Sri Lanka rejects all bids at bond auction

ECONOMYNEXT – Sri Lanka’s Central Bank rejected all bids at the treasury bond auctions Tuesday, the public debt department said in a statement.

It got bids of 12.4 billion rupees for five billion rupees worth of 12 years and 08 months bonds with a coupon rate of 11.50 percent.

The public debt department, a unit of the central bank, got bids worth almost 12 billion rupees for five billion rupees of 05 years and 10 months bonds with a coupon rate of 9.45 percent.

It also got bids of 8.7 billion rupees for three billion rupees of 03 years and 10 months bonds with a coupon rate of 08 percent. 

Sri Lankan shares end higher ahead of cbank rate decision

Reuters: Sri Lankan shares firmed up in low volume trade on Tuesday after hitting a near two-week low in the previous session, as financials and telecom stocks led the recovery ahead of the central bank's decision on policy rates.

Turnover was however muted as many market participants kept away in the holiday season, traders said.

The main stock index rose 0.28 percent to touch 6,847.74 at the close, recouping from Monday's loss, when it reached its lowest closing level since Dec. 15.

"Buying side is very weak and investors are also waiting for the central bank's direction on the interest rates," a stockbroker said asking not to be named.

"If they are going to raise the monetary policy rates, investors may shift to fixed and risk free assets, from stocks."

Sri Lanka's central bank is expected to raise interest rates by 25 basis points from record lows at its policy meeting on Wednesday, a Reuters poll found, a move that could relieve pressure on the fragile rupee.

Foreign investors sold a net 141.2 million rupees ($981,237) worth of equities, extending the net outflow to 4.44 billion rupees so far in the year.

Turnover stood at 306.6 million rupees, less than a third of this year's daily average of 1.07 billion rupees.

Top fixed line phone operator Sri Lanka Telecom gained 2.6 percent, while Commercial Leasing and Finance plc rose 5.3 percent.

Top lender Commercial Bank of Ceylon, which saw net selling by foreign investors, ended flat, but accounted for around 50 percent of the day's turnover.

($1 = 143.9000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Biju Dwarakanath)

Sanasa Bank’s debentures draw applications over Rs.2bn

Micro finance lender Sanasa Development Bank PLC yesterday said it received applications for over Rs.2 billion for its listed debenture issue which officially opened yesterday. 

The bank last week announced the issue of 20 million rated, guaranteed, redeemable debentures at the par value of Rs.100 with an option to issue up to a further 20 million debentures in the event of an oversubscription of the initial tranche. 

The bank yesterday said the initial issue of Rs.2 billion was oversubscribed and the issue would be closed at 4.30 p.m. today (Dec.29th) as per the prospectus. 

The bank further said any application received until 4.30 p.m. today (Dec.29th) to the collection points as mentioned in the issue prospectus would be accepted. 

www.dailymirror.lk

Dollar gains limited in 2016, fund managers look elsewhere

(LBO) – US Dollar gains are expected to be limited next year compared with the strengthening seen over the last two years after a well-expected tightening of interest rates by the US Fed this month.

The dollar rallied 10 percent to 1.09 per euro this year from 1.2 per euro at the beginning of the year. This is a gain from 1.35 per euro at the beginning of 2014.

The currency will appreciate about 5 percent to 1.05 per euro by the third quarter of 2016 due to the well-expected Fed liftoff, analysts said.

Money managers say they will be looking elsewhere for returns after chasing the U.S. dollar’s gains in the past three years.

The Dollar Index has extended 2014 gains, up near-9 percent against a basket of major world currencies. Some individual currency trades, like USD/Brazil Real, have netted currency investors huge returns, a CNBC report said.

The performance was only beaten by the digital currency bitcoin up 40 percent this year to 428 dollars.

The dollar’s gains are already losing steam in parts of Asia, with the Indonesian rupiah rallying 7.3 percent in the fourth quarter, the Malaysian ringgit 2.5 percent and the Singapore dollar 0.9 percent, according to a Bloomberg report.

Sri Lanka may merge two state-run cement firms

ECONOMYNEXT - A re-structuring committee has recommended the merger of two state-run cement firms, one of which is a listed company, which are at the moment engaged in the import and sale of cement, a minister has said.

Lanka Cement Plc is listed on the Colombo Stock Exchange but Lanka Cement Corporation is an unlisted firm.

Industries minister Rishard Bathiudeen told parliament that Lanka Cement Plc earned revenues of 2.446 billion rupees up to September 2015 selling 2614 metric tonnes of cement.

Sri Lanka Cement Corporation had sold 2,090 metric tonnes of cement and lost 7.7 million rupees. Revenues were not given.

A re-structuring committee has recommended that a voluntary retirement scheme be given to staff and the two firms merged, he said.

‘People's disposable income slide hitting CSE listed companies’ profits’

By Hiran H.Senewiratne

Most of the Colombo Stock Exchange listed companies' net profits have come down by more than 6 percent. The reason behind this development is that people's disposable income has come down this year. Consequently, companies have been affected where business volume growth is concerned, stock market analysts said.

"Listed companies saw total net profits sliding 6.2 percent year-on-year to Rs 47.7 billion in the month of September quarter.This was because the disposable income of most people came down significantly. That affected the volume growth in many companies, president of the Colombo Stock Brokers Association Ravi Abeysuriya told The Island Financial Review.

Some analysts said that there are many reasons for profits to come down in many listed companies. They said corporate earnings in 2015 were driven by the boom in consumer demand, which was, in turn, stimulated by lower interest rates, benign inflation and fiscal stimulus extended by way of lower taxes and higher public sector salaries.

Abyesuriya said that some companies adopted a wait and see approach until the budget but the banking sector will be affected from next year with certain tax restrictions coming in.

Third quarter earnings demonstrate a reversal of the growth trend in corporate earnings as second (June) quarter earnings grew by a healthy 10.7 percent year on year.According to stock brokers the total earnings of many listed companies in the September quarter came down. Lanka IOC PLC, Carson Cumberbatch PLC and Bukit Darah PLC incurred heavy losses of Rs.373 million, Rs.497 million and Rs.1 billion respectively. However, the growth trend of the early quarters will soon reverse as consumer demand growth is expected to slow down amid tightening credit due to rising interest rates, increase in inflation and higher taxes which will taper people’s disposable income.

The largest individual contributors to September quarter earnings were John Keels Holdings, Ceylon Tobacco, Commercial Bank and Hatton National Bank, with 7.3 percent, 6.9 percent, 6.8 percent and 5.6 percent respectively. The sector-wise highest contributors were, banking, finance and insurance (BFI) sector with a 43 percent share, followed by beverage, food and tobacco (BFT) with 19 percent and diversified holdings with a 13 percent share.

www.island.lk

Browns to build two resorts in Maldives

Browns Hotels and Resorts will be extending their footprint to the Maldives.The group is planning to build two resort hotels in the island nation.

In addition the company has also signed up with one of the leading travel agencies in Italy, Alpitours to market the newly opened Dickwella Resort and Spa opened on December 22.

Browns Hotels and Resorts General Manager Eksath Wijeratne said that they have signed up with the Italian company who in turn will send tourists for the hotel. “The company also invested over Rs. 250 million to upgrade the 56 roomed hotel.

“We were closed for six months for this refurbishment,” Wijeratne said. All rooms have been done up while several other features too were added under the refurbishment program.

Wijeratne said that the company has also repositioned the hotel as an all inclusive club concept hotel on the request of Alpitours.

The Italian counterpart will also be operating chartered flights from next month and they will use the Mattala Airport for this purpose.Wijeratne said Dickwella Resort and Spa’s forward bookings are very positive and they already have over 80% Italian booking for the January February season channeled through Alpitours. The average stay would be around one week.He said that Alpitours has also stationed a 10 member animation team to work in the hotel to entertain the guests.

LOLC Group’s Leisure sector was grouped under their subsidiary Browns Hotels and Resorts in 2014.

The Group now has nine properties in its portfolio both locally and internationally with 1,200 keys upon completion.

With over 3.1 million customers, Alpitour World is the leading Italian travel group and high-ranking in the European travel industry.

www.dailynews.lk