Sri Lankan stocks fall for 4th day to over 3-month closing low

Reuters: Sri Lankan shares fell for a fourth straight session and closed at their lowest level in more than three months on Friday as investors waited for clues from government policies and budget, brokers said.

The main stock index ended 0.14 percent, or 9.71 points, weaker at 7,020.74, its lowest close since July 13.

Analysts said a government move to implement a budget proposal of a retrospective tax targeting corporate is the main concern for investors.

"Bad stories about the budget are dragging the market lower and we have seen a state fund also selling, that too prevented other investors from entering," said a stock broker asking not to be named.

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

Turnover stood at 524.9 million rupees ($3.74 million), compared with this year's daily average of 1.1 billion rupees.

Foreign investors, who have been net sellers of 2.73 billion rupees worth of equities so far this year, bought a net 36.6 million rupees worth of shares on Friday, extending the net foreign inflow in the past three sessions to 349.3 million rupees worth of equities.

Shares of Bukit Darah Plc fell 3.21 percent, C T Holdings Plc declined 3.29 percent and People's Leasing & Finance Plc dropped 2.38 percent. 

($1 = 140.5000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Subhranshu Sahu)

Sri Lanka sells USD330mn of one, three and five year development bonds

(LBO) – The issue of Sri Lanka development bonds amounting to 75 million US dollars have been oversubscribed with 407.25 million US dollars of bids received from investors.

The central bank has accepted 277.50 million US dollars in one year bond at a floating rate of weighted average margin (bps) over six month LIBOR of 335.95.

The Public Debt Department of the Central Bank has also accepted just 2.50 million US dollars of the three years and three months bond at a rate of 370.00.

The bond auction held during 08 to 15 October has accepted another 50.00 million US dollars in the four years and eight months bond at a floating rate of 405.00.

At the last development bond auction held in August, a one year and seven month bond was sold at 349.47 while a two years and five months bond was sold at 373.83.

Sri Lanka tax spenders take more than 60 cents of every tax-rupee home

TAX TAKE Up to July 2015, 61 cents out of every tax rupee has been taken home as salaries and pensions.
ECONOMYNEXT - Sri Lanka's bloated public service and the expanding elected ruling class is taking home more of the taxes collected from the people as salaries and pensions, data shows.

In 2013 salaries and pensions made up 516 billion rupees out of 1,005 billion rupees in total taxes or 51 cents out of every tax rupee collected from the people.

Over the latter stage of the Rajapaksa administration, fiscal policy improved with the overall budget deficit falling real spending cuts seen in some areas while revenue to gross domestic product also fell, an enviable achievement in any country where ordinary people valued fiscal restraint.

However in Sri Lanka there was a backlash on the spending cuts from statists and sadly also economists who also claimed that the revenue was also low from compared to gross domestic product.

They have now got their wish as spending ratcheted up, with most of it going to salaries as expected.

Tax spending state workers took home 54 cents out of every tax rupee as salaries and pensions in 2014, up from 51 cents and in the 2015 budget it was expected to go up further to 56 cents from every tax rupee.

Up to July 2015, 61 cents out of every tax rupee has been taken home as salaries and pensions.

Sri Lanka's rulers have earlier run massive current account deficits in the budget with revenue to GDP topping 20 percent.

In Sri Lanka, while ordinary state workers have to work two decades or more to earn a pension, the elected ruling class and several of their personal staff give themselves a lifetime pension after just five years in a feudal style privilege that stands contrary to a modern democracy.

Family members including wives and children are usually appointed to the positions so that they can become lifetime tax spenders.

In Sri Lanka the spending agenda has been driven by state worker unions, unemployable graduates from tax-payer funded universities and some political parties such as the Janatha Vimukthi Peramuna, who have helped heaped burdens of tax, inflation and currency depreciation on helpless private sector workers in particular.

Private sector workers have also been content to be treate like tax objects in a serfdom, since independence from British rule. At one time all state workers were freed from income tax, but now only the President is free from income tax.

Sri Lanka has given a sweeping tax breaks for large companies which freedom advocates say should be eventually phased out as discriminatory taxation undermines rule of law and justice.

However there are questions about the tax to GDP ratio due to questions about the gross domestic product number.

Following the latest revision more sources of 'growth' including imputed numbers and work-in-progress which bring no taxes have been added to an GDP number which is already under fire for being bloated.

Singer Finance launches credit card in industry first

Singer Finance (Lanka), a subsidiary of Singer (Sri Lanka) launched its credit card recently.

Singer Finance created history as the first non-banking financial institution in the country to launch an internationally accepted credit card.

The new Singer credit card will now be available to customers. The new credit card powered by Visa will be accepted at all local and international merchants and ATM locations.

"Offering a credit card is a logical extension of our activities, as Singer has been in consumer finance in Sri Lanka since 1877. We plan to effectively and aggressively roll out the card through Singer Finance's 19 regional branches and among Singer Sri Lanka's immense customer base and our distribution network of 410 branches," Singer Group Chief Executive Officer Asoka Pieris said. As a pioneering non-banking financial institution, Singer Finance continuously improves in offering innovative financial products aligned with ongoing development of the Group's strategy. Singer Finance firmly believe this product will help uplift the lifestyle of its customers.The new credit card will also serve to empower the masses as a means of conducting transactions.

"Singer Finance has recorded marked growth in recent years and has played a key role in the growth of the dynamic financial system in the country. It is a momentous occasion as Singer Finance is the first licensed financial company to be granted a license from the Central Bank of Sri Lanka to issue a credit card," said Chief Executive Officer,Singer Finance CEO Shantha Wijeweera.
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Ceylon Chamber proposes 10 point plan

For the first time, the Ceylon Chamber of Commerce (CCC) in its 175 year old history has come out with a set of 10 principles to guide and influence the trajectory of the private sector and the country's economy.

Chairman CCC, Samantha Ranatunge said that they came out with this since they believe that the ambiance is ready to present such principles. "We also see rule of law being established and fair playing field being created for business."

Speaking at a special event to present these proposals to the media, he said that they also believe that the present government listens and engages in such proposals. These principles, the first of its kind for a business chamber in Sri Lanka, will form the basis of the Chamber's advocacy on pro-business policy and legislation, within a 'Nation-first' mind-set.

The Chamber is keen to ensure that its activities, as well as its engagements within the private sector and between the private sector and the government, are based on consistent and coherent principles, instead of ad hoc stances taken from time to time.

Accordingly, the 10 principles are 'Good Governance, Policy Stability and Regulatory Quality', 'National Integration, Harmony and Inclusiveness', 'A Market-Oriented and Private Sector-Led Economy', 'An Economy based on Competitiveness and Driven by Exports', 'Forging Mutually Beneficial Trade Agreements', 'A Strong and Thriving SME Sector', 'Bridging Regional Growth Disparities through Business', 'Attracting Quality FDI and making Sri Lanka a Preferred Investment Destination', 'Sustainable and Development-focused Technology Advancement and Innovation', and 'Demand-focused Education and Skills Development'.

The '10 Principles' come as part of the ongoing efforts of the Ceylon Chamber of Commerce to transform the organisation's role to stay relevant to the modern day needs of its members, the wider private sector, the government and the general public, in the evolving social, political, economic scenario.

The carving out of the 10 new principles was spearheaded by leadership team of the Chamber and the main committee of the Chamber consisting of top corporate executives of the private sector drawn from diverse sectors.

It was also duly approved by the newly appointed nine-member Board of Directors of the Chamber, which replaced the 'Standing Committee' A, under the newly enacted rules of the Chamber at its 176th AGM. (SS)
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Ashan Nissanka, new CEO, LOLC Finance

Sri Lanka’s top finance company , LOLC Finance Plc has appointed Ashan Nissanka as its new Director/ Chief Executive Officer (CEO) with effect from yesterday, Colombo Stock Exchange (CSE) sources said.

Nissanka is a person with industry experience, holding several top positions before this appointment. Nissanka has been appointed to the company in accordance with CSE listing rules, CSE said.

LOLC Finance PLC is a premier licensed finance company in Sri Lanka with its own identity and is one of the flagship entities of LOLC Group.

LOLC Finance, by means of strategic alliances, offers services reaching grassroot level entrepreneurs, the SME sector and high-level corporate executives.

Growth and diversification has led the company to move into areas such as Islamic Finance, auto and SME finance working capital and foreign currency business, with the ability to leverage. - HS

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Dilith Jayaweera takes over reins of Derana as chairman and MD

Marking probably the most important milestone in the history of the company, Derana recently celebrated its 10th anniversary with on air and off air excitement and pageantry. This celebration was symbolic of the channel’s rapid growth towards the top since its inception in 2005.

Every index researched and tabulated by media research agencies, illustrate the brand’s growth potential and standing at present. Ranked No.1 in weekend prime time and weekday non prime time, Derana is at the cusp of attaining an overall leadership status in the not too distant future. Fast-tracking Derana’s progress into the future, the Board of Directors recently made a decision to appoint one of the founder investors, Dilith Jayaweera as chairman and Managing Director of TV Derana, FM Derana and Derana Macromedia with immediate effect. Laksiri Wickramage will function in the capacity of Deputy Chairman and CEO while Madhawa Madawala will continue to serve as Executive Director and COO. The Board of Directors will include all of the above members as well as Varuni Amunugama Fernando.

Taking pride in telecasting innovative programming content, Derana has continued to create new waves in the industry. Built upon a platform of ‘proudly presenting new ideas while preserving the true essence of Sri Lankanness,’ Derana has evolved to be the most preferred channel amongst youth audiences. With a strong reach across the country, Derana programmes are segmented to cater to the viewing pleasure of the various genres of viewers. With engagement being the keyword, the industry’s most experienced professionals who deliver the right combination of entertainment and knowledge, craft Derana’s programme line up. 

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Kingsbury signs Management Agreement with Platinum Realty

The Kingsbury PLC, the luxury five star city hotel in Colombo signed the Management Agreement with Platinum Realty Investments (Private) Limited to manage its Platinum 1 apartment complex.

Platinum 1 is a 20 storey apartment complex located at No.1, Bagatalle Road, Colombo 3, comprising of 66 apartments plus 4 penthouses. The complex would have other residential amenities on the 4th floor- with a swimming pool, spa, gym, and restaurants.

The property would be branded as "Platinum 1 by Kingsbury", on the theme of "promise of luxury", catering to the growing demand for luxury serviced apartments in the city of Colombo. The Management Agreement would come into effect from 1st April 2016 for a period of 10 years.

The Kingsbury PLC comes under the umbrella of the diversified blue chip conglomerate Hayleys Group.

Local capital market has a ‘lot of catching-up to do’

By Hiran H.Senewiratne

Sri Lankan capital market has great potential to grow and has as a lot of catching up to do when compared to our regional peers, new president of the Colombo Stock Brokers Association (CSBA) Ravi Abeysuriya said.

"The listed corporates should further improve on governance aspects to attract savvy investors to participate in the growth of their companies, rather than depend on only bank borrowings, Abeysuriya told The Island Financial Review.

He said market intermediaries, such as the stock broking firms and asset managers need to take greater responsibility to ensure a larger number of our population who hitherto are not benefiting from our market directly or indirectly, to participate in our capital market.

"Our industry is at a crossroads, largely because investors no longer see the value the industry brings to society and only a meaningful change can restore that trust, he said.

"When investors do not trust the stock market, they are unlikely to save and invest for their future and achieve their long term financial goals. The problem is not the Colombo Stock Exchange (CSE); rather it is the minority of people who have aided to cut corners and incorrectly advised clients on reckless practices when trading for short term gain, Abeysuriya said.

"Sri Lanka is one of the fastest aging countries in the world. There will be a massive social impact to Sri Lanka in the not too distant future unless they start investing. People will have lower quality of life and may have to work longer and will have intergenerational stress, Abeysuriya said.

"To restore trust, we need a shift towards greater integrity and accountability.

"We need a stronger and systematic ethical dimension. Getting back on the right path requires education and leadership that is sustained over many years. Most importantly, it requires investors and financial leaders who take ‘values’ as seriously as ‘valuation’ and ‘culture’ as seriously as ‘capital, he explained.

CSE is under-owned versus other frontier market peers and as a result people in Sri Lanka miss out on the ‘power of investing’, particularly to build long term savings for retirement, he said.

The long term institutional funds, such as, provident funds, insurance companies and Unit Trusts collectively own only 6.5 percent of the Rs 3.1 trillion stock market capitalization. Similarly, only 6 percent of Rs 133 billion assets under management of Unit Trusts is in pure equity funds in Sri Lanka and only about 25,000 credit default swap accounts are active, Abeysuriya added.

The stock market offers the means to participate as an owner in the growth of the companies that make up the Sri Lankan economy, he said.

"Investing calls for optimism about future opportunities. It requires investing wisely, taking a reasonable amount of risk and a long-term view and most importantly, getting professional help, Abeysuriya said.

The CSBA is an apex industry body, representing the stock broking companies, licensed and regulated by the Securities and Exchange Commission of Sri Lanka. 

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