Sri Lankan stocks edge up to over 6-wk closing high before polls

Jan 7 (Reuters) - Sri Lankan stocks rose to a more than six-week closing high on Wednesday, as investors picked up beaten-down shares a day ahead of a tight presidential election.

The main stock index closed 0.25 percent, or 18.38 points, firmer at 7,438.52, its highest close since Nov. 20.

"The market took a cautious approach towards elections, though there won't be a major shift in policies whoever wins," said Reshan Kurukulasuriya, chief operating officer of Richard Pieris Securities (Pvt) Ltd.

President Mahinda Rajapaksa called early elections to be held on Jan. 8. Twenty-six lawmakers have quit his ruling United People's Freedom Alliance since the announcement, including former health minister Mithripala Sirisena, who is challenging Rajapaksa's bid for a third term. Two opposition legislators have joined the ruling party.

The gain in stocks was boosted by a 5.13 percent rise in Hemas Holdings Plc and a 0.78 percent gain in Sri Lanka Telecom Plc.

The day's turnover was 1.39 billion rupees ($10.6 million), slightly less than last year's daily average of 1.42 billion rupees, stock exchange data showed.

Foreign investors were net buyers of 81.3 million rupees worth of shares on Wednesday, but have been net sellers of 216.9 million so far this year, the data showed. They bought a net 22.07 billion rupees worth of stocks last year.

The index rose 23.4 percent in 2014, but has lost 3.5 percent since Nov. 19 when Rajapaksa announced the snap poll. 

($1 = 131.7500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)

MBSL Midcap Index Year 2015 – Proven stock market index brand for 15 years

In a pioneering move, MBSL constructed a stock market index: the ‘MBSL Midcap Index’, which measures the aggregate price level and price movements of medium size companies listed on the Colombo Stock Exchange (CSE). The index which came into operation in the year 1999 is revised annually and looks at the middle range market capitalisation, liquidity and the profitability of the firms to be included in the MBSL Midcap Index. The MBSL Midcap Index has the base as 1,000 as at 31 December 1998 (which is the same base year for Milanka Index) whilst it has rose to 11,058.93 by 31 December 2014.  

Benefits of the MBSL Midcap Index
MBSL Midcap Index can be used as the benchmark index by individual and institutional investors who prefer growth but are prepared to with stand only conservative levels of volatility in their equity investments.It can be used as the benchmark index for the introduction of MBSL Midcap linked index funds.MBSL Midcap Index generate valuable signals for portfolio managers for switching from larger-cap more sensitive stocks to midcap less sensitive stocks with more growth potential in response to changing capital market conditions. The MBSL Midcap Index focus in profitability helps to screen stocks with better future prospects that will cross to higher market capitalisation in the coming year.


MBSL Midcap Index which is in effect from 1 January 2014 and the criteria for selecting the 25 stocks of the index remained unchanged. They are:
Middle Range Market Capitalisation as at 30 November 2014.
Liquidity based on number of trades during the year.
Profitability within the last two years.
The range for market capitalisation for the year 2014 was Rs. 2.15 billion – Rs. 21.49 billion. With the stock market movements, this range has been adjusted for the change in the ASPI annually. Accordingly the range of market capitalisation for the year 2015 is Rs. 2.76 billion – Rs. 27.26 billion.Based on the above criteria the MBSL Midcap index 2015 includes the following stocks representing eight sectors.

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NSB sets the record straight about $ 750 m intl. bond issue

Savings giant NSB yesterday set the record straight in relation to certain recent news items regarding its successful $ 750 million international bond issue.

Following is the full text of NSB’s statement:

NSB wishes to clarify its position on certain news items and on statements made at various forums on the international bond issue. In 2013 National Savings Bank entered into the international market to raise funds by issuing a USD bond under the ruling RegS/144A. A RegS/144A means that it complies with US regulations and that of the Asian and European regulations.

In terms of the relevant regulations only institutional investors are allowed to participate in subscribing for the issue with a minimum subscription value of $ 200,000.

The bond for $ 750 m with a five-year tenor was priced on 12 September 2013 at a coupon rate of 8.875%.

The issue was oversubscribed 2.5 times approximately, and 172 subscribers committed for $ 2.3 b. The allocation was made among 141 applicants with a good spread among investors.

The spread of the investor community to the NSB bond issue ranged from the US to Asia that covers all three time zones. Geographically US contributed 39%, Europe with 38% and Asia with the remaining 23%. The categorisation of investors ranged from fund/asset managers with 88%, banks with 10% and insurance companies and other institutions with 2% of the issue.

Therefore, we wish to emphasise to the general public that no individual investors were among the subscribers to NSB international bond.

NSB was rated on par with the sovereign by two rating agents, and the bond carried an international rating of BB-.

In the first week of September none of the bonds in the secondary market of Singapore Debt Exchange traded at par except of the Vietnamian’16 and Vietnamian’20. All others were trading at a discount. The average $ 100 bond was trading between prices of $ 78-99.

In the global market, certain bonds that carry identical issuer/issue ratings to that of NSB was trading at levels of 8.3% p.a., to 8.5% p.a. with comparable maturities.

When an issuer who is not known to the investors enters the international market for the first time, a debut issue is priced higher than that of a seasoned issuer.

The NSB bond being a non-sovereign issue would have had to pay a margin of 100 bp to 150 bp over a sovereign issue. Nevertheless, in reality the initial book building started at rates above 9.25% and NSB was able to drive the price down due to the strong demand shown by over 170 investors with a commitment of over $ 2.3 billion.

The issue price was finally set at 8.875% and not at 9% or above as has been stated at various forums. NSB wishes to highlight that the proceeds were never deployed at 7% or below the cost but always at a margin.

The NSB bond was trading near par immediately after the issue. If the pricing was way beyond the market rates, the post issue should have been traded at high premiums.
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