Sri Lankan shares fall; turnover slumps to 21-month low

Reuters: Sri Lankan shares fell to a near one-week closing low on Tuesday, led by market heavyweight John Keells Holdings, in thin trade as investors kept to the sidelines ahead of holidays later in the week.

Turnover slumped to the lowest level since March 24, 2014 at 262.9 million rupees ($1.83 million), against this year's daily average of 1.08 billion rupees.

"There is no reason for the fall. It is a year-end market and there are hardly any investors," said Danushka Samarasinghe, research head at Softlogic Stockbrokers.

"Market sentiment next year will depend on how the government is going to fund its fiscal deficit and on foreign inflows into the country."

The market is expected to be lacklustre with low turnover due to year-end holidays starting this week, stockbrokers said.

Markets will be closed on Thursday for a Buddhist religious holiday and Friday for Christmas.

The main stock index ended 0.39 percent weaker at 6,854.57, its lowest close since Dec. 16.

Foreign investors sold a net 19.2 million rupees worth of equities, extending the net outflow to 4.26 billion rupees so far this year.

John Keells Holdings, the country's top conglomerate, accounted for around 56 percent of the day's turnover. It closed 2.8 percent lower, while large cap Ceylon Tobacco fell 0.5 percent.

($1 = 143.6500 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lanka should be investment friendly without retrospective taxes: Mark Mobius

ECONOMYNEXT - Sri Lanka had the potential to attract large investment where he would also like to participate but a "generally unfriendly attitude toward businesses" with retrospective taxes will hurt investment, Mark Mobius, an international fund manager has said.

"We would encourage a more favourable tax environment to attract foreign investors, without the threat of retroactive taxes," he said in a blog post after visiting Sri Lanka.

"The retroactive “Super Gains Tax” targets large companies deemed to be making “excessive” profits. Companies have started paying these retroactive taxes since the third quarter of 2015 and it has had adverse impacts for shareholders."

Prime Minister Ranil Wickremesinghe has said that there will be no more retrospective taxes but there are fear that a future administration will resort to the same tactic now that the way has been shown.

Fitch ratings has said that a series of large taxes on alcohol companies are likely to kill off several small players. There has been allegations of widespread excise tax fraud against some of the small players.

However under globally and regionally accepted principles of public finances, taxes that kill companies are not imposed analysts say.

"It remains to be seen if foreign investment will continue to rise in view of the more aggressive tax regime and a generally unfriendly attitude toward businesses with some retrospective and ad-hoc tax proposals in recent times," Mobius said.

Funds managed by his company is the largest investor in Sri Lanka government bonds.

He had met Prime Minister Wickremesinghe in Colombo.

"I had the pleasure of meeting Wickremesinghe, who was quite generous with his time," Mobius said.

"He was very relaxed and seemed confident about his term in office under the new government, although he recognized challenges, including the ability to get legislation passed."

He referred to a policy statement made by Wickremesinghe in November, which aimed to reform state enterprises, pension systems and wanted to make Sri Lanka more open to international trade.

"In order to expand capital markets, in our view it will be necessary to carry out more privatizations of state enterprises and encourage the growth of businesses generally," Mobius said.

"Privatization immediately brings revenue to the state, increases productivity with more efficient management and increases tax revenue. We think this model is better than state-owned regimes in terms of driving economic prosperity."

Sri Lanka should also modernize critical and diversify the economy.

LB Finance joins with Money Gram

LB Finance PLC, the trail-blazer in Sri Lanka's non-banking financial services industry has joined hands with MoneyGram through its super-agent in Sri Lanka Hatton National Bank. MoneyGram is one of the world's most popular money transfer companies to enable their customers a much faster access to their money across the world.

This new partnership between the local giant LB Finance and the global giant Money Gram opens up a wide range of conveniences and benefits for customers who wish to receive money via MoneyGram. Unlike most banks in Sri Lanka, LB Finance offices operate from 8.30am to 6.00 pm Monday to Saturday, enabling customers to withdraw money at their own convenience, without having to worry about early closing times.

In addition to this, the 135 LB Finance branches and centres located across Sri Lanka makes sure that LB Finance customers have more options on where to withdraw their money and have access to cash no matter where they are. Sumith Adhihetty, Managing Director of LB Finance said “This is indeed a historic partnership for Sri Lanka's financial services industry. We at LB Finance are well-known for our efficient and quick service as well as our customer care and we are extremely pleased to extend our services through MoneyGram.”

Jhonathan Alles, Managing Director/CEO of HNB said “MoneyGram is one of the most efficient and easiest ways of sending money from overseas. I am quite delighted to see LB Finance joining hands with them. I hope this initiative will strengthen MoneyGram's operations.
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Inflation accelerates to 4.8% in November

Year on year inflation of Food Group has increased from 2.3 percent in October 2015 to 4.6 percent in November while Non-food Group also increased by 3.5 percent to 4.9 percent during this period.

Consumer prices rose 4.8 percent in the 12-months to November from a year earlier, from the 3.0 percent a month earlier, data from the state statistics office showed.

The Department of Census and Statistics commenced releasing this new price index called 'National Consumer Price Index' from last month.

The national consumer basket includes 407 items which represent the consumption expenditure of all households in Sri Lanka and the base year is 2013.

However, the Department has been releasing Colombo Consumer Price Index from June 2011, covering only the urban areas of Colombo district.
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Sanasa Development Bank goes for Rs. 4 b listed debenture issue

Sanasa Development Bank (SDB) is to raise Rs. 4 billion from a listed debenture issue, the company said in a stock exchange filing.

The company has decided to issue 20 million rated, guaranteed, redeemable debentures at Rs. 100 each with an option to issue up to a further 20 million debentures in the event of an over subscription, subject to the necessary regulatory approvals. The issue is up for subscription from yesterday whilst the official opening is on 28 December. NDB Investment Bank will be managing the debt issue.

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