Sri Lanka Govt. considers bringing EPF, ETF under Treasury

Proposal to work out new social security scheme for private sector

By Damith Wickremasekara

With the objective of introducing a pension scheme for private sector employees, the Government is considering a proposal to bring the Employees Provident Fund (EPF) and Employees Trust Fund (ETF) under the Treasury, a Cabinet minister said. Labour Minister W.D.J. Seneviratne told the Sunday Times the proposal to formulate a private sector pension scheme was under discussion after bringing the EPF and ETF under the Treasury.
He said the proposal was to have a contributory pension scheme similar to what has been proposed for public sector employees.

For the private sector, a fund would be set up to support the pension scheme while part of the funds would be made available as housing loans for EPF/ETF contributors, the minister explained. But the amount given as housing loans would be cut down from the current 75 percent to 30 percent because the Government wanted to ensure that the employees received a sufficient amount after retirement.

A Finance Ministry official said that under this scheme, the private sector would be given the option to fix the retirement age according to their wish.

He said another model under study was to release the EPF money in stages after retirement. The Government was also studying various investment plans to increase profits gained from the EPF/ETF funds.

Minister Seneviratne said the Government would introduce the proposal as a bill, after discussions were completed. The EPF, Sri Lanka’s largest social security scheme, had assets upto Rs. 1,665 billion at the end of last year. The EPF is now managed by a unit in the Central Bank.

The ETF as at end of last year was Rs. 218.5 billion with 2.5 million active members. It is now managed by the National Policies and Economic Affairs Ministry which is under the Prime Minister.

In 2011, the former government proposed a pension scheme for the private sector, but the plan was shelved after protests by unions which claimed that the EPF and ETF would be affected.

www.sundaytimes.lk

Hilton eyes more properties in Sri Lanka

By Sunimalee Dias

Hilton Hotels is looking at new property management opportunities in Sri Lanka while catering to a significantly large Chinese travel segment that continues to patronise the industry’s growth.

Moving forward the Hilton Hotels “would want to have more hotels in the country,” Hilton’s Vice President for South East Asia and India William Costley told the Business Times in an interview this week during a visit to Colombo for the Hilton Hotels-hosted conference for women empowerment.

He noted that they have plans to look for locations outside Colombo like Kandy, Nuwara Eliya, Dambulla, and resort hotels under their resort brands in the south including Yala wildlife safaris and possibly Jaffna.

However, Mr. Costley explained they would first have to find a partner since they were involved (only) in the management of the hotels.

Within Colombo they were looking at the possibility of another hotel likely to come under the Hilton’s Double Three by Hilton brand, the Vice President noted adding that it would cater to a smaller room size compared to the Hilton Hotel’s full service options.

Hilton has 13 brands under its umbrella catering to different segments of the traveller namely the Hilton Hotels and Resorts, Waldorf Astoria, Conrad Hotels and Resorts, Canopy by Hilton, Curio A collection by Hilton, Double Tree by Hilton, Embassy Suites by Hilton, Hilton Garden Inn, Hampton by Hilton, Tru by Hilton, Homewood Suites by Hilton, Home 2 Suites by Hilton and Hilton Grand Vacations.

Meanwhile, the city hotel also has plans to renovate the entire hotel and has currently completed work on the lobby.

The intention is to renovate every room in the hotel, Mr. Costley explained noting that a function room would be added similar to the grand ballroom located just off the lobby that could accommodate about 300 people within a 600 sq. metre extent of space.

This is said to the be the first time the entire hotel has been subject to a renovation since it opened its doors 29 years ago, it was noted.

About four floors have been renovated in 2006 and the hotel would be completing 30 years next year by which time it would be brought up to the modern requirements, Mr. Costley said adding that the hotel would also include a new Chinese restaurant in addition to the others already available.

Hilton also has plans to venture into the Colombo (Port) Financial Centre once it opens. If the hotel gets a strategic partner “we will look at going there as well.”

With the region, there are currently 42 hotels and 51 hotels are in the pipeline worldwide that would be opened within a three to five year period, Mr. Costley said.

Within the region next week the Hilton is opening its Bali hotel and another in Malaysia is also scheduled to take place, he said.

Hilton also has a Chinese centric customised solutions to ensure the future 200 million odd travelers that would travelling around by 2020 from the Far East market would stay at their hotels.

“It is a very important market by default,” he said adding that this is a market that would come up and stay on the top.

Hilton has a special service called “Huan Ying” launched about four years back with its hotels worldwide catering to Chinese with Mandarin speaking staff and specialised menus to suit their palette and Chinese TV channels.

Sri Lanka needs to work on its infrastructure development and the key to attracting travelers to its distant locations would be by improving on the current railway system, Mr. Costley explained who having married a Sri Lankan has come to love the destination’s rail journeys. He believes this is an untapped infrastructure.

Moreover, he pointed out that with a proper resort strategy for Sri Lanka through its wildlife and diving hotspots there is much to take in within this small island.

“If Phukhet (Thailand) can get 7-8 million people Sri Lanka can get 10 million easily,” he explained adding that however, the current hotel inventory falls short of being able to cater to this number.

Hilton branded ‘good to work for’ 

Hilton was recently branded as a hotel that is a good place to work and is currently on a drive to induce its female workforce to continue in their jobs amidst having kids and an assurance of rising to the top.

In this respect, the Hilton Hotel in Colombo held a conference to make women aware of the possibilities at the workplace, Hilton’s Vice President of South East Asia and India William Costley told the Business Times.

With no biases made even in granting promotion for women he noted that preconception of the women themselves is mainly brought on through social values imbued to them, he explained.

Hilton Hotels has a 43 per cent workforce that comprises women and Hilton Colombo had won the Gold title for being the best place to work.

Women were assessed for leadership positions within the Hilton group, he said, adding that “we want to make them aware of the possibilities.”

During the conference the Hilton management had attracted 250 students currently studying at the state-run hotel school along with their parents to help them overcome the challenge of cultural barriers in moving up the ladder into leadership positions within the group.

www.sundaytimes.lk

Cigarette sales drop cuts tobacco tax revenue by half

By Bandula Sirimanna

The tobacco tax revenue for government coffers has declined significantly due to a drop in sales of cigarettes manufactured in Sri Lanka by Ceylon Tobacco Company(CTC) during the months of October and November this year due to consecutive tax hikes that led to price increases twice, official data showed.

The Ceylon Tobacco Company’s contribution to the Government through its value chain during the nine months ended 30th September 2016, in the form of Excise Tax, Corporate Tax and other levies, increased by 20 per cent over the same period last year to Rs.75 billion, driven primarily by relatively stable volumes during the first nine months of 2016, according to the published results of the company available on the Colombo Stock Exchange website.

Top line growth for the nine months ended 30th September 2016 was spearheaded by mainstream and premium segments in the company’s brand portfolio, CTC performance report revealed.

Accordingly the CTC has made a contribution of Rs.75 billion during the first nine months at an average of Rs. 8.3 billion per month, CTC summery of performance revealed.

However its contribution to the Treasury coffers has come down drastically to Rs.4.2 billion during the period of October 1st to November 1st, Finance Ministry data revealed.

Tobacco tax revenue for this month has dropped to 51 per cent when compared to the CTC’s first nine months contribution at an average of Rs.8.3 billion per month.

The CTC has increased the price of cigarette by Rs.7 on October 4 and it then went up further as of November 1, with the enforcement of 15 per cent VAT, to Rs. 50 per cigarette.

The company expects a further drop in sales affecting sustainability of its business, a CTC official who wished to remain anonymous, said.

The targeted revenue from cigarette taxes this year has now been revised to approximately Rs. 88 billion from the previous target of Rs. 99.6 billion under these changes, Treasury sources said.

Almost 4 billion cigarettes are sold in the country per annum and consumers pay over Rs. 100 billion for purchasing cigarettes, official data showed.

The latest report, issued by the World Health Organisation states that Sri Lanka has the distinction of selling the highest priced packet of 20 cigarettes in South Asia. Based on market prices for 2016, the price of a packet of cigarettes sold in Sri Lanka is Rs. 700.

Meanwhile a controversial budget proposal requesting the tobacco company to donate Rs. 500 million to the Presidential Fund to be utilised by the Presidential Task Force for the antismoking campaign, is unlikely to be approved.

The issue was first raised in a Sunday Times story on November 13 saying the proposal was a direct violation of Article 13 of the WHO Framework Convention on Tobacco Control. Sri Lanka is one of the key signatories to this convention. Later Health Minister Rajitha Senaratne also said it cannot be accepted as it contravened the WHO pact on tobacco control.

www.sundaytimes.lk

Lanka Hospitals issues interim dividend

Lanka Hospitals has sought to add to shareholder value by issuing an interim dividend of Rs. 1 per share. This amounts to a payment of 224 million.

The dividend was issued taking in to account the positive growth in Lanka Hospitals’ performance in the first nine months of this financial year. As of September 30, 2016, Lanka Hospitals has recorded a Group net profit of Rs. 625 million. “Lanka Hospitals has always shown great consistency in its performance. We are very happy with the results we have achieved thus far in this year.

These results reflect healthy growth trends in almost all of the profit centres under the Lanka Hospitals umbrella.

Lanka Hospitals Diagnostics in particular must be noted for its outstanding performance,” enthused Dr. Sarath Paranavitane, Chairman Lanka Hospitals.

Lanka Hospitals has achieved many successes in the recent past which have all contributed to its enhanced profitability.

Most recently it has achieved MTQUA certification which recognises Lanka Hospitals as one among an elite group of global hospitals.

MTQUA certification holds huge weight among medical tourists, as it assures them of treatment, care and services on par with the best in the world.

Lanka Hospitals Diagnostics is the first reference laboratory to be set up in Sri Lanka and is ISO 15189:2007 certified.
www.dailynews.lk

Asian Alliance General Insurance rebrands as Fairfirst Insurance

On November 22, 2016 consequent to regulatory approval, Asian Alliance General Insurance (AAGI) announced that it has changed the company name to Fairfirst Insurance Limited.

This name change follows the recent 100% share acquisition of Asian Alliance General by Union Assurance General (UAG), which is a part of the Fairfax Group in Sri Lanka.

Asian Alliance General Insurance has been rapidly growing over the last few years and comes geared with a strong retail product line, a distribution network of 40 branches and an experienced workforce of 527.

Formerly, a part of the Softlogic Group, some of their strong suits include efficiency in claim servicing, through the innovative Click2Claim, and a growing motor insurance business, both of which were recognized at the inaugural IASL – Fintelekt Insurance Industry Awards 2016.

Speaking on the re-branding Ramal Jasinghe CEO of Fairfirst Insurance (formerly known as Asian Alliance General Insurance) said, “We are very keen to build a strong brand identity that stands out and accurately represents the fresh vision of the organization.”

The Fairfax Group is one of the largest general insurance groups in the world.

A diversified, financial services company headquartered in Toronto.

Most recently, Fairfax acquired American International Group (AIG) businesses in Latin America and Central & Eastern Europe, further strengthening their global footprint.

“The Fairfax Group views the Sri Lankan insurance market with optimism,” said Dr. Sanjeev Jha, CEO of Union Assurance General.

“As the holding company of Fairfirst Insurance we are excited to be part of this dynamic journey.”

Fairfirst Insurance will continue its operations as a fully owned subsidiary of UAG until the compete amalgamation of the two companies, which is expected to be concluded by Q1 2017.

www.dailynews.lk

Sri Lanka Fitch confirms Sunshine Holdings at 'A(lka)'

ECONOMYNEXT – Fitch Ratings said it has confirmed the National Long-Term Rating of Sri Lankan diversified conglomerate Sunshine Holdings at 'A(lka)' with a stable outlook.

“The rating on the company reflects its exposure to defensive end-markets, strong positions in the markets for its key products and strong free cash flow generation despite short-term pressures faced by some its key operating subsidiaries,” a statement said.

It said the rating also reflects Fitch's expectations that the group is likely to maintain a low level of leverage.

The full statement follows:

Fitch Ratings-Colombo-02 December 2016: Fitch Ratings has affirmed Sri Lanka-based diversified conglomerate Sunshine Holdings PLC's National Long-Term Rating at 'A(lka)'. The Outlook is Stable.

The rating on the company reflects its exposure to defensive end-markets, strong positions in the markets for its key products and strong free cash flow generation despite short-term pressures faced by some its key operating subsidiaries. The rating also reflects Fitch's expectations that the group is likely to maintain a low level of leverage.

KEY RATING DRIVERS

Short-Term Challenges in Healthcare: Sunshine Holdings is the second-largest pharmaceutical distributor in Sri Lanka by sales. The government recently introduced a price control mechanism that Fitch expects will reduce Sunshine Holdings' pharma revenue by 15%-20%. However, Fitch believes the impact of the new regulation will be temporary and the long-term fundamentals for the segment remain intact as the population is rapidly aging, urbanisation is rising and per capita income is increasing, which will drive spending on healthcare.

Growth from Palm Oil: We believe Sunshine Holdings' palm oil segment will be the key growth driver in the medium term and will provide buffer against downturns in most other segments. Sunshine Holdings is the largest palm oil producer in the country and is strongly positioned to benefit from the government's policies protecting the sector to expand local production. Higher taxes on imported palm oil, an increase in global palm oil prices due to the recovery in oil prices and continuous capacity expansions by Sunshine Holdings should support the growth trajectory and profitability of the segment in the medium term.

Margin Pressure in Consumer Goods: Margin in Sunshine Holdings' fast-moving consumer goods segment, which is the largest branded tea company in Sri Lanka, has narrowed due to higher tea prices in the past six months. We expect tea prices to moderate in the next 12 months once supply stabilises, which should benefit Sunshine Holdings' margins in this segment. Sunshine Holdings' strategy to tap the higher growth by selling to the hotel, restaurant and catering industry should also help the segment, both in terms of top line growth and profitability.

Tea Industry in Structural Decline: Sunshine Holdings' tea segment posted operating losses for the third consecutive year in the financial year ended 31 March 2016 (FY16) as low global tea prices and escalating costs made it difficult for tea plantations to break even. Fitch does not expect a meaningful turnaround in the tea segment in the medium term owing to lower demand from Sri Lanka's key markets, such as Russia, Ukraine, and the Middle East, and cost pressures stemming from wage increases for plantation workers that are not based on productivity.

New Investments Drive Growth: Sunshine Holdings is expanding its capacity in its power and dairy sectors, with the company expecting the majority of the new capacity to come online before end-FY19. Fitch believes the new projects will enable Sunshine Holdings to reduce its dependency on the highly volatile agricultural sector and improve overall margins as the new projects provide higher margins.

Balance Sheet Strength Intact: Sunshine Holdings may face short-term operational pressures, but Fitch expects the company to maintain adjusted gross debt/EBITDAR (including proportionate consolidation of EMSPL, the holding company for the agriculture and consumer goods segments) at less than 3.0x over the medium term (FY16: 1.68x). This will be supported by moderate capex and already low levels of group debt. The holding company holds minimal debt and the main operating subsidiaries have low levels of debt, so Fitch views as immaterial the structural subordination of debt of the holding company.

KEY ASSUMPTIONS

Fitch's key assumptions within the rating case for Sunshine Holdings include:

- Revenue growth to slow down in FY17 to mid-single digits, owing to price controls in the pharma segment, but to recover to high single digits in the medium term, driven by expansion in the palm oil and fast-moving consumer goods segments and contribution from new investments.

- EBITDAR margins to remain in the low double digit range in FY17-20 despite challenges faced by the pharma and tea segments.

- Capex of LKR3.6bn over FY17-20 for expansion across the board. Working capital outflow of about LKR250m each year to support growth.

- Sunshine Holdings to maintain its current dividend policy

RATING SENSITIVITIES

Positive: No positive rating action is expected in the next 12-18 months given the regulatory risks in the pharma segment, cyclical risks of the commodity business and execution risks associated with new business ventures.

Negative: Developments that may, individually or collectively, lead to a negative rating action include:

- A sustained increase in Sunshine Holdings' group adjusted gross debt/EBITDAR (including proportionate consolidation of EMSPL) over 3.0x

- Sunshine Holdings' EBITDAR coverage of gross interest + rent (including proportionate consolidation of EMSPL) reducing below 2.5x on a sustained basis.

- Adverse impact on growth and profitability arising from sustained regulatory pressure in the healthcare and agriculture segments.

LIQUIDITY

As at end-March 2016, Sunshine Holdings had about LKR1.5bn of unrestricted cash and LKR2.7bn in unutilised credit facilities to meet LKR880m of debt falling due in the next 12 months. This places the company in a comfortable liquidity position that will be enough to absorb the impact negative FCF in FY17 owing to high capex and weak operating performance.

Sri Lanka’s Melstacorp to focus on premium liquor, diversity into oil palm

ECONOMYNEXT – Melstacorp Limited (MCRP), which becomes the parent firm of Distilleries Company of Sri Lanka in a share swap, aims to focus on premium products in its alcoholic beverage business, which generates the bulk of sales, and get plantations to diversify into oil palm.

According to the group’s future plans, revealed in a draft introductory document filed with the stock exchange, it is highly dependency on the beverage segment which generates over 70% of MCRP group’s net revenue.

“However, MCRP has continued to diversify its business portfolio to sectors such as financial services, hydro-power and tourism, which is likely to reduce the dependence on the beverage sector,” the introductory document said.

The group said it also continues to evaluate investment opportunities in other segments.

Melstacorp Limited, which is to be listed on the Colombo stock exchange, continues to maintain its dominant market share in the Sri Lankan hard liquor market, relying on the brand equity of Distilleries Company of Sri Lanka and the established liquor brand portfolio within the group.

Its Periceyl (Pvt) Ltd. unit focuses on the distribution of locally manufactured foreign liquor, and targets customers for its premium-branded products.

“The group is expected to increase its focus on premium brands such as Franklin Brandy, Flinton London Dry Gin and Petroff Vodka, given an expected increase in per capita GDP and tourism in Sri Lanka,” the stock exchange filing said.

Demand for alcohol is expected to continue its growth trajectory with a potential shift towards premium alcoholic products, it said.

With liquor is expected to continue as a major contributor to government revenue from taxes and duties, the government is expected to continue in its efforts to restrict the illicit liquor market in Sri Lanka, the filing said.

The group is exposed to tea and rubber businesses through its plantations Balangoda Plantations PLC and Madulsima Plantations PLC.

“The plantations industry has been facing challenges owing to weak commodity prices due to volatility in global markets and mandatory wage hikes,” it said. “The company’s strategy for the plantation segment in future is to diversify its crop to oil palm and reduce exposure to the volatile tea and rubber segments.”

Melstacorp said fluctuations in global spirit prices will have an impact on its gross profit margin.

“Given that spirits account for a substantial portion of the beverage sector’s raw materials, the company is exposed to movement of spirit prices,” the stock exchange filing said. “A price hike is therefore likely to contract margins for the sector.”

To mitigate the impact of higher raw material prices, the company said it’s policy is to increase its level of inventory on spirit volumes during periods of low prices.

Sri Lanka's Kelsey Homes launches high end gated community

ECONOMYNEXT - Sri Lanka's Kelsey Homes, a property developer said it is launching an up market gate community project in Negombo, which is close to the country's international airport.

The firm said its 'Verdant Villas' gated community where 80-perch blocks of land is offered is 10 minutes from an expressway running from Colombo to the main airport.

The expressway has made access to Negombo from the capital faster than to some of the suburbs of Colombo, where traffic has led to gridlock.

Verdant Villas will have a clubhouse with a swimming pool, pool lounge, steam and sauna rooms, gymnasium, tennis court, kids play area and 24-hour security with closed circuit television monitoring.

Sri Lanka banks stable; loan growth may increase bad loans: Moody's

ECONOMYNEXT - The outlook for banks in Sri Lanka remain stable but continued loan growth driven by construction credit may increase bad loans but the levels will not be high, Moody's Investors Services, a rating agency has said.

The stable outlook for banks, is better than the negative outlook given to Sri Lanka's B1, speculative grade long term rating.

Despite external funding challenges, the rating agency expects economic growth to remain stable at 5.0 percent in 2017, a marginal improvement over the 4.7 percent expected in 2016.

"Continued strong loan growth may put downward pressure on asset quality and liquidity conditions, but nonperforming loan (NPL) ratios will remain at low levels," says Srikanth Vadlamani, Vice President - Senior Credit Officer at Moody's.

"We therefore expect a degree of asset quality deterioration consistent with the current credit profiles of Sri Lankan banks."

Moody's says construction loans have been a key driver of a 16 percent loan growth up to September.

"The weakening in asset quality will come from a generally low 2.9 percent nonperforming loan ratio for the system at end-September 2016, which are close to the lowest level for the last decade," the rating agency said.

Sri Lanka is seeing a boom in apartment building, which has been given a further boost in the budget with foreigner allowed to buy apartments with domestic credit.

Other analysts have warned that a bubble may be developing in the sector.

Sri Lanka, Maldives priority markets for hotel expansion: JKH

ECONOMYNEXT – John Keells Holdings sees its home base Sri Lanka and the Maldives as priority markets for hotel expansion, given the growth potential in both countries, Sunimal Senanayake, Executive Vice President of the group said.

Tourist arrivals had grown rapidly since the island’s 30-year ethnic conflict ended in 2009 and could “hopefully” exceed two million this year, he told a tourism industry forum.

“Given demand from generating markets, this could easily double in the next 4-5 years,” Senanayake said.

“We see growth coming to Sri Lanka from multiple markets,” he told the Asia Hotel & Tourism Investment Conference held in Colombo in partnership with the Sri Lanka Tourism Club.

“We see Sri Lanka as the priority market for further expansion followed by the Maldives which has had very steady growth in the last 10 years.”

Tourist arrivals in the Maldives had grown from 600,000 in 2006 to 1.2 million in 2015 but had been flat in the last two years.

“But it seems to be coming back – in the last two months we have seen occupancy levels going up,” Senanayake said. “And Maldives is one of a kind, unique destinations and very much still in fashion in most generating markets. It still is a lucrative market for investment.”

JKH group has 14 hotels – three in Colombo and eight resorts in Sri Lanka and three in the Maldives.

Sri Lanka Melstacorp listing reference price set at Rs69

ECONOMYNEXT – Melstacorp Limited (MCRP), currently a 100% subsidiary of Distilleries Company of Sri Lanka, which will become the latter’s parent in a share swap, is to be listed on the Colombo bourse at a reference price of Rs69.

According to a stock exchange filing, the fair value of MCRP’s share ranges from Rs65.52 to Rs74.94 with an average price per share of Rs69.78, based on several valuation methodologies used.

The valuation, done by brokerage CT CLSA Capital (Pvt) Ltd., used the Relative Price to Earnings Method (PE), Relative Price to Book Value Method (PBV), Market Price Method and the Sum of the Parts Method (SOTP), to derive a fair value for MCRP.

“SOTP and PE are the two preferred valuation methods for a conglomerate where the value is driven as a combination of business units,” the research report said.

Discounted Cash Flow (DCF) valuation was used to value the beverage segment of the group within the SOTP method.

With MCRP group having two companies in the financial services sector, DCF valuation was considered less applicable for MCRP overall.

Sri Lanka’s PABC to raise Rs2.1bn through rights issue

ECONOMYNEXT – Sri Lanka’s Pan Asia Banking Corporation (PABC) said it plans to raise Rs2,065 million from a rights issue of one new share for every existing two shares.

A stock exchange filing said PABC will issue 147.5 million new shares at Rs14 a share.

The proceeds of the rights issue will be used to fund the bank’s growth plans, it said.

Colombo Stock Exchange Market Review – 02nd Dec 2016

(Click here)

Colombo Stock Exchange Trade Summary 02-Dec-2016

Colombo equity market wrapped the weekly operations on positive note despite foreign outflows. All Share index continued the previous session momentum as index touched the 6,331 mark but closed at 6,325.57, an increase of 16.53 index points or 0.26%. 20-scrip S&P SL 20 index gained 16.91 index points or 0.48% to end at 3,525.35.

Two largest cap, Ceylon Tobacco (closed at LKR 885.00, +1.6%) and John Keells Holdings (closed at LKR 151.00, +0.7%) pinned the index in positive territory along with gains in Aitken Spence (closed at LKR 67.50, +3.9%) and Asiri Hospital Holdings (closed at LKR 26.50, +3.1%).

Daily market turnover reached LKR 948mn supported by negotiated deals in John Keells Holdings (1.42mn shares at LKR 150.00) and Hatton National Bank (0.46mn shares at LKR 218.50). John Keells Holdings was the top contributor with LKR 343mn followed by DFCC Bank (LKR 264mn), Hatton National Bank (LKR 113mn) and Commercial Bank (LKR 88mn) respectively.

Market breadth was positive where out of 181 scripts traded today, 76 advanced and 40 declined. High investor activity was seen in Commercial Credit & Finance, John Keells Holdings and Ceylon Grain Elevators.

Major banks such as Commercial Bank (+0.1%), Hatton National Bank (+0.4%), Sampath Bank (+0.6%), National Development Bank (+0.3%) and DFCC Bank (+1.9%) continued to post gains.

Foreign investors were net sellers with a net foreign outflow of LKR 250mn. Foreign participation was 64%. Net foreign outflows were seen in DFCC Bank (LKR 260mn), Hatton National Bank (LKR 61mn) and Hemas Holdings (LKR 14mn). Net foreign inflow was mainly seen in John Keells Holdings (LKR 41mn).
Source: LSL

Sri Lanka shares end at 2-wk high; banks lead

Reuters: Sri Lankan shares rose for a second straight session on Friday to close at a two-week high as investors sought bargains in large-cap shares after the benchmark index hit a near-eight-month low earlier in the week.

The Colombo stock index gained 0.26 percent to 6,325.57, its highest close since Nov. 18. The bourse gained 1.17 percent for the week, recording its first weekly gain in four.

Turnover stood at 947.9 million rupees ($6.40 million), more than this year's daily average of 697.9 million rupees.

"Buying interest continues as prices are attractive after they fell steeply," said Reshan Kurukulasuriya, chief operating officer, Richard Pieris Securities (Pvt) Ltd.

Foreign investors sold a net 250.3 million rupees worth of shares on Friday, extending the year-to-date fund outflow to 1.84 billion rupees.

The index had hit a near-eight-month low on Tuesday on concerns that the proposed hike in various taxes and fees would reduce disposable income and challenge consumption-led growth.

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

The market shrugged off the central bank's monetary policy decision on Tuesday to keep rates unchanged. Brokers said investors are concerned about sustainability of rates.

Shares of Ceylon Tobacco Company Plc rose 1.60 percent while conglomerate John Keells Holdings Plc rose 0.67 percent and biggest listed lender Commercial Bank of Ceylon Plc rose 0.14 percent. 

($1 = 148.0000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Vyas Mohan)