Free flow of information vital for financial markets: CB Governor

(LBO) – A free flow of information is vital for financial markets to grow, Sri Lanka’s Central Bank Governor Arjuna Mahendran told media on Monday.

He was responding to a question posed by Lanka Business Online about concerns of market participants that they should censor information when dealing with the media.

Some bank dealers had also said the central bank may be listening into conversations over official dealing room lines.

“I can say categorically that we don’t tap any phones,” Mahendran said.

“What we have been trying to achieve in the last six months is bringing a greater degree of market related activity in the financial markets,” he said.

“When we had an extended debate in the media about bond markets and how bonds were being traded and polarization about direct placements versus auctions, I suppose that degree of polarization was something market participants may have got worried about,” he said.

“It was politicized, which led to a huge amount of acrimony on the political front,” he added.

He said the media had a major role to play in helping grow financial markets, and the financial press should engage in more discussions, especially in the vernacular Sinhalese and Tamil language press.

This is something the central bank would like to encourage, he added.

Colombo Stock Exchange to transform into a sustainable stock exchange

(LBO) – The Colombo Stock Exchange is to be transformed into a sustainable stock exchange while enhancing corporate transparency on Environmental, Social, and corporate Governance (ESG) issues.

CSE recently joined the United Nations Sustainable Stock Exchanges initiative, launched by UN Secretary General Ban Ki-moon in 2009.

It aims to explore how exchanges can work together with investors, regulators and companies to promote sustainability initiatives.

“CSE wishes to publicly demonstrate its commitment to sustainability, while promoting better business practices within the Sri Lankan Capital Market,” CEO of the CSE, Rajeeva Bandaranaike said.

‘CSE also encourages listed companies to measure and publicly report their ESG performance and impacts.” He further added.

Commenting at the event Sutheash Balasubramaniam of the UN Global Compact Network Sri Lanka said the partnership will enhance the global positioning of CSE while creating a platform for the Sri Lankan capital market to be abreast with international trends.

Sri Lanka sells 04, 06 and 13 year bonds; 13 year bond yields up

(LBO) – The issue of treasury bonds amounting to 13 billion rupees have been oversubscribed with 64 billion rupees of bids received from investors.

The Central Bank has accepted 3.0 billion rupees of 04 year bonds maturing on 15 September 2019 at a weighted average yield rate of 9.50 percent.

The bond auction held on Monday also accepted 6.5 billion rupees of 06 year bonds maturing on 01 August 2021 at a rate of 9.90 percent.

Debt department of the Bank also accepted 3.6 billion rupees of 13 year bonds maturing on 01 September 2028 at a weighted average yield rate of 11.04 percent.

The bank has rejected all the bids received for the 8 year bond.

At the last auction the 13 year bond maturing on 01 September 2028 rated at 10.88 percent.

Sri Lankan stocks end near 11-wk low on retrospective tax concern

Reuters: Sri Lankan shares ended near 11-week lows on Monday led by diversified and banking shares on concerns of a retrospective tax on corporates, brokers said.

The main stock index closed down 0.45 percent at 7,078.64, its lowest close since July 15.

"The index fell because of the government's move to impose a retrospective tax on corporates that had earned more than 2 billion rupees in profit last year," said a stockbroker on condition of anonymity.

"But the turnover is high because some investors are gradually taking positions."

Finance Minister Ravi Karunanayake last week tabled finance bills to raise 80 billion rupees in revenues, including from a super gain tax to be paid by corporates that earned more than 2 billion rupees in the last financial year.

Shares of Ceylon Tobacco Company Plc fell 0.58 percent, while biggest listed lender Commercial Bank of Ceylon Plc dropped 0.91 percent.

Turnover was 1.88 billion rupees ($13.34 million), the highest since Aug. 26 and more than the daily average of 1.12 billion rupees. The turnover has been roughly half of this year's daily average since Aug. 31, stock exchange data showed.

On Monday, the central bank chief said he would not rule out a possible rate hike if credit grew faster.

Analysts said investors were waiting to see how the government would bridge the budget deficit and where the revenue would come from, in its November budget.

The IMF on Sept. 18 said the fiscal deficit is likely to range between 5.5 percent and 6 percent in 2015, much higher than an official target of 4.4 percent, due to falling government revenues.

Foreign investors were net sellers of 630 million rupees worth of shares on Monday, extending the year-to-date net foreign outflow to 3.12 billion rupees.

($1 = 140.8800 Sri Lankan rupees) 

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

Sri Lanka luxury property market under threat: OBG

(LBO) – Sri Lanka’s high end residential property market is at a possible risk as supply is set to overtake demand, a recent real-estate update by the Oxford Business Group said.

The supply of luxury apartments in the commercial capital could reach 6000 units by 2018-19, according to a recent report by the Research Intelligence Unit (RIU), up from 783 in 2009 and 2657 this year, the report quotes.

“In the premium residential segment, insufficient demand will be a problem,” Pravir Samarasinghe, chief executive of Overseas Realty said in the report.

“There is a maximum off take of 500 units a year in Colombo, and there are probably 3500 under construction over the next three years.”

The report lists several residential projects which are expected to be completed in the years ahead.

John Keells Holdings’s 850 million dollar Cinnamon Life waterfront project scheduled for completion in 2018 will include an 800-room hotel, apartment and office complexes, a convention centre and a shopping mall.

Colombo’s Havelock City mixed-use development is also expanding, investing some 130 million dollar to add another four residential towers and nearly 650 units.

Other luxury residential projects, such as the Astoria luxury condominium development, two 194-metre Shangri La residential towers and the 240-metre Altair skyscraper, will further add to stock in the city.

Though sales are steady, the update says the increase in the supply of top-end residential units in the capital could outstrip existing demand.

Quoting Pradeep Moraes, director and president of sales and marketing at Altair/Indocean Developers, it says nonetheless, sales could see the demand gap narrow over time as the economy gains momentum.

“The improved political and economic environment will drive many more people and businesses to come to Sri Lanka,” he told OBG.

Demand could also be spurred by wealthy Sri Lankans returning to cities in search of better accommodation.

“In the past there was an exodus out of town in search of larger properties, but there is a new emerging segment for rental apartments in the city,” he told OBG.

This in turn could boost sales, encouraging buyers to invest in upscale properties for residential rentals.

Currently, more than a third of premium residential sales are generated by Sri Lankans living abroad, while less than 4 percent of investments are made by foreign buyers with the balance coming from locally based, high-net-worth individuals, the update says.