We don’t want to see companies getting delisted: Securities Regulator

(LBO) – Sri Lanka’s securities regulator has invited listed companies to send their suggestions on the minimum public float rule as they seem to be struggling meet the rule.

Director General of Securities and Exchange Commission Vajira Wijegunawardane speaking at a forum on the minimum public float said they are flexible in terms of their guidelines.

“We actually don’t want to see companies getting de-listed. The commission is flexible in terms of guidelines,” Wijegunawardane said.

“But we have to understand that these rules are there for a reason. So we would like companies to comply and in terms of timelines, companies might encounter difficulties,”

“So if there is any issue or proposal that you want the SEC to consider please let us know in writing so that we have time to take recourse.”

Wijegunawardane further stated that if a company is willing to comply with guidelines, the commission may look at giving an extension to those companies.

“But if the company is not willing to comply unfortunately it would lead to a de-listing.”

Currently the Colombo Stock Exchange is transferring non-compliant listed companies to its defaults board.

But the ultimate repercussion would be de-listing though the regulator is currently giving a further 9 months extension period on struggling listed companies on a case by case basis.

Speaking at the forum SEC Chairman Thilak Karunaratne said Sri Lanka need a regulation on minimum public holding to compete with other countries.

“20 percent rule for me is quite reasonable. If an extension is needed we can look at it,” Karunaratne said.

“But we are talking about bringing in foreign investments. In fact all the countries are looking for foreign investments. But we have to show something special to foreign investors to attract.”

He added that the government has given them some breathing space by delaying the capital gains tax.

Sri Lanka shares post near 7-wk closing high on retail investor buying

Reuters: Sri Lankan shares rose for a third straight session on Thursday to post their near seven-week closing high, as retail investors bought beaten-down stocks, though continued foreign outflows on worries over macroeconomic stability weighed on sentiment.

Foreign investors offloaded a net 197.4 million rupees ($1.36 million) worth of equities, their sixth straight session of selling, and extending the year-to-date outflows to 3.24 billion rupees.

The benchmark stock index ended 1.06 percent, or 65.08 points, higher at 6,230.19, its highest close since Feb. 19.

"It has been mainly retail buying. Retail investor interest has been a bit high on fallen shares. They feel this is the best price (at which) they can enter into the market," a stockbroker said, asking not to be named.

Turnover was 804.04 million rupees, just above this year's daily average of 791.1 million rupees.

Analysts, however, said investors are cautious about macroeconomic uncertainty after a rating downgrade and unclear capital gains tax.

Sri Lanka on Friday postponed a plan to reintroduce capital gains tax by six months after the move threatened to dent foreign investor sentiment.

Stockbrokers said the concern now is how the government is going to impose the tax, rather than the tax itself.

Higher market interest rates and higher borrowing by the island nation facing a balance-of-payments crisis have also weighed on investor appetite for risky assets, dealers said.

The average weighted prime lending rate has risen 84 basis points to 9.19 percent through Friday since Feb. 19, when interest rates were increased by 50 basis points, central bank data showed.

Investors preferred fixed interest rate-bearing assets over shares due to a rise in interest rates.

Analysts and economists worry slower growth could reduce corporate earnings of some listed firms.

Shares of conglomerate John Keells Holdings Plc jumped 1.27 percent, while Carson Cumberbatch Plc rose 0.85 percent and the country's biggest listed lender, Commercial Bank of Ceylon Plc, gained 1.62 percent.

The market will see subdued trade in the coming days due to the Sinhala-Tamil new year on April 13 and 14, traders said. 

($1 = 145.0000 Sri Lankan rupees) 

(Reporting by Shihar Aneez and Ranga Sirilal; Editing by Subhranshu Sahu)

Shareholders approve Eden Hotel Lanka rights issue

(LBO) – Shareholders of Eden Hotel Lanka today approved a resolution on a rights issue of the company which aimed at repaying part of its outstanding debts.

The leisure sector player Eden Hotel Lanka said the company is to issue 52.8 million new ordinary shares at 20 rupees each in the ratio of one for every one existing share as at end of trading today.

The company who has interests in hotels and travels business said the Extraordinary General Meeting held this morning also approved to change the articles regarding the methods used to give notices to the shareholders.

Sri Lanka to review billion dollar ArcelorMittal tin house deal

ECONOMYNEXT - Sri Lanka will review a billion dollar deal to build 65,000 tax-payer financed houses by ArcelorMittal for homeless Tamil refuges in the island's former war zone, a minister said, amidst allegations of corruption and tender rigging.

"The President said he will form a committee with the Prime Minister and relevant ministers to go into this," Minister of National Co-existence Dialogue and Official Languages Mano Ganesan said.

Sri Lanka's government is being given a loan which can be repaid after a one-year grace period, which had not been offered by the next qualified bidder, Minister for Rehabilitation D M Swaminathan told parliament.

The so-called “tin houses” have come under fire for costing 2.1 million rupees when an Indian government was spending 550,000 rupees per house on a 50,000-houses project for Sri Lanka's homeless.

The steel houses would also come with a solar panel and a gas cooker.

Tamil National Alliance legislator M A Sumanthiran said the Tamil people were very grateful for the government for wanting to give houses free of charge to the recipients, but a longer lasting house could be built with traditional materials for less than half the cost.

"The tender procedure itself has serious flaws," he told parliament two weeks ago. "I was told in August last year as to who was going to build the houses. I was told the name of the eventual builder.

"I have said this in public before. I will tell you where I was told; I was told on stage when His Excellency the
President came to hand over the land in Sampur (in the eastern Trincomalee) in late August last year.

A month later in September, a tender was called for and there were just 12 days’ time to bid on this 65,000-housing project.

"All this is very specific and tailor-made for this ( ArcelorMittal). There are serious flaws and I do not want to place
all of them on record here".

Local media has reported that the local agent for the deal is a man on bail over pending cases, who has links with the ruling party.

At a time when Sri Lanka was suffering a high debt burden, it would be possible to build 65,000 houses for 500 million dollars, instead of a billion US dollars, and save tax-payers money, he said.

"You also have a grace period; you do not start paying now; you start paying one year later. All that is true," he said.

"But, eventually, you have to pay. That is why I said this is also demonstrative of the larger picture. Borrow now at better rates; all that is true.

"But, you have to pay eventually. You have a 10-year period to repay the whole thing. We
want the government to take a re-look at this.

"We want the houses. Our people need the houses. But, we want it done in a way that will be acceptable not just for the recipient who will be thankful anyway but also for the society."

Sumanthiran said he had inspected a model house in Jaffna.

"Already that model house is coming apart," he said. The walls are moving apart. It is prefabricated. They have brought in the steel and they have fixed it.

“Already a gap has come. I want to table this photograph of the gap that has already come in this model
house. It is beginning to move apart,” he said producing a photo of the model house.

"The gauge is very small. There is some material which has been put in between two tin sheets, probably not to pass heat.

"But if you shake it, it shakes. A stone house does not shake. I was scared to shake it harder because it might have made the wall collapse."

Sri Lanka's Treasuries yields down

ECONOMYNEXT - Sri Lanka's Treasuries yields fell across maturities at Wednesday's auction with the 12-month yield falling 41 basis points to 10.23 percent, data from the state debt office showed.

The 3-month yield fell 43 basis points to 8.47 percent and the 6-month yield fell 19 basis points to 9.57 percent.

The debt office sold 4.65 billion rupees of 3-month bills, 12.1 billion rupees of 6-month bills and 15.2 billion rupees of 12-month bills, totalling 31.99 billion rupees.

Bond yields also fell after the auction.

CSE launches S&P/CSE Sector, Industry Group Indices

The Colombo Stock Exchange (CSE) on launched the S & P/CSE Sector and Industry Group Indices in collaboration with world's leading index provider S & P Dow Jones indices yesterday.

The comprehensive index series is designed to measure the performance of various sectors and industry groups within the Sri Lankan equity market as defined by the Global Industry Classification Standard (GICS)

The S &P /CSE sector and industry group indices were developed based on the universe of common stocks listed on CSE. The index family includes 10 sector indices such as S & P/CSE Energy, Materials, Industries, Consumer Discretionary, Consumer Staples, Health Care, Financial Sector, Information Technology, Telecommunications and Utilities.

CSE Chairman Vajira Kulatilake speaking at the launch of the indices said the CSE is moving towards global industry classification standards in order to make it a regional hub. "This is an important step to internationalise the stock market and the indices will elevate visibility of Sri Lankan equity market through the launch of this benchmark series by leveraging S & P Dow Jones indices expertise in index development and governance,"he said.

Kulatilake also added that as part of CSE's ambitious plans to make it a region hub and bring in best global practices, the CSE is moving ahead with Central Counter Party System (CCP).

He said CSE expects to launch the CCP in the first quarter of 2017 provided all the necessary regulations are in place.

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Crysbro opens largest hi-tech livestock feed plant in Wariyapola

Crysbro, has opened its new livestock feed plant at Wariyapola in Kurunagala.

Established as a joint venture with Bairaha, having an investment of Rs. 1.65 billion and incorporating state-of-the-art features, this is Sri Lanka's largest and most modern livestock feed plant to date.The plant brings world-class productivity, efficiency and ultra-modern storage, which are envisaged to play an invaluable role in enhancing the health and quality of livestock in the country.

Focused on the production of corn soya-based feed, the plant will require 120,000 tonnes of corn as input for its production at maturity of the project. The initial capacity of producing 10,000 metric tonnes per month will be expanded to 20,000 metric tonnes at a later stage. The plant is also capable of producing 20 tons per hour at maximum capacity and possesses its own silos, which are sufficient for the storage of its entire output.

Farmers in the Wayamba province will be required to cultivate corn in at least 60,000 acres in order to meet the feed mill's annual requirement of 120,000 tonnes as input. This would be a great boon to the farming community in the province, with the resultant prosperity filtering down to the rest of the community by way of direct and indirect employment.

This investment by Crysbro is of paramount importance to the livestock industry, as the lack of raw materials for the production of livestock feed has been a serious issue until now.

The commissioning of this plant and the impetus provided to farmers for the growing of corn, which is the main ingredient in animal feed, will ensure a steady output of livestock feed for the industry. Farms Pride Director Shafeek Samad said the new livestock feed plant will enable to better serve customers with advanced technology and high quality, safe animal feed.

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