Sri Lankan index edges up from 8-week low

Sri Lanka's stock index rose on Friday from its lowest in more than eight weeks hit in the previous session, led by local buying in market heavyweight John Keells Holdings Plc.

Foreign investors, however, sold Keells' shares amid political uncertainty that has sapped investor confidence and turned them away from risky assets.

The market saw net foreign outflow of 865.1 million rupees ($6.46 million), its worst since Sept. 30, 2014, extending net foreign outflow from equities to 2.39 billion rupees during the past 13 sessions. The bourse, however, has seen net inflows of 3.54 billion rupees into equities so far this year.

Analysts said foreign investors have been selling shares amid expectations the U.S. would hike key interest rates sooner than expected. An upbeat U.S. nonfarm payrolls in May, the largest gain since December, has raised chances of a rate hike as early as September.

The main stock index ended 0.14 percent higher, or 9.76 points, at 7,061.28, edging up from its lowest closing level since April 15 hit on Thursday. The index snapped a four- session straight losing streak on Friday.

"Today, there was some buying interest while the block deals in Keells pushed the turnover," said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

"Not much selling pressure was there today and the pressure will fade away with the announcement of elections."

President Maithripala Sirisena's government has said it would dissolve parliament once some crucial reforms, including an electoral bill, are passed, but has yet to fix a date for the election.

Friday's turnover was 1.59 billion rupees ($11.87 million), its highest since May 20 and more than this year's daily average of about 1.1 billion rupees.

Shares in conglomerate John Keells Holdings Plc, which saw net foreign selling of 3 million shares, ended 1.94 percent higher while Hayleys Plc rose 6.06 percent.

($1 = 134.0000 Sri Lankan rupees) 

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

Sri Lankan tea prices recover

COLOMBO (EconomyNext) –Sri Lankan tea prices recovered at this week’s Colombo auctions as quality improved and helped by the depreciation of the rupee, lower global production and higher prices at other origins, brokers said.

But auction average prices still remained below the same level in 2013 and have been causing loses for many regional plantations companies.

“This week there was better demand and consequently a firm to dearer trend in prices,” , Forbes & Walker Tea Brokers said, referring to sales from plantation company estates.

They attributed the recovery to a combination of the recent depreciation of the rupee against the US dollar, lower global crops and the significant appreciation in prices at the Mombasa auction over the past several weeks.

Global tea production so far this year is about 50 million kilos less than in the same period in 2014.

“However, the overall Colombo auction average is still below the corresponding average in 2013,” Forbes & Walker Tea Brokers said in a report.

“From a global perspective, the current auction prices would appear good value and considering the improvement in product quality that is observed in the forthcoming sales, it would be reasonable to anticipate a gradual upward movement in prices from now on.”

Sri Lankan tea prices have fallen sharply because of problems in key markets like Russia and the Middle East with the devaluation of the rouble and lower oil prices.

John Keells tea brokers said the recovery in oil prices “should auger well for the tea drinking nations in the Middle East, Iran and Iraq.”

They said Iranian and Russian buyers were quite active this week while Iraq, Libya, Jordon, Saudi Arabia and Syria also “lent useful support.”

Sri Lanka rupee falls to record low

COLOMBO, June 12 (Reuters) - The Sri Lankan rupee fell to a record low of 134 on Friday as a state-run bank, through which the central bank directs the markets, lowered the dollar selling rate by 20 cents, dealers said.

Currency dealers said hopes that the rupee would strengthen on rising inflows was fading as the currency has come under pressure due to political uncertainty ahead of a parliament poll and foreign selling in rupee bonds during the last few days.

The spot currency traded at 134.00 per dollar, weaker from Thursday's close of 133.80.

"The central bank lowered the spot by 20 cents, now the state bank is selling dollars at 134 (rupees per dollar)," a currency dealer said on condition of anonymity.

Two other dealers confirmed the move. Officials from the central bank were not immediately available for comments.

On Tuesday, the state-run bank cut the spot rupee's level by 10 cents to 133.80 after retaining it at 133.90 during the previous five sessions through Monday.

The move came amid tepid dollar sales by exporters and the continuing political uncertainty, dealers said.

The market expects the rupee to be stable so long as the central bank offers dollars, but its stability will depend on inflows into the country, currency dealers said.

Finance Minister Ravi Karunanayake said on Thursday that Sri Lanka is planning to borrow $1 billion via five-year syndicated loans as early as this week from international banks and it could borrow up to $2 billion.

In the stock market, the benchmark index was steady at an eight-week low by 0616 GMT. Turnover stood at 993.7 million rupees ($7.4 million).

'Colombo Port City to begin work soon'

Shirajiv Sirimane

Colombo Port City, the biggest Chinese invested project in Sri Lanka will move on, Board of Investment Chairman, Upul Jayasuriya said.

Speaking at the Sri Lanka China Business Forum and B2B Meetings he said that the project will be in action sooner than later. "There are some environmental issues that needs to be attended and solutions found for. After that the project will re-commence."

Jayasuriya also said Sri Lanka introduced the open economy in 1978 even before Malaysia, Indonesia, India, Pakistan and many other countries. However, due to the war situation in the country Sri Lanka fell back. However with peace, Sri Lanka today is a place much sought after by many."

He said in addition to peace, a corrupt free society where 'fair play' and 'rule of law' is effective is a must for investors. This too has now being created," he said.

Jayasuriya said that one of the biggest finance of Sri Lanka China relationships will be the implementation of the FTA. "This China Lanka FTA should have taken place before, since Chinese investments increased in the last decade.

He also said that this visit by the Chinese entrepreneurs will further help to increase trade and investment between the two countries.

Chamber of Commerce Secretary General and CEO Mangala P B Yapa said this is the biggest ever Chinese business delegation. The Sri Lanka-China Business Forum is jointly organized by the Beijing Lansing Century Exhibition Company in association with the Ceylon Chamber of Commerce.



"Persistent efforts needs to taken, both at the government as well as the private sector level for a comprehensive engagement to market both our nations together, as partners in progress," he said.

"Trade between our two countries have increased rapidly during last couple of years. We also observe the increased number of tourists visiting Sri Lanka due to many promotional campaigns organized by the Sri Lanka Tourism Development Authority in China. We wish to encourage more Chinese tourists to visit Sri Lanka."

"In November 2014, the Chamber was instrumental in leading a successful business promotion mission to China, that included 22 leading business entities and we are glad to note that this mission resulted in several trade agreements were concluded to export products from Sri Lanka to China," he recalled.

Deputy Division Director, Liaoning Provincial Bureau of Foreign Trade and Economic Corporation Sui Yetuo said the 48 member delegation includes members from electronic to heavy industries sector.

He said that the visit by President Maithripala Sirisena to China has given their investors further confidence to invest in Sri Lanka.
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