Sri Lankan stocks fall to 12-wk low; political uncertainty weighs

Nov 27 (Reuters) - Sri Lankan stocks fell to a 12-week closing low on Thursday as investors pulled back over worries the defection of some ruling party members would result in a hung parliament after the Jan. 8 presidential polls.

The main stock index closed down 0.89 percent or 63.83 points at 7,115.89, its lowest since Sept. 5, after falling 1.6 percent earlier in the session.

Eight loyalists from President Mahinda Rajapaksa's United People's Freedom Alliance, including Health Minister Mithripala Sirisena, have defected since Rajapaksa announced the snap poll last week. Sirisena has resigned to contest against Rajapaksa as the consensus candidate of a united opposition.

"The crossovers have raised concern over the political stability of the government and some believe it could result in a hung parliament, resulting in political instability," a stockbroker said on condition of anonymity.

"At the moment, it is not clear who will win. But if we see a massive defection in parliament towards one side, then it will be clear who is going to win and that will help the market rebound."

Continued buying by foreign investors, low interest rates and hopes of better corporate earnings pushed the bourse into the overbought zone by Nov. 18, before it slipped on political uncertainty. The bourse is near the oversold region since Friday, Thomson Reuters data showed.

Thursday's turnover was 1.32 billion rupees ($10.08 million), exchange data showed, less than this year's daily average of 1.44 billion rupees. Foreign investors bought a net 320.1 million rupees worth of stocks, extending purchases during the year to 20.12 billion rupees, exchange data showed.

Shares in biggest listed lender Commercial Bank of Ceylon Plc fell 4.40 percent, leading the losers, while fixed line telephone operator Sri Lanka Telecom Plc declined 3.51 percent. 

($1 = 131.0000 Sri Lankan rupee) 

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

Sri Lanka Sampath Bank to issue debenture

Nov 27, 2014 (LBO) – Sri Lanka, Sampath Bank to issue 70,000,000 rated unsecured redeemable subordinated debenture, the bank said in a stock exchange announcement.

The bank will issue 70,000,000 debenture at a rate of 100 rupees per share has been approved by the regulatory.

The bank said the subscription will open on 05th December this year.

Sri Lanka stocks close down 0.9-pct

Nov 27, 2014 (LBO) - Sri Lanka's stocks closed 0.89 percent lower with telco and banking stocks losing ground despite net foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 63.83 points lower at 7,115.89, down 0.89 percent.

The S&P SL20 closed 47.55 points lower at 3,977.15, down 1.18 percent.

Turnover was 1.32 billion rupees, down from 1.70 billion rupees a day earlier with 35 stocks closed positive against 183 negative.

Access Engineering closed 1.20 rupees lower at 35.70 rupees with an off market transaction of 162.80 million rupees changing hands at 37.00 rupees per share contributing 12 percent of the turnover.

The aggregate value of all off-the-floor deals represented 16 percent of the daily turnover.

Lanka Cement closed 1.90 rupees lower at 3.40 rupees and Lanka IOC closed 60 cents lower at 54.60 rupees, attracting most number of trades during the day.

Foreign investors bought 445.70 million rupees worth shares while selling 125.55 million rupees worth shares.

Commercial Bank of Ceylon closed 7.40 rupees lower at 160.60 rupees and Sri Lanka Telecom closed 1.70 rupees lower at 46.80 rupees, contributing most to the index drop.

Oil palm firms Shalimar (Malay) closed 382.00 rupees higher at 1,987.00 rupees and Good Hope closed 382.20 rupees higher at 1,998.90 rupees.

Cabraal Spells Out 8-point Agenda For Banks

Central Bank Governor Ajith Nivard Cabraal yesterday spelled out an eight-point agenda for the Lankan banking sector to get themselves aligned with the government’s ‘Vision 2020’.The government hopes to achieve the US $ 150 billion economy and gross domestic product (GDP) per capita of US $ 7000+ by 2020. According to Cabraal, the banking sector, which represents 60 percent of the financial system, has a pivotal role to play in getting the country there.

“Financial inclusion is topping my list. Here we don’t mean how many Sri Lankans have a bank account or not. We are talking about real financial inclusion, where people have real access to finance to do business and carry out their activities.What is the point of having a bank account without money,” Cabraal quipped.According to a recently published working paper by Asian Development Bank Institute, Sri Lanka tops in the region in financial inclusion with comparatively easy access to finance.

As the second point, the Governor urged the banks to develop new fund-based products as margins are shrinking due to the prevailing low interest rate regime, a scenario the Central Bank predicts for the medium and long term.Sri Lanka’s largest private bank Commercial Bank PLC saw its interest income falling 4 percent year-on-year (YoY) to Rs.15.3 billion in 3Q14. The second largest Hatton National Bank PLC’s interest income for the same quarter fell 6 percent YoY to Rs.15.4 billion.

As the third point, Cabraal urged the banks to get involved in the infrastructure projects that are taking place in the country.“For a long time, infrastructure was funded and developed by the government. The key infrastructure of the country such as ports, air ports, power plants have now been built. The next wave of infrastructure development should come from the private sector.”Already, some of the large banks in the country, both private and state-owned, have funded some of the key infrastructure projects.Assistance in reviving ailing businesses was the fourth point in Cabraal’s list. Deriving examples from the Central Bank-driven financial sector consolidation programme, he recommended banks to have dedicated units to help their customers who are struggling.

The Central Bank has a separate unit headed by a Deputy Governor, driving consolidation process.“It is more difficult to recover than revive,” Cabraal noted. He further said banks in most of the developed countries follow this path and stressed that lower NPL ratios in those countries are a result of this practice.“We would like to see a few banks setting up such dedicated units in the coming few months.” As the fifth point, Cabraal said the banks need to reposition themselves as soon as possible as Sri Lanka is going to be a regional hub. “You need to be the trailblazer,” he urged.the ongoing
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Anilana Rights Issue oversubscribed

Anilana Hotels and Properties PLC's Rights Issue, which closed yesterday, was fully subscribed attracting applications over and above the number offered under the rights.

The Rights issue offered Ordinary Shares in the ratio of two shares for every seven shares held by the registered holders of Ordinary Voting Shares in the Company at an issue price of Rs 7 per ordinary voting share. The Company offered 109,624,114 Ordinary Voting Shares, making it a total 494 million shares. The offer closed yesterday, raising Rs 767 million partly to finance the balance construction of Phase-I of the Dambulla hotel and to retire Rs 167 million of existing debt.

Chairman Peter Amerasinghe said Anilana Hotels and Properties PLC will continue to investment in expansion and debt restructuring to improve its financial position and will actively streamline cost structures by benchmarking best practices from within and outside the country. In addition, Anilana will focus on continuous staff training and development to achieve a high level of service which would be a hallmark of its resorts in Sri Lanka.

Anilana is one of Sri Lanka’s youngest and brightest hospitality brands, already enjoying positive recognition from guests around the world and is a collection of unique and stylish resorts, designed to present Sri Lanka at her most picturesque and beautiful.

Anilana-Pasikuda, the first resort, opened in May 2013, with Anilana-Nilaveli opening to the public in April 2014.

Anilana-Damublla and Anilana Villas-Panichchankerni are due to open in the latter part of 2015. The company also plans on developing three more resorts in the east coast and also start a joint venture development in the city of Colombo.
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Capital market key contributor to achieve Vision 2020 goals - SEC Chairman

The capital market is expected to be a key contributor to the economy by 2020 with a Market Capitalization of around US$ 100 billion. A strong regulatory framework and a reputation for Corporate Governance are essential pre-requisites in achieving that vision, SEC Chairman Dr Nalaka Godahewa said.

Speaking on ‘Corporate Governance’ at the Directors Symposium for the NBFI sector on Tuesday, he said with the right strategic focus and the commitment of all stakeholders,they have been able to bring the stability back to the market and create an environment where the capital market is viewed as a potential key contributor to the national economy.

"Since the end of the war in 2009, the total value of the equity market has increased to US$ 24 billion. The All Share Price Index (ASPI) of the CSE recorded an impressive growth of nearly 300%. Market Capitalization to GDP ratio has improved from 11% to 37%. Net Foreign Inflow has exceeded Rs. 90 billion during the last 3 years.

Average Market Return over the last 11 months exceeded 26%. The ASPI has crossed the 7000 mark and all signs are that the market has entered a phase of steady growth with normal fluctuations. "I believe most of you are already familiar with the vision 2020 targets of the country.

The government is targeting a US$ 150 billion economy and a Per Capital Income of US$ 7500 by 2020 that will make us on par with some of the upper middle income economies. A key component in this overall economic development strategy of the country is making Sri Lanka a true commercial hub.

“We expect the capital market to be a key contributor to the economy by 2020 with a Market Capitalization of around US$ 100 billion," Dr Godahewa said.

A strong regulatory framework and a reputation for Corporate Governance are essential pre-requisites in achieving that vision.
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