Sri Lankan shares fall for seventh session on margin calls

Reuters: Sri Lankan share index fell for a seventh straight session on Tuesday due to panic selling, led by margin calls after the market fell over 3.5 percent in the past six sessions, brokers said.

Fears over investors shifting to risk-free assets such as government securities due to rising yields in government securities also dented sentiment.

The main stock index ended 1.74 percent or 115.97 points down at 6,534.35, the lowest close since July 7, 2014. The index fell as much as 1.85 percent, posting its biggest fall since Aug. 24, 2015.

"Market came down due to margin calls and panic selling," said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

The bourse dipped further into an over sold territory on Tuesday with the 14-day relative strength index at 17.311 points versus Monday's 22.844, Reuters data showed. A level between 30 and 70 indicates the market is neutral.

The turnover was at 997.2 million rupees ($6.94 million).

Foreign investors were net sellers of 271.4 million rupees worth of equities on Tuesday extending the year to date net foreign outflow to 1.95 billion rupees, compared with 4.43 billion rupees of outflow in 2015.

Local investors are worried of more monetary tightening after the central bank raised commercial banks' statutory reserve ratio by 150 basis points with effect from Jan. 16.

Following the central bank's move, the yield on 91-day t-bill rose 19 basis points to an over three-month high of 6.78 percent at a weekly auction on Tuesday.

Shares in Nestle Lanka Plc fell 2.09 percent, Lion Brewery Plc lost 9.61 percent and conglomerate John Keells Holdings Plc closed 1.83 percent lower, dragging the overall index.

Commercial Bank of Ceylon Plc, the country's biggest listed lender, fell 1.89 percent. 

($1 = 143.7000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)

Entrust officials swindle Rs 6 bn

There is market speculation that over Rs. 6 billion of funds at the Entrust Securities PLC has been unaccounted for.

Sources say that this amount has been increasing and no action had been taken on it.

Questions are being asked as to why no action was taken previously by authorities even after the then Chairman, Chanuka Ratwatte resigned from the company last October.

After studying the issue, the Central Bank requested a restructuring proposal from the company in November and when this was not forthcoming, it was taken over. Subsequently the management was given over to National Savings Bank to manage.

"We are taking over the company to protect the government securities market," said Governor Arjuna Mahendran at a recent media conference.

This is the first time that a Primary Dealer is being acquired by the government.

Formerly known as Ceylinco Shriram, this company crashed in 2009 during the Ceylinco group financial controversy. Subsequently Chanuka Ratwatte, a former Securities Exchange Commission Director along with a consortium took over the management. Later Entrust Securities created history in the local debt market by being the first regulated Non Banking entity under the Public Debt Department of CBSL that got listed in the Colombo bourse.

A source from the Central Bank said that they have handed over the investigations to the Criminal Investigations Department and justice will be done to those affected.

"This is a primary dealer and we want to find out who used this money and for what,"a senior official said.

Many dealers have praised the Central Bank in the manner in which this transformation was done with out creating panic in the market and trading going on uninterrupted.
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Lanka will add 45,000 hotel rooms by Q1, 2017 - Minister

Sri Lanka will add 45,000 luxury hotel rooms by the end first quarter of next year said the Minister of Tourism John Amaratunge. “Many hotels are being built. By the first quarter of next year 45,000 hotel rooms will be built in the country,” the Minister told BBC.

Minister Amaratunge said that tourist arrivals, especially from Western Europe, China, Middle East and India, had seen a significant increase.

He said that the tourist arrivals have been steadily increasing since the end of the war and recent data from the Tourist Board has shown that Sri Lanka’s tourist arrivals topped 1.8 million in 2015 rising 17.8% compared to 2014.

The Minister has clarified that the arrival numbers do not include the expatriate Sri Lankans, who hold foreign passports. This year’s budget has allocated Rs. 4 billion to promote tourism, said the Minister adding that the government plans to launch a number of programs with the allocation.

Sri Lanka hopes to attract 2.2 million arrivals for 2016 and revenue in the excess of US $ 3.6 million.

Sri Lanka was ranked second among the top 16 places recommended by lifestyle magazine, Conde Nast Traveler while a special edition of the lonely plant magazine 2016 recognizes Sri Lanka as the top 10 destinations to visit in 2016.
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