Sri Lankan shares up from 3-month low

Sri Lankan shares edged higher on Thursday from their lowest in three months hit in the previous session, as investors picked up battered shares like market heavyweight John Keells Holdings Plc.

However, the gains were capped as political uncertainty ahead of the Aug. 17 parliamentary elections weighed on sentiment. Foreign investors continued to exit risky assets for a seventh straight session.

The main stock index ended up 0.34 percent at 6,947.05, edging up from its lowest close since April 10 hit on Wednesday.

The day's turnover stood at 1.04 billion rupees ($7.78 million), near this year's daily average of 1.06 billion rupees.

The market saw a net foreign outflow of 577.4 million rupees on Thursday, the highest since June 17, extending net outflows for the past 31 sessions to 5.43 billion rupees.

However, foreign investors have been net buyers of 513.3 million rupees worth of shares so far this year.

"Foreigners will come only when the water is clear. They will not take a chance in uncertainty," said Reshan Kurukulasuriya, chief operating officer of Richard Pieris Securities (Pvt) Ltd.

Shares in John Keells rose 2.11 percent, while Lion Brewery Plc rose 1.03 percent, pushing up the overall index.

President Maithripala Sirisena dissolved parliament on June 26 and scheduled elections for Aug. 17, in an effort to consolidate power and push through political reforms. 

($1 = 133.6000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

Sri Lanka bond yields sharply up at auction, secondary trading

ECONOMYNEXT - Sri Lanka's 5, 6 and 7 year bonds rose sharply at Thursday's auction data from the state debt office showed, with secondary market yields also moving up, dealers said.

The debt office sold 11.5 billion rupees of 4 and 9 month bonds maturing on 01.05.2020 at a weighted average yield of 8.39 percent. The bonds were last auctioned at 8.20 percent on July 02.

The bond which was quoted around 8.25/30 percent before the auction moved up to 8.55/60 percent levels, dealers said.

About 7.6 billion rupees of bonds maturing on 15.10.2021, a new maturity, were sold to yield 9.08 percent. The bond was quoted around 9.15/35 percent after the auction.

About 12.1 billion rupees of 7-year 2-month bonds maturing on 01.10.2022 were sold to yield 9.14 percent. The bonds were quoted around 9.20/40 percent after the auction.

Sri Lanka has expanded domestic bond sales to raise money to bridge the deficit but in April cut policy rates, blunting price signals.

Sri Lanak's Expolanka to spin-off more units, sharpens focus on logistics

EconomyNext – Expolanka Group has said it is open to further divestment of its international trade and manufacturing businesses as it seeks to improve profit margins and focus on its core business.

The company, in which SG Holdings of Japan acquired a controlling 51 percent stake last year, sold off its tea and herbal pharmaceutical business to concentrate better on its core freight and logistics business.

Expolanka divested “volatile businesses with varying returns” as part of ongoing restructure efforts, especially sectors which were not aligned with core sectors, the company told shareholders in its annual report.

“In the International Trade & Manufacturing sector, the Group will, going forward, continue to consider further divestments should the right value be realised (that exceeding the future value forecasted through business in the long-term) for existing sector businesses,”

The remaining businesses in the sector are perishable products, processed foods and eco-based paper products.

“The strategy going forward will be to consolidate the sector’s business pillars, although the Group remains open to further divestments, should the divestment opportunities supersede forecasted growth for each pillar in the medium term,” it said.

Expolanka Group Chief Executive Hanif Yusoof said the divestment was aimed at better optimization of the group’s resources towards key growth sectors.

“Resources were thus re-allocated for greater returns and know-how integrated to optimise long-term business sustainability,” he told shareholders.

This led to a “series of hard yet high return decisions,” he said. “The intention of the re-engineering efforts was to divest businesses that were falling below performance benchmarks and projected growth patterns.”

The annual report said the group divested its interests in plantations and tea in the third quarter of the 2014-15 financial year owing to the volatility of the tea plantation operations and its inability to yield expected returns.

“Given that the sector concentrated on bulk exports and given the intense volatility of the industry in the global marketplace, the divestment assisted the group to refocus resources towards more critical growth areas.”

The herbal pharmaceuticals business represented by the Baraka brand was also sold during the year, as growth prospects fell short of the group’s strategic requirements.