Sri Lankan stocks mark 2-wk closing low; budget, corporate earnings eyed

Reuters: Sri Lankan shares closed at their lowest level in two weeks on Tuesday as investors waited for clues from government budget and September-quarter corporate results, brokers said.

The main stock index ended 0.3 percent, or 21.55 points, weaker at 7,078.45, its lowest closing since Sept. 30.

"Selling of large-cap shares was absorbed with the anticipation of the market reviving after the budget," said Danushka Samarasinghe, research head at Softlogic stockbrokers.

Analysts said investors were cautious ahead of Prime Minister Ranil Wickremesinghe's policy statement next month outlining his government's economic priorities.

Turnover stood at 1.16 billion rupees ($8.26 million), compared with this year's daily average of 1.11 billion rupees.

Foreign investors were net sellers of 278.4 million rupees worth of shares on Tuesday, extending the year-to-date net foreign outflow to 3.08 billion rupees.

Shares of Chevron Lubricants Lanka Plc fell 1.80 percent, Union Assurance Plc dropped 7.39 percent and Dialog Axiata Plc declined 0.89 percent. 

($1 = 140.5000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Subhranshu Sahu)

Candor launches Sri Lanka close-ended mutual fund

ECONOMYNEXT – Sri Lanka’s Candor Asset Management (Pvt) Ltd. (CAM), a fund manager, said it will launch a five-year, close-ended listed Unit Trust with an Initial Public Offering of 50 million units at 10 rupees each.

Candor Opportunities Fund IPO, which will be raised to 75 million units in the event of oversubscription, will invest in listed equities and fixed income securities.

The IPO opens on October 20, 2015 and closes on November 9, a stock exchange filing said.

Eagle Proprietary Investment Ltd of Dubai, parent firm of CAM, will invest 100 million rupees as seed capital in the fund.

The fund manager will adopt an active management approach and will aim to provide annual dividends over the life of the fund through dividend income received, capital gains made and interest income earned by the fund.

Fees include a front-end fee of 1.5 percent of the initial offer price of the unit, management fee of two percent a year of net asset value, trustee fee of 0.15 percent a year of NAV to Deutsche bank AG, Colombo Branch. There will be no exit fee.

The fund will “primarily invest in stocks of well-managed companies that are attractively priced with medium to long-term growth and income potential with the option to move into fixed income securities at times when the equity market is over valued,” the offer document said.

“The investment management approach will be based on quality investing which will involved in-depth fundamental research, long term focus and strong price discipline.”

British-born economist Deaton wins 2015 Nobel Prize for Economics

STOCKHOLM (Reuters): British-born economist Angus Deaton won the 2015 economics Nobel Prize for “his analysis of consumption, poverty and welfare”, the Royal Swedish Academy of Sciences said on Monday.

The academy said that Deaton’s work had been a major influence on policy making, helping for example to determine which social groups are affected by an increase of value-added tax on food.

“To design economic policy that promotes welfare and reduces poverty, we must first understand individual consumption choices,” the award-giving body said on announcing the 8 million Swedish crown ($978,000) prize.

“More than anyone else, Angus Deaton has enhanced this understanding,” it said.
Deaton also spearheaded the use of household survey data in developing countries, especially data on consumption, to measure living standards and poverty, the academy said.

The economics prize, officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was established in 1968. It was not part of the original group of awards set out in dynamite tycoon Nobel’s 1895 will.

Deaton, who was born in Edinburgh and holds both British and U.S. citizenship, is professor of Economics and International Affairs at Princeton University in the United States.

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Insurance industry growth soars in 1H

GWP up 11.73% to Rs. 55 billion as against a mere 3% improvement in 1H of 2014

The insurance industry has grown by 11.73% in terms of Gross Written Premium (GWP) to Rs. 55 billion as against a mere 3.07% improvement in the same period of last year.

Insurance Board of Sri Lanka (IBSL) said yesterday that the GWP for Long Term Insurance and General Insurance Businesses for the six months up to 30 June 2015 was Rs. 54,988 million compared to the first six months of 2014 amounting to Rs. 49,216 million. 

The GWP of General Insurance Business amounted to Rs. 32,113 million (1st half 2014: Rs. 28,761 million) while the GWP of Long Term Insurance Business amounted to Rs. 22,875 million (1st Half 2014: Rs. 20,455 million) during the first half of 2015. General Insurance Business and Long Term Insurance Business witnessed a GWP growth of 11.66% and 11.83% respectively when compared to the corresponding period of year 2014.

Total assets of insurance companies have increased to Rs. 394,193 million as at 30 June 2015 when compared to Rs. 390,918 million recorded as at 30 June 2014, reflecting a growth of 0.84%. This growth rate is significantly low when compared to the growth experienced in 1st Half of 2014, i.e. 13.0%. This is mainly due to the decline in the assets of General Insurance Business. 

The assets of Long Term Insurance Business amounted to Rs. 259,134 million (1st half 2014: Rs. 237,706 million) indicating a growth rate of 9.01% year-on-year. The assets of General Insurance Business amounted to Rs. 135,060 million (1st half 2014: Rs. 153,212 million) depicting a negative growth rate of -11.85%, at the end of first six months of 2015.

At the end of first six months of 2015, investment in Government debt securities amounted to Rs. 120,503 million representing 46.50% (1st Half 2014: Rs. 106,192; 44.67%) of the total assets of long term insurance business, while such investment of the total assets of general insurance business amounted to Rs. 29,312 million representing 21.70% (1st half of 2014: Rs. 28,491; 18.60%). Accordingly, the total investment of assets of both technical reserve of general insurance business and long term insurance fund of the life insurance business amounted to Rs. 149,816 million representing 38.01% (1st Half of 2014: Rs. 134,683; 34.45%) as at 30 June 2015. 

IBSL, under its overall objective of safeguarding the interests of policyholders, inquires into policyholders’ grievances in connection with insurance claims pertaining to life and general insurance policies. IBSL also investigates into any other complaint referred to it against any insurer, broker or agent. Out of 277 matters referred to and being reviewed by IBSL, 124 (44.76%) were settled/closed during the period. Out of the matters settled/closed, 84 disputes were relating to claims under insurance policies. Out of this amount, 24 claims were honoured by insurers upon the intervention of IBSL.

Out of 29 insurance companies (insurers) registered with the Board as at 30 June 2015, four are composite companies (dealing in both Long Term and General Insurance Businesses), 11 are registered to carry on Long Term (Life) Insurance Business and 14 companies are registered to carry on only General Insurance Business. Ceylinco Takaful Limited is prohibited from engaging in insurance business since 5 August 2009. AIG Insurance Ltd. has informed the Board of its intention to withdraw its operations from the Sri Lankan market and is on a runoff plan currently.

Fifty-seven insurance brokering companies, registered with the Board as at 30 June 2015, mainly concentrate in General Insurance Business. Total Assets of insurance brokering companies have increased to Rs. 3,568 million as at 30 June 2015 when compared to Rs. 3,182 million recorded as at 30 June 2014, reflecting a growth of 12.12% year-on-year.
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