Colombo Stock Exchange Market Review – 16th Nov 2016

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Colombo Stock Exchange Trade Summary 16-Nov-2016

Colombo stocks plummeted on Wednesday as losses in the banking and telco stocks led ASI to the lowest level in 18 weeks. All Share index declined by 57.13 index points or 0.89% to end at 6,349.03 while 20-scrip S&P index dipped by 51.87 index points (-1.45%) to close the session at 3,531.92.

Price depreciation in Commercial Bank (closed at LKR 141.10, -4.7%), Dialog Axiata (closed at LKR 10.50, -5.4%) and Vallibel One (closed at LKR 19.10, -6.8%) impacted the index performance.

Daily market turnover was LKR 514mn. No negotiated deals were recorded during the session. John Keells Holdings emerged as the top contributor to the turnover with LKR 229mn followed by Dialog Axiata (LKR 40mn), Browns Investments (LKR 30mn) and Teejay Lanka (LKR 28mn) respectively.

Losers offset the gainers 115 to 35, while 73 counters remained unchanged. High investor activity was witnessed in John Keells Holdings, Teejay Lanka, Access Engineering and Dialog Axiata.

Foreign investors were net sellers for the session with a net foreign outflow of LKR 80mn. Foreign participation was 32%. Net foreign outflows were seen in John Keells Holdings (LKR 83mn), Dialog Axiata (LKR 6mn), People’s Leasing & Finance (LKR 3mn) while net foreign inflow was mainly seen in Nations Trust Bank (LKR 5mn).

Meanwhile, at the weekly treasury bill auction, six month yield advanced by 9bps to 9.65% while one year treasury rate increased to 10.20% (+6bps). Three month Treasury bill rate remained at 8.60%. CBSL offered LKR 29.5bn worth of Treasury bills today and the auction was oversubscribed by 1.4 times with bids received amounting to LKR 41.9bn. It was decided to accept LKR 1bn worth of bills.
Source: LSL

Sri Lankan shares fall for 3rd session to over 4-mth closing low

Reuters: Sri Lankan shares fell to a more than four-month closing low in thin volume on Wednesday as investor sentiment was dented by the budget tax proposals last week, including revisions in corporate and withholding taxes, to boost revenue.

The government aims to boost its 2017 tax revenue by 27 percent to 1.82 trillion rupees ($12.36 billion) year on year, to meet a commitment given to the International Monetary Fund in return for a $1.5 billion loan in May.

The benchmark index of the Colombo Stock Exchange ended 0.89 percent, or 57.13 points, weaker at 6,349.03, its lowest close since July 7.

It fell for a third straight session and was in the over sold territory, with the 14-day relative strength index at 26.347 versus Tuesday's 36.333, Thomson Reuters data showed. A level between 30 and 70 indicates the market is neutral.

"The budget proposals are still not clear and there are some concerns that some of the proposals could be reversed as in the last year," said a stockbroker asking not to be named.

Foreign investors offloaded shares worth a net 79.6 million rupees, their second straight session of selling. They have sold a net 1.09 billion rupee of shares so far this year.

Analysts said the increase in various taxes and fees would reduce the disposable income of people and challenge the consumption-led growth.

Turnover was 514.1 million rupees, less than this year's daily average of 706.4 million rupees.

Shares of Commercial Bank of Ceylon Plc, the country's biggest listed lender, fell 4.66 percent, while Dialog Axiata Plc declined 5.41 percent and Sri Lanka Telecom Plc dropped 0.27 percent. 

($1 = 147.7500 Sri Lankan rupees) 

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

Lanka Sugar Company turns loss into Rs1bn profit

(LBO) – Lanka Sugar Company, which includes Pelwatte and Sewanagala sugar factories, has recorded a profit of 1,018 million rupees for the first nine months of this year.

The company which employs around 5,600 workers has made a significant turnaround this year after it suffered a loss of 1,030 million rupees last year.

In 2014, the company suffered a loss of 211 million rupees.

Releasing a statement the company said the change was mainly due to stronger government regulations and support from top policymakers.

“The company earned this profit because of the direct guidance given by the minister Rishad Bathiudeen,” its Chairman Naveen Adikarama said.

“It is also because of new tender procedures introduced for the first time.”

Around 25,000 farmer families depend on sugar factories to absorb their crop, and the factories cover more than 15,000 hectares. Factories grow around 2,000 hectares while the rest is cultivated by farmers of Monaragala district.

The two factories manufacture about 50,000 metric tons of sugar annually and cater to the high demand in the local market.

Sri Lanka's Distilleries group net up 50-pct

ECONOMYNEXT - Profits at Distilleries Corporation of Sri Lanka, which has interests in alcohol, farming, telecoms and insurance rose 50 percent to 1.18 billion rupees in the September 2016 quarter from a year earlier, interim accounts showed, as new taxes were slapped in a budget for 2017.

The group reported earnings of 7.20 rupees per share for the quarter. For the six months to September the firm reported earnings of 13.70 rupees per share on total profits of 4.1 billion rupees, which were up 38 percent.

Quarter of quarter profits of the group can be volatile.

During the quarter, revenues at the core alcohol company, rose 43 percent to 23.6 billion rupees with excise taxes while net revenues rose 37.4 percent to 68 billion rupees.

From November 01, value added tax was imposed on alcohol and in the budget for 2017 another tax was slapped on ethanol imports. An evaporation allowance was also cut.

The group said in the six months to September out of a total of 5.6 billion rupees in profits 5.9 billion rupees came from beverages, 154 from financial services, 209 million from diversified.

Tea plantations lost 67 million rupees (down from 177 million a year earlier) and telecoms lost 553 million, up from 278 million rupees.

Sri Lanka financial transaction tax to be paid by banks: Finance Minister

ECONOMYNEXT - A debit tax on bank withdrawals will have to be paid by banks, Finance Minister Ravi Karunanayake said, amid rising concerns that the levy will discourage the use of the banking system and encourage a cash economy.

The budget for 2017 imposed a 5 rupee tax on every 10,000 rupees withdrawn from banks.

Karunanayake told a forum organized by Sri Lanka's Ceylon Chamber of Commerce that banks will have to bear the cost of the so-called Financial Transactions Levy (FTL).

Banks will now have to recover the tax by giving lower interest rates to customer overall, or raising interest rates to lenders, or both analysts say.

The debit tax was imposed in Sri Lanka in the early 2000s and withdrawn.

The imposition of the new tax goes against the declared principle of the new administration to simplify the tax system and reduce the total number of taxes.

Many of Sri Lanka's policy wonks have been calling to increase the tax to gross domestic product ratio, going against the time honoured principle of basic economics that rulers should be forced to cut spending improving the use of tax money, rather than allowing them to take more money.

The new administration ratcheted up spending on state workers.