Sri Lankan shares recover on bargain-hunting

Reuters: Sri Lankan shares rose on Tuesday, recovering from a near three-month closing low hit in the previous session, as investors picked up battered stocks such as John Keells Holdings Plc.

However, the gain was capped as worries about a capital gains tax on equities and rising interest rates weighed on sentiment.

The benchmark Colombo stock index ended 0.41 percent higher at 6,280.39, after posting its lowest close since April 7 on Monday. It lost 1.3 percent last week, posting its third straight weekly loss.

Shares have been on a downward trend recently with comments from a minister last week about the imposition of a capital gains tax on equities dampening sentiment which was already hit by high interest rates and policy uncertainty.

Turnover was 254.7 million rupees ($1.74 million) on Tuesday, well below this year's daily average of 731.9 million rupees.

Overseas funds, which have offloaded shares worth a net 6.28 billion rupees so far this year, were net buyers of 23.9 million rupees worth shares on Tuesday.

Shares of conglomerate John Keells Holdings Plc rose 2.36 percent, while those of Lanka ORIX Leasing Co Plc gained 2.03 percent. 

($1 = 146.2500 Sri Lankan rupees) 

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

Dr Indrajit quits JKH Board

Dr. Indrajit Coomaraswamy who served on the Director Boards of John Keells Holdings has tendered his resignation from the board with effect from July 3, 2016 in view of becoming Central Bank Governor.

Accordingly Dr. Coomaraswamy has no relevant interest in the shares of John Keells PLC as at July 3, 2016 the company said.
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Fitch assigns first time ‘BB+(lka)’ to Sierra Cables

Fitch Ratings has assigned Sri Lanka-based cable manufacturer Sierra Cables (Sierra), a National Long-Term Rating of ‘BB+(lka)’. The Outlook is Stable.

Sierra’s rating reflects its established core business, which has an extensive product portfolio, modest but expanding market share and stable EBITDA margins. This is counterbalanced by exposure to cyclical end-markets, risks associated with international expansion and losses at subsidiaries.

The rating is also supported by Fitch’s expectation that the company will maintain net leverage, measured as net adjusted debt/operating EBITDAR, at less than 2.5x over the medium term, despite planned capacity expansions. Leverage was 2.4x in the financial year ended 31 March 2016 (FY16).

Sierra’s customers are mostly in cyclical industries, including construction and infrastructure development, which substantially slowed down in the past 12-18 months. However, the government’s decision to resume work on many of the suspended projects and to launch a few new large-scale developments in 2016 will boost demand for the cable industry. Growth in construction of housing due to rapid urbanisation in Sri Lanka and gradual expansion in the manufacturing sector should also drive demand for cables.

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Ernst &Young examines Blue Diamonds rights issue

The Securities and Exchange Commission of Sri Lanka (SEC) has appointed Ernst &Young as a special purpose auditor to conduct a Special Purpose Audit on Blue Diamonds Jewellery Worldwide.

It will assist the SEC to examine the documents and other evidence produced in support of the complaints received from the shareholders and investors with regard to the utilization of the proceeds collected from the rights issue of Blue Diamonds Jewellery Worldwide from January 21 2015 to September 30 2015 by the company. Ernst &Young has reviewed the objectives of the rights issue and budgeted value assigned to each objective,examined cash books and reviewed disbursement of rights issue proceeds, evaluated the substance of the amounts utilized for the objective as stated in the rights issue document.

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Sri Lanka motor cycle registration rebound in May

ECONOMYNEXT - Sri Lanka's motor cycle registrations rebounded in May while small cars also recovered following a tax hike, data showed, indicating that the less affluent were trying to improve their living standards despite obstacles placed in their way by the state.

Sri Lanka's rulers who get tax free cars, and bureaucrats, who get tax slashed cars, raised taxes on ordinary people's vehicles and restricted in January making vehicles less affordable.

In May taxes were against raised.

Sri Lanka's vehicle registry data analysed by JB Securities, a Colombo-based brokerage shows that motorcycle registration recovered to 32,244 in May after falling to 21,000 in January and February.

Car registrations which fell from 7,181 in December to 2,888 in January recovered a little to 3,657.

Three wheeler registrations recovered to 5,732 in May from 3,268 in January.

In 2015, between 10,000 to 12,000 three wheelers were registered a month with people like craftsmen buying them for private transport.

Total vehicle registrations rose to 46,486 in May from 32,007 helped mostly by motorcycles

Sri Lanka tourist arrivals barely grow in June

ECONOMYNEXT - Sri Lanka's tourist arrivals grew just 2.2 percent to 118,038 in June 2016 from a year earlier, with slow growth from Western Europe and India, while arrivals from the Middle East plummeted amid Ramadan.

In the six months to June tourist arrivals were grew 16.2 percent to 964,267.

Arrivals from the Middle East, Pakistan, Maldives, Malaysia and Indonesia plunged in the Holy month while growth from India was also slow.

Arrivals from Western Europe grew 6.6 percent to 29,559 with UK arrivals up 9.6 percent to 9,406. UK is Sri Lanka's third largest generating market after China and India.

German visitors down 2.2 percent to 5,461. Visitors from France were up 21.5 percent to 3,659 and Italian tourists were up 22.4 percent to 1,390. Depsite strong growth from UK< Italy and Fracne June is not a peak season for Western European visitors.

Visitors from North America was up 14.2 percent with US arrivals up 12.2 percent to 4,111 and Canadian arrivals up 16.5 percent to 3,917.

Visitors from the Middle East plunged 58 percent to 2,210 in June from a year earlier amid the fasting period of Ramadan. Arrivals from Saudi Arabia plunged 82 percent to 400.

East European visitors also fell 10.2 percent to 4,733 with Russia down 28 percent to 1,608 and Ukraine down 8 percent to 823.

East Asia rose 15.8 percent to 19,952 with China continuing to drive growth. China with Hong Kong rose 28.8 percent to 19,952 while Japan rose 9.1 percent to 2,674. Malaysian fell plunged 9 percent to 1,976 and Indonesia plunged 53.5 percent to 724

Chines arrivals were up 40 percent to 132,842 during the first six months.

Arrivals from India rose 4.7 percent to 27,068. In the six months to June Indian arrivals were up 18 percent to 172,841.

Visitors from the Maldives was down 32 percent to 4,722 and those from Pakistan was down 48 percent to 1359.