Colombo Stock Exchange Market Review – 15th Dec 2016

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Colombo Stock Exchange Trade Summary 15-Dec-2016

Colombo equities edged lower for the third straight day in lackluster trading on Thursday. ASI slipped by 13.48 index points (-0.2%) to 6,285.53 while S&P SL20 index lost 11.01 index points (-0.3%) to 3,529.61.

Concerns of capital flight amid Fed rate hike affected the investor sentiments to a certain extent and foreign favorite blue-chips such as John Keells Holdings (LKR 148.80, -2.0%) and Dialog Axiata (LKR 10.50, -1.9%) declined in today’s trading session.

However, Chevron Lubricants managed to held ground at LKR 161.30 (+0.4%) supported by the interim dividend announcement of LKR 3.50 per share. Chevron Lubricants have declared LKR 18.00 in dividends (per share) so far, pushing the stock further up in the high dividend yield list with a yield of 11%.

Market turnover fell to a three-week low of LKR 362mn. Commercial Bank (LKR 71mn) led the turnover list along with LOLC (LKR 47mn) and Dialog Axiata (LKR 44mn). The only crossing of the day was recorded in Hatton National Bank-nonvoting (0.2mn shares at LKR 190.00) and it accounted for mere 11% of the total turnover.

Apart from Chevron Lubricants, the investor interest was seen in John Keells Holdings, Commercial Credit (LKR 58.60, +1.0%) and Access Engineering (LKR 24.90, -0.4%).

As announced by S&P Dow Jones Indices, Ceylinco Insurance will be replaced by Teejay Lanka in the S&P SL 20 index with effect from 19th December 2016.

Foreign investors were net buyers with net foreign inflow of LKR 45mn. Top net inflows were seen in Commercial Bank (LKR 29mn), Access Engineering (LKR 12mn) and Hatton National Bank (LKR 8mn) while top net outflow was seen in Chevron Lubricants (LKR 7mn). Foreign participation accounted for 38% of the market activity.

According to the Department of Census & Statistics, Sri Lanka’s economy has grown by 4.1% in the third quarter of 2016. This is a significant improvement from the 2.6% reported in the second quarter. The growth was mainly driven by the Services (+4.7%) and Industry (+6.8%) sectors while the Agriculture segment contracted by 1.9%. Among the sub sectors, notable growth was seen in construction (+14.4%) and Financial & insurance activities (+12.8%). Accordingly the economy growth in first nine months of 2016 is at 4.0%.

Source: LSL

Sri Lankan shares hit more than 2-wk closing low; Fed rate hike weighs

Reuters: Sri Lankan shares fell in line with regional bourses to close at their lowest in more than two weeks on Thursday, as a 25-basis-point interest rate increase by the U.S. Federal Reserve and hints of more to come next year kept investors on tenterhooks.

The Fed signalled a faster pace of increases in 2017 as central bankers adapted to incoming President Donald Trump's promises of tax cuts, spending and deregulation. Partly as a result of the changes anticipated under Trump, the Fed sees three rate hikes next year instead of the two foreseen as of September.

The Colombo stock index ended 0.21 percent weaker at 6,285.53, its lowest close since Nov. 30.

"Market was on a very slow downtrend," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

"Bond and equity markets have adjusted for the Fed rate hike. We have seen outflows in the last three months. But going forward, we may go into a period of economic and political uncertainty because of a large number of bonds maturing in the first half on 2017 and local elections, plus a referendum coming up next year."

The rate hike could increase borrowing costs of foreign capital for Sri Lanka and force the coalition government to borrow locally at higher interest rates, which could also see some outward movement of money from equities, analysts said.

The government is considering a change in the country's constitution next year which requires a referendum.

The two main parties in the coalition government are expected to contest separately in the upcoming local government election, which the administration of President Maithripala Sirisena has postponed since mid-2015 citing delays in a new electoral process.

Foreign investors bought a net 44.7 million rupees ($301,213) worth of shares on Thursday, with the year-to-date net foreign inflow in shares declining to 514.7 million rupees.

Turnover was 361.8 million rupees, less than half this year's daily average of 749 million rupees.

Shares of John Keells Holdings Plc fell 2 percent, while top mobile phone operator Dialog Axiata lost 1.9 percent.

($1 = 148.4000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Biju Dwarakanath)

Sri Lanka rejects bids for 03-month Treasury Bills

ECONOMYNEXT – Sri Lanka’s central bank rejected bids for 03-month Treasury Bills at Wednesday’s auction.

The yield on the one-year bill edged up one basis point to 10.11 percent at the auction while that on the 06-month bill remained unchanged at 9.56 percent, a statement said.

The debt office of the central bank got bids worth Rs41 billion and accepted only bids worth Rs6 billion.

Central Bank approves Richard Pieris, Chilaw Finance amalgamation

(LBO) – Sri Lanka’s Central Bank has granted approval for the amalgamation of Clilaw Finance with Richard Pieris Finance, by taking over all the assets and liabilities of Clilaw Finance.

Following the approval granted by the Central Bank on 05th December, the Board of Directors of Richard Pieris Finance has approved the amalgamation proposal on 09th December 2016.

Richard Pieris Finance is in control of the shareholding and the management of Chilaw Finance and as per the proposal, the shares of Clilaw Finance will not be converted into shares of Richard Pieris Finance.

Remaining shareholders who still holds 9.99 percent of Clilaw Finance will be paid 22.50 rupees per share and thereafter all the shares of Clilaw Finance is to be cancelled.

Under the 2014 financial sector consolidation plan, Richard Pieris Finance acquired 81.77 percent of Clilaw Finance at 26.50 per share on the trading floor in 2014.

After the obligatory mandatory offer, the shareholding of Richard Pieris Finance increased to 90.09 percent.

It is the intention of Richard Pieris Finance to acquire 100 percent of Clilaw Finance subject to necessary regulatory and shareholder approvals.

The amalgamation process is to be completed by 31st March 2017 in compliance with the financial sector consolidation plan.