Sri Lankan shares fall to over 7-1/2 mth closing low on budget worries

Reuters: Sri Lankan shares fell to a more than seven-and-a-half-month closing low on Monday, led by blue chips such as John Keells Holdings Plc and Commercial Bank of Ceylon Plc on worries earnings of financial firms would fall after the new budget proposals announced were implemented.

The main stock index ended 0.75 percent, or 52.26 points, weaker at 6,909.15, its lowest close since April 10.

"Nothing much is happening with very low retail and high net worth investor participation," said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

"With the month-end settlements, big caps came down. With very low foreign participation, markets will continue to come down for the next few weeks until we see steady foreign inflows."

Sri Lanka's consumer prices in November rose to 10-month high of 3.1 percent from a year earlier, the Department of Census and Statistics said on Monday.

Rating agency Fitch said on Tuesday that Sri Lanka's 2016 budget provides no clear plan for fiscal consolidation over the medium term and the absence of such a framework will put more pressure on the fiscal deficit.

"Fitch believes there are risks to government being able to meet its fiscal deficit target, especially considering the trend in revenues in recent years," the rating agency said.

The government on Nov. 20 announced a raft of steps, including the removal of a 0.3 percent share transaction levy, to stimulate trading in the share market and increase liquidity.

Shares of conglomerate John Keells Holdings fell 2.55 percent, while the country's biggest listed lender, Commercial Bank of Ceylon, dropped 3.24 percent and Nestle Lanka Plc declined 1.63 percent.

Turnover was 754.4 million rupees ($5.27 million), lower than this year's daily average of 1.1 billion rupees.

Foreign investors, who have been net sellers of 3.77 billion rupees worth of shares so far this year, bought a net 34.27 million rupees worth of equities on Monday. 

($1 = 143.2500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Subhranshu Sahu)

6 cos. ring delisting bell

By Paneetha Ameresekere

Ceylon Finance Today: Following Bukit Darah, Selinsing and Good Hope, two other Carson Cumberbatch companies have also given recent signals to delist.

Those are Shalimar and Indo-Malay plc. Voicing similar sentiments as that of Bukit, Selinsing and Good Hope, the two companies have told its shareholders, vis-a-vis their 30 September, 2015 quarterlies, that in lieu of the directives given by the regulators of the Colombo Stock Exchange (CSE), i.e. to increase the minimum float to 15% of voting shares, and to have a minimum share holding of 500, they are "compelled" to seek a delisting. The companies have no intention to dilute their shares. The Carson Cumberbatch Group, its subsidiaries and other connected companies, be they parent, associates or subsidiaries, are controlled by the Selvanathan brothers, Mano and Hari.

Bukit, Good Hope, Selinsing, Shalimar and Indo-Malay overlook the Carsons Group's overseas plantation companies, which are primarily located in Malaysia and Indonesia. They are essentially palm oil plantations, a commodity, which like tea, has seen its prices suffer a steep slide recently, led by the fall in oil prices-considered as the "jewel in the crown" commodity which gives direction to other commodity prices, ipso facto such as palm oil and tea. Those five Carsons companies have no interest to dilute their holdings either. Further, their share prices are relatively expensive, so, there is a question mark as to whether those companies are also able to attract investors, given the relative smallness of the CSE. Such high prices also make their shares illiquid.

The yellow light, preceding the greenlight given by those four companies to delist, follows Finlays, another plantation company, this time owned by the Swire Group, UK, recently notifying of their intent to delist and giving the price at which they will pay its small investors who want to sell their shares, at Rs 302 a share.

Market sources told this reporter that the CSE needs to be a place of attraction where listed companies can make money. Those are initially through an "IPO" the route from where they get listed, followed by rights and debentures issues to raise further cash.

If these criteria cannot be met, or, rather, unlisted companies not seeking to public, the CSE needs to examine why this is so. Is it due to its smallness, or due to any other reason?
One insinuation is that stock market manipulators not being prosecuted. That, apparently being why companies want to delist.

There is paperwork and attendant costs attached to a company being listed.

Nonetheless, such happenings are allegedly a source of discouragement to at least the majority shareholders of certain companies. Nevertheless,If crooks are allowed to go scot free, it acts as a disincentive to all bona fide stakeholders of the CSE and not just a few high net worth individuals only. 
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Govt. to plunder Rs 1.7 Trillion EPF, ETF cash

By Ravi Ladduwahetty

A frontline anti-corruption watchdog this week alleged that the government was attempting to plunder the private sector employees inheritance-the Employees Provident Fund and the Employees Trust Fund savings, under the guise of creating a private sector Pension Fund.

"This is glaring day light robbery with the government trying to lend that money to venture capital funds, president of the Inter Company Employees Union Wasantha Samarasinghe charged in an interview with Ceylon Today.

He added that the previous government also invested the EPF and ETF funds in corporate listed on the Colombo Stock Exchange and suffered heavy losses, thus jeopardizing the interests of private sector employees.

The funds squandered amounted to over Rs 30 Billion, miniscule in the enormity of Rs 1.7 Trillion, he said.

The same players who manipulated the Colombo Stock Exchange in the past have now joined the present regime, he alleged.

He said, the Laughs Gas share which was Rs 38 was manipulated within one hour and artificially raised to Rs 48 with a large volume changing hands. There were the other shares such as those of Ceylon Grain Elevators which were also manipulated.

He alleged that the previous regime also attempted to manipulate the EPF and ETF Funds but had to withdraw the proposals in the wake of massive resistance. There were people like Roshen Chanaka who were killed by the previous regime, but we won our struggle in thwarting the attempts to play around with the private sector employees' funds, he said. 

Samarasinghe also said, the trade unions had a meeting with Prime Minister Ranil Wickremesinghe on November 14, but no details were spelt out as to how the Pension Fund was being created and what the Employees and Employers contributions were to be.

He also claimed that EPF and ETF funds were invested in Treasury Bonds and Bills and that 92-93% of the Funds were lent out.

He also claimed that the proposed private sector Pension and Gratuity Fund should also enable those at the lower spectrum of society such as the trishaw drivers, betel sellers, sweep ticket sellers and security guards and others to get some retirement benefits as well.

Samarasinghe said, instead 1% of tall tax revenue could be used for the creation of the Pension Fund.

He also alleged that the Government's attempt to misuse the EPF/ETF funds was a small manifestation of a bigger scheme to suppress workers rights. One of those, he alleged, was to make a five day working week by extending the working hours to nine, in contrast to the present eight. The government was bringing in these amendments to the labour laws in collusion with the International Labour Organization Agency and others.

"The eight hour working day was enacted by the international labour community after years of international struggles and we are not going to allow Finance Minister Ravi Karunanayake to tamper with what has been internationally accepted, he said.

The government, through the budget proposals, was making the working week nine hours per day and was making Saturday and Sunday non -working days.

He also proposed that with the mechanization in business, the working hours per day should be reduced to six or seven.

Samarasinghe proposed that the Pension Scheme could be maintained as it is, without creating a separate Fund. If the Rs 1.7 trillion was invested at a 10% interest rate, that would have Rs 170 billion. Even if Rs 20 billion was set off for allowances of private sector employees, there would be Rs 150 billion left which could give a monthly Rs 25,000 each to 500,000 private sector employees.

This is the way that the government pensioners get their money and the Consolidated Fund allows Rs 150 Billion for the payment of funds to state sector employees, he pointed out.

He also wanted to know who would shoulder responsibility if the government decision to invest the funds in Venture Capital companies fails.

The Mahinda Rajapaksa regime did not even gazette the promised Rs 2500 salary increase to the private sector and the Cost of Living and the people who vehemently opposed that move were MPs Ravi Karunanayake, Harsha de Silva, who are Government Ministers now, he said. It appears as if the course that this government is following is not that of Regaining Sri Lanka but rather more like that of 'Reselling Sri Lanka,' he quipped.

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