Megapolis plan presented to President, USD 30bn worth investments in pipeline

(LBO) – Sri Lanka’s President Maithripala Sirisena was presented with the new government’s Megapolis Plan formulated to develop the island’s Western Province by Minister Champika Ranawaka on Wednesday.

Minister of Megapolis and Western Development, Champika Ranawaka said Sri Lanka will be able to get about 30 billion dollars worth investments within next 10 years through this project.

The plan aims to transfer informal urban development into formal urban development and boost the living standards of the people n the region.

The Megapolis Development Plan has identified issues that should be given priority in the town development and includes traffic congestion, garbage disposal and housing facilities for slum dwellers as well as drinking water and sanitary facilities, Ranawaka said.

“The implementation of the development plan will be carried out under three phases and will be completed by 2030.”

Speaking at this occasion, the President said everybody should contribute to make the Megapolis Development Plan, the main development project to be implemented by the government in the new year, successful.

“The Megapolis Development Plan will be implemented at the beginning of 2016 and every ministry, department and government officer should fulfill their responsibilities in that regard, considering it as a prominent task,” he said.

The President said this plan aims at developing every mega town to a similar level and thereby reduce the number of people who are migrating to Colombo, seeking better facilities.

Ministers Rajitha Senaratne, Susil Premajayantha, Arjuna Ranathunga and Western Province Chief Minister Isura Dewapriya also participated in the event.

Sri Lanka may request IMF loan in February: CB Governor

ECONOMYENXT - Sri Lanka may make a formal request for a loan from the International Monetary Fund early next year, Central Bank Governor Arjuna Mahendran said.

Informal discussion on a loan has started already he told reporters in Colombo.

An IMF team was due for regular discussions in February 2016, when a formal request may be made, he said.

At the moment reserves are comfortable he said.

Sri Lanka inflation slows to 2.8-pct in December

ECONOMYNEXT - Sri Lanka's inflation slowed to 2.8 in the 12-months to December 2015, down from 3.1 percent in November, the statistics department said.

Prices rose 0.3 percent during the month with the Colombo Consumer Price Index rising to 185.2 from 184.7 points.

Food price inflation slowed to 0.8 percent during the month from 3 percent in November.

The statistics department said year-on-year inflation of the Food Group fell to 4.2 percent in December 2015 from 5.2 percent in November 2015 while the Non‐food Group increased to 1.5 percent from 1.1 percent during this period.

For the month of December 2015, on a year-on-year basis, contribution to inflation by food commodities was 1.99 percent while contribution of Non food items was 0.77 percent.

The core inflation index, which excludes items like fresh food, energy, and transport edged back up to 4.5 percent in December, the highest in two and a half years, after having fallen from 4.5 percent in October to 4.3 percent in November.

Sri Lanka removes share trading levy

ECONOMYNEXT – A share transaction levy of 0.3 percent from the buyer and seller on Sri Lanka’s stock exchange will be removed with effect from 1 January 2016, the Colombo stock exchange announced.

The proposal was announced in the government’s 2016 budget presented to parliament in November aimed at encouraging share market trading.

The CSE said in a statement that under the new fee structure, total transaction fees on equities up to 50 million rupees would be 0.82 per cent while the fees for trades over 50 million rupees would be 0.31 percent.

Sri Lanka’s Metropolitan Resource to delist, offers Rs28 a share

ECONOMYNEXT – Metropolitan Resource Holdings, which owns a Sri Lankan listed plantations firm, said it plans to delist its shares from the Colombo Stock Exchange offering to pay 28 rupees for a share which last traded at 28.50 rupees.

A stock exchanging filing said the only asset of Metropolitan Resource Holdings is its 67 percent stake in Bogawantala Plantations PLC, which grows and exports tea.

Metropolitan Resource Holdings shares have had low liquidity in recent years “as a result of which there is a strong possibility of the price of a share to be manipulated, thereby distorting its real value,” the statement said.

Sri Lankan share index falls 5.5 pct in 2015, ends at 1-month high

Reuters: Sri Lanka's main share index fell 5.5 percent this year, but ended firmer at a more than one-month high on Thursday in thin trading due to the holiday and investors awaiting the impact of a hike in commercial banks' statutory reserve ratio (SRR).

Sri Lanka's central bank on Wednesday raised the SRR by 150 basis points to 7.50 percent, to stabilise a rupee hovering near record lows and slow private sector credit growth.

The main stock index recouped early losses to end 0.35 percent firmer at 6,894.50, its highest close since Nov. 30.

The index fell 5.5 percent in 2015, Thomson Reuters data showed. In terms of U.S. dollar value, Sri Lanka's market capitalisation fell 13.9 percent, still performing better than the other stock index in Asia like Malaysia, Thailand , Indonesia and Singapore.

Stockbrokers said many investors are on year-end leave and some are waiting to see the impact of the central bank's first step in monetary tightening.

Foreign investors bought a net 49.1 million rupees ($340,617) worth of equities, but the market saw a net foreign outflow of 4.43 billion rupees in 2015, compared to a net foreign inflow of 22.07 billion rupees last year.

Turnover stood at 326.4 million rupees, less than a third of this year's daily average of 1.06 billion rupees. Last year's daily average was 1.42 billion rupees.

Diversified conglomerate Aitken Spence, which led the overall index gain, rose 5.1 percent, while development lender DFCC Bank gained 3.3 percent.

($1 = 144.1500 Sri Lankan rupees) (Reporting by Shihar Aneez; Editing by Richard Balmforth)

Sri Lanka Treasuries yields up across the board

ECONOMYNEXT – Sri Lankan Treasury Bill yields rose across the board at Wednesday’s auction with one-year yields rising 19 basis points to 7.30 percent, the debt office said.

Three month bills rose 07 basis points to 6.45 percent at the auction while six month bill yields rose 14 basis points to 6.83 percent.

The debt office, a unit of the central bank, said it got bids worth 43.1 billion rupees and accepted 7.4 billion rupees of bills.

2016 may not be the year for 'hot' investment tips

By Sanath Nanayakkare

Investors are mostly putting their money in very short term investments eying maturity-yields as they still find it hard to guess how the financial year 2016 is going to turn out for Sri Lanka in terms of investment prospects, The Island Financial Review learnt yesterday from Dimantha Mathew, Manager - Research, First Capital Equities (Pvt) Ltd.

"In the wake of this trend extending into the New Year, 2016 may not herald the ideal first or second quarters for investors looking for the quick fix, the easy answer, the magic formula or hot investment tips. However, if the government's envisaged construction projects start pumping money into the economy between first and second quarters, a construction-led growth could come to the rescue in the second half, renewing hopes of a more predictable, a more tangible business and investment outlook in which the investors will roll over their money" Dimantha noted.

Speaking in a broader manner, Dimantha said," Basically, 2016 may turn out to be a tough year with, interest rate hikes, increasing funding-costs and the weakening rupee. The slowly but steadily rising inflation will add to this unwelcome mix. The government will look to borrow funds from local sources rather than foreign credit lines. This will invariably push funding costs higher for the private sector. We may see T-Bill rates going up to around 10% in 2016. As a consequence of increased funding costs, corporate entities' volumes, earnings and profits could be affected, which is not a healthy development. The 1st quarter will see an economy dependent on domestic consumption which places pressure on importer dollar demand. As the government has to also deal with the balance of trade issue, either the exchange rate or the interest rate will have to take a beating," he pointed out.

Concluding on a positive note Dimantha said. "However, with the government's planned construction projects hopefully streaming money into the economy between 1st and 2nd quarter, the construction industry and allied enterprises will spur the economy to a noticeable degree injecting fresh hopes towards the 3rd and 4th quarters".

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