooperation meeting in Beijing in November.
www.ft.lk

Tourism earnings up 32% to $ 1.4 b

Earnings from tourism in the first eight months of this year have increased by 32% to $ 1.447 billion, according to Central Bank estimates.

“Earnings from tourism are estimated to have increased by 22.2% to $202.7 million in August 2014 compared to $165.9 million in August 2013. Meanwhile, in cumulative terms tourist arrivals recorded a growth of 23.1% during the year to August 2014 while earnings from tourism soared by 32.1% to $1,447.2 million during the period,” the Central Bank said.

It said tourist arrivals grew by 25.2% in July 2014 followed by 13.8% growth in August 2014 to 140,319 tourists from 123,269 in the corresponding month of 2013. India, UK, China, Germany and France were the top five sources of tourist arrivals accounting for 47.6% of total arrivals in August 2014.
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Union Bank issues shares, warrants

By J. Kurukulasuriya

Ceylon Finance Today: At an Extraordinary General Meeting (EGM) held yesterday, a majority of over 75% of the shareholders voted to issue 742,156,249 ordinary voting shares of the Union Bank PLC to Culture Financial Holdings Ltd, for Rs 15.30 each, by way of a 'private placing', the company revealed in a disclosure to the Colombo Stock Exchange.

The bank also resolved to issue 218,281,250 Warrants to Culture Financial Holdings at a price of 30 cents each, which would entitle them to take up one new share per warrant within a period of 6 years, at a price of Rs 16, and further issue up to a total of 218,281,250 shares at Rs 16, upon the exercise of such option, subject to terms which were previously set out in a letter to shareholders on 22nd August 2014.

It was further resolved that the new shares would not be issued to existing shareholders in a manner that would maintain their existing voting rights, per section 12(1) of the Company's Articles of Association - the internal rules of the company. Article 12(1) was duly amended by resolution.
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