Sri Lankan stocks edge up from near 11-week low amid foreign buying

Reuters: Sri Lankan shares ended Tuesday slightly firmer from the previous session's 11-week low, snapping a losing streak over three straight sessions, helped by foreign buying of blue chips.

Foreign investors were net buyers of 40.3 million rupees worth of shares on Tuesday, but they have been net sellers of 3.07 billion rupees worth of shares this year.

The main stock index closed up 0.1 percent, or 6.74 points firmer, at 7,085.38, edging up from its lowest close in nearly 11 weeks in the previous session.

"The market was pushed up on low volumes. But the buying is not that prevalent," said Dimantha Mathew, a research manager at First Capital Equities (Pvt) Ltd.

"Still investors are largely waiting for the government's policy direction and budget."

Shares of Nestle Lanka Plc rose 3.96 percent while Sri Lanka Telecom Plc rose 2.30 percent.

Turnover was 816.3 million rupees ($5.78 million), less than this year's daily average of 1.11 billion. 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. 

($1=141.2000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Clarence Fernandez)

Fitch affirms Abans at 'BBB+(lka)'

Fitch Ratings has affirmed Abans' National Long-Term Rating at 'BBB+(lka)' and revised its outlook to stable.

Fitch has also affirmed the National Long-Term Rating on Abans' unsecured redeemable debentures at 'BBB+(lka)' and its outstanding commercial paper at National Short-Term Rating of 'F2(lka)'.

The outlook revision reflects improvements in Abans' net leverage due to improvements in the operating environment and its margins, which Fitch considers sustainable in the medium term.

The outlook is also supported by Fitch's expectations that Abans' capex and investments are likely to be minimal in the medium term, which would help sustain improvement in its leverage.

Abans' leverage, as measured by lease-adjusted net debt/operating EBITDAR (excluding Abans Finance PLC), improved to 6.48x in the financial year ended March 2015 (FY15) from 8.04x in FY14, supported by strong top-line growth and a wider EBITDAR margin.
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MTD Walkers Rs 3 b debenture full

MTD Walkers has received applications for over Rs 3 billon for the company’s debenture issue which has been oversubscribed.

The company announced an initial issue of 25,000,000 Rated, Senior, Unsecured , Redeemable, debentures of Rs 100, each with an option to issue up to a further 5,000,000 of said debentures at the discretion of the company in the event of an oversubscription of the initial issue of totaling up to a maximum of 30,000,000 debentures.

The issue closed yesterday as per the prospectus. The basis of allotment will be notified to the CSE in due course.
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Palm Hotels amalgamates with two subsidiaries

The Board of Directors of Palm Garden Hotels have resolved to amalgamate with Southern Cleaners and Central Services. They are wholly owned subsidiaries of Palm.

By the terms of this amalgamation, all Southern and Central shares will be cancelled without payment or any other consideration and Palm will acquire all assets and liabilities of Southern and Central.

The Board of Directors of the companies are of the opinion that the proposed amalgamation is in the best interests of all Companies and are also satisfied that the amalgamated company, Palm will immediately after the amalgamation becomes effective, satisfy the Solvency Test.

The amalgamation will take effect on October 30, 2015 or such other date as may be decided by the Registrar General of Companies.
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EPF,ETF to merge

Hiran H.Senewiratne (hsenewiratne@gmail.com)

Sri Lanka’s pension funds,the EPF and ETF, will be merged to provide more benefits to the people in the private sector, Central Bank Governor Arjuna Mahendran said.

This was also in the last election manifesto, the Governor said.

“We are exploring the possibility to merge the pension funds which runs into more than rupees one trillion to simplify the fund.” Today the employee has to contribute to two funds,” the Central Bank Governor told the media yesterday.

Mahendran said this will benefit the small employees who run small business entities. This huge fund will help large amount of people to obtain benefits out of this huge fund.

The Governor said Sri Lanka’s economic growth is estimated at 6.7 percent in the second quarter and there was sufficient economic momentum due to prudential economic policies in the country, “he said.

“The rupee was now determined by market forces and the government is not involved in it. Therefore, the recent fall in the rupee will increase export competitiveness, Mahendran said.

Bank lenders were asked to finance only 70 percent of loans of cars, which were being imported in large numbers, taking away the competitive advantage from a reduction in oil prices, he said.

Uncertainty in global markets had made many currencies volatile and the situation may continue until the US hikes rates, he said.

An eventual hike in US interest rates need not necessarily signal a domestic hike he said, if credit, inflation and balance of payments are stable. He said core inflation has been rising, but headline inflation was low.

He also said that US Federal Reserve will likely increase interest rates before the end of this year. Due to that short term investors move away from emerging markets and invest different investment tools in US markets, Mahendran said.

Sri Lankan car prices which spiked with the sharp depreciation of the local currency has seen weak demand following the Central Bank’s move to curtail credit for vehicle purchases, dealers said.
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