Sri Lankan shares end weaker; further fall expected

Reuters: Sri Lankan shares edged down on Tuesday, falling for a second session amid fears of further declines due to worries over a higher budget deficit and economic growth, brokers said.

The benchmark share index closed 0.15 percent lower at 5,970.40.

Investors preferred fixed interest rate bearing assets over shares due to a rise in yields on treasury bills, which are hovering at two-year highs, and on the central bank's unexpected interest rate hike in mid-February, dealers said.

"The market should decline as the economy is running into a sharp fiscal problem. The recovery would take longer as there is no visible trigger compared to what we saw after the war," said an analyst, asking not to be named.

The island nation's economy grew at 4.8 percent last year, slowing from the previous year's 4.9 percent, government data showed on Tuesday, while it expanded 2.5 percent in the December quarter, down from a revised 5.6 percent in the previous quarter.

Foreign investors sold 16.7 million rupees ($115,331) worth of shares on Tuesday, extending the net foreign outflow so far this year to 435.4 million rupees worth of shares.

Turnover stood at 731.4 million rupees, below this year's daily average of 774.4 million rupees.

Shares in Ceylinco Insurance Plc fell 0.79 percent while biggest listed lender Commercial Bank of Ceylon Plc eased 1.23 percent. 

($1 = 144.8000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

Sri Lanka’s Hayleys acquires 75-pct stake in Fentons for Rs963mn

(LBO) – Sri Lanka’s Hayleys has acquired 75 percent of the equity stake of Fentons Limited for 963 million rupees, the Company said in a stock exchange filing.

Fentons, established in 1921 is a leading electrical and mechanical engineering solutions provider for Building Systems and ICT Infrastructure.

“The management of Hayleys believes that there is a strong strategic fit between the two organizations,” the company said.

‘The acquisition will positively contribute to the Hayleys Group’s turnover and profitability considering the growing demand in the country’s infrastructure and support services sector.”

Sri Lanka gives official go ahead for China Port City

(LBO) – Sri Lanka’s government officially informed the Chinese investors of resuming the construction of the Port City project in capital Colombo, yesterday one year after its suspension, a foreign news agency reported.

According to China’s state media, Xinhua Sri Lanka’s Ministry of Ports and Shipping, in an official letter to the CHEC Port City Colombo (Pvt) Ltd, said that the company could resume the construction of the project immediately.

“At its meeting held on March 9, 2016, the Cabinet of Ministers has granted approval for the project to resume immediately,” the letter said.

“Accordingly the suspension effected by my letter dated March 6, 2015, is hereby withdrawn with effect from today (Monday).”

Earlier, Sri Lanka’s Prime Minister Ranil Wickremesinghe said that the country plans to have a ‘unique financial and business district’ in Colombo when the sea reclamation project by a Chinese firm is resumed.

The much talked project was under water for a long period of time as the new administration questioned project approvals by the last regime.

The builders of Sri Lanka’s Chinese-funded port city project told LBO in an earlier interview they were awaiting a positive reply from the government after the suspension of work citing environment concerns by the administration which came in to power in January.

The 1.4 billion US dollar Port City is to be constructed between the Southern edge of the new Colombo South Port and the Fort Lighthouse.

The total area of sea to be reclaimed is 252 hectares.

The Port City is expected to boost the local economy by generating millions of dollars upon its completion and generate over 80,000 jobs.

The project includes a marina and yacht club, a central boulevard, a sea view apartment complex and a five-star hotel, shopping and entertainment center, office space, a mini golf course, and many other modern facilities.