Sri Lankan stocks close lower on profit-taking

Oct 17 (Reuters) - Sri Lankan stocks fell for the second straight session on Friday, led by profit-taking in select shares such as Sri Lanka Telecom Plc and John Keells Holdings Plc, although foreign investors bought into risky assets.

Sri Lanka's main stock index fell 0.31 percent, or 22.60 points, to 7,234.47.

Foreign investors bought a net 15.9 million rupees ($121,792) worth of shares on Friday, extending the year-to-date net foreign inflow to 10.13 billion rupees, exchange data showed.

"Profit-taking was seen along with low foreign fund activity. Local investors are waiting for cues amid volatility in the regional markets," said a stock broker asking not to be named.

"The volatility will be there next week too on the back of the global markets' performance."

Leading fixed line telephone operator Sri Lanka Telecom Plc led the fall with a 2.75 percent loss, while conglomerate John Keells Holdings Plc lost 0.8 percent.

Asian stocks were on the defensive on Friday, unable to hold early gains as solid U.S. data gave only a temporary boost and failed to dispel underlying worries about slowing world economic growth.

Stockbrokers said trading in local shares may be volatile due to government moves on an early presidential poll, and a possible bottoming out of interest rates.

President Mahinda Rajapaksa could hold a snap election in January, nearly two years before he has to, a close ally said, amid signs his popularity is fading among people who criticise his party for abusing power.

The central bank held its key policy rates steady before the market opened Friday, a day after governor Ajith Nivard Cabraal said a reversal of the falling trend in t-bill yields was a signal of where the authorities want rates to head.

Local investors have been buying stocks as they have no other option in a low interest rate regime.

The day's turnover was 1.02 billion rupees, less than this year's daily average of over 1.36 billion rupees. 

($1 = 130.5500 Sri Lankan rupee) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)

Sri Lanka stocks close down 0.31-pct

Oct 17, 2014 (LBO) - Sri Lanka's indices closed lower Friday with banking and diversified stocks losing ground, brokers said.

The Colombo benchmark All Share Price Index closed 22.60 points lower at 7,234.47, down 0.31 percent. The S&P SL20 closed 26.84 points lower at 4,029.55, down 0.66 percent.

Turnover was 1.02 billion rupees, down from 1.54 billion rupees a day earlier with 103 stocks closed positive against 94 negative.

Commercial Bank of Ceylon closed 1.30 rupees lower at 163.70 rupees with three off-market transactions of 196.37 million rupees contributing 19 percent of the turnover.

Alufab closed 3.00 rupees higher at 31.00 rupees, Brac Lanka Finance closed 1.50 rupees higher at 13.00 rupees and First Capital Holdings closed 1.50 rupees lower at 53.30 rupees, attracting most number of trades during the day.

Foreign investors bought 287.92 million rupees worth shares while selling 272.06 million rupees worth shares.

Commercial Leasing and Finance closed 30 cents lower at 4.50 rupees and John Keells Holdings closed 2.00 rupees lower at 248.00 rupees, contributing most to the index drop.

JKH’s W0022 warrants closed 20 cents higher at 73.80 rupees and its W0023 warrants closed 1.30 rupees lower at 76.70 rupees.

Sri Lanka Telecom closed 90 cents lower at 50.00 rupees and Ceylon Tobacco Company closed 6.90 rupees lower at 1,153.10 rupees.

Finlays Colombo closed 55.00 rupees higher at 400.00 rupees.

Sri Lanka policy rates unchanged, further room for lower interest rate due to low inflation: CB

Oct 17, 2014 (LBO) - Sri Lanka's central bank held policy interest rates at 6.5 and 8.0 percent but said there is further room for banks to reduce lending rates, as inflation continued to be slow the Central Bank in its October monetary policy review.

“In nominal terms, most market interest rates are at historic lows, although there is further room for these rates to reduce in relation to the low inflation environment.” Central Bank said in a media release.

However in August credit extended to the private sector by commercial banks increased by 47.7 billion rupees indicating a turnaround in the behavior of bank credit.

The monetary authority says is expected that credit disbursements to the private sector from commercial banks would continue to grow given the continued growth in economic activity and the relatively low market interest rates.

The island inflation continued to remain in low single digit levels, as headline inflation on a year-on-year (Y-o-Y) basis remained unchanged at 3.5 percent in September 2014 while declining on an annual average basis to 4.2 per cent from 4.5 percent in the previous month.

Core inflation (Y-o-Y) meanwhile, decelerated to 3.7 percent in September 2014 from 3.9 per cent in August 2014.

The bank says the reduction of international energy prices and the improvements in the domestic electricity infrastructure have enabled the government to reduce domestic energy prices, and the benefits of these adjustments have now begun to reflect favorably on inflation.

Net credit to the government from the banking sector has increased by 60.9 billion rupees in the first eight months compared to the projected bank borrowing of 100 billion rupees for the year, and credit to public corporations has declined by 27.2 billion rupees during this period.

Reflecting increased foreign inflows to the government and the private sector, net foreign assets of the banking sector have increased by 289 billion rupees during the first eight months of the year, the bank said.

The growth of broad money which moderated in July 2014 to 11.9 per cent (y-o-y), accelerated to 12.3 per cent (y-o-y) in August 2014.

Central Bank says access to the Standing Deposit Facility (SDF) will remain rationalised with deposits of OMO participants under the SDF window exceeding three times being accepted at the lower rate of 5.00 per cent until further notice. In the meantime, OMO auctions will be conducted when necessary.

Sri Lanka First Capital reports a consolidated turnover of 1.7 billion

Oct 17, 2014 (LBO) - Sri Lanka’s First Capital Holdings PLC reported a consolidated turnover of 1.7 billion rupees for the first half of the financial year 2014/15, the company said in a media release.

The consolidated profit after tax of the Group has increased to 868 million rupees compared to 95 million rupees reported in the corresponding period of the previous year.

Media Statement By First Capital PLC

The consolidated turnover for the period under review is in comparison to 910 million rupees for the same period last year.

The group’s primary dealer arm, First Capital Treasuries Limited, was a notable contributor towards the financial results for the period under review.

“Favourable macro-economic factors such as a decline in secondary market interest rates, high market liquidity and low inflation created significant opportunities for growth in the market.

“First Capital Treasuries, which is currently the leading non-bank Primary Dealer appointed by Central Bank, was able to analyse yield curve movements and earn exceptional returns through an incisive combination of trading expertise and extensive research,” elaborated Dilshan Wirasekara, CEO of First Capital Holdings PLC.

First Capital Limited, which specialises in structuring and placement of corporate debt securities, successfully raised funds over Rs. 7Bn through listed debentures, asset backed securitizations and other corporate debt securities.

Meanwhile during the first half of the financial year 2014/15, the group’s Wealth Management and Unit Trust, First Capital Asset Management Limited, displayed a 200% increase over the previous year-end.

The division’s total assets under management surpassed Rs. 3.2Bn during the period.

With a return of 25.23% p.a. over the 12 months ended September 2014, First Capital Wealth Fund continued to steadily outperform the market during the six months under review maintaining its position as the best performing fixed income unit trust.

Consistent with a surge in the performance of the Colombo Stock Market, First Capital Equities (Private) Limited, the stock broking arm of the group, also contributed positively to the Group results.

“We are pleased with our performance to date but expect profits from the primary dealer arm to be more modest during the second half of the financial year. With interest rates currently at historical lows, the opportunities for exceptional gains are limited and our focus will be on managing risk and maintaining acceptable income levels. The Group will continue to build on the current growth momentum across all its subsidiary businesses while expanding on corporate advisory and broader investment banking services,” said Dilshan Wirasekara, highlighting the Group’s vision of becoming Sri Lanka’s leading investment bank and its performance thus far.

During the period under review, First Capital Asset Management also extended its range of products by launching three new funds - First Capital Fixed Income Fund, First Capital Gilt Edged Fund and First Capital Money Market Fund. With renewed interest in the Unit Trust industry, First Capital Asset Management also conducted multiple investor awareness programs around the island in order to facilitate knowledge sharing and support the development of the industry.

First Capital Holdings PLC comprises of First Capital Treasuries Limited, First Capital Asset Management Limited, First Capital Equities (Private) Limited, First Capital Markets Limited and First Capital Limited.