Sri Lankan shares fall for 5th session; deal reversal order weighs

Reuters: Sri Lankan shares fell for a fifth straight session on Monday to close at their lowest in nearly three weeks, led by large caps, as an order to reverse a share transaction weighed on sentiment despite foreign inflows.

Sri Lankan Prime Minister Ranil Wickremesinghe has ordered a reversal and a probe into the 1.3 billion rupees ($8.7 million) Seylan Bank foreign deal as it failed to follow proper procedure, the country's finance minister said on Monday.

The transaction of 13 million shares or 7 percent stake in Seylan Bank, owned by state-run Bank of Ceylon, went through on Friday and a foreign fund bought the shares at 100 rupees each, a 17.6 percent premium to the stock's closing price that day.

The Colombo stock index ended 0.29 percent weaker at 6,250.57, its lowest close since Nov. 30. The bourse has fallen 1.4 percent in five straight sessions through Monday.

"This is year-end market trading, but the news on reversal of Seylan Bank shares is not good for the market," a stockbroker said asking not to be named.

Shares in Seylan Bank closed 5.5 percent higher at 89.70 rupees on Monday, on speculation the foreign fund may buy more shares from the market at a premium to its closing price of 85 rupees a share on Friday, two stockbrokers said.

Turnover stood at 260.7 million rupees ($1.75 million), around a third of this year's daily average of around 750 million rupees.

Foreign investors bought a net 66.1 million rupees worth of shares on Monday, extending the year-to-date net foreign inflow to 1.94 billion rupees worth of equities.

Shares in Ceylon Tobacco Company fell 1.16 percent, while top private lender Commercial bank of Ceylon lost 1 percent to drag down the overall index.

($1 = 149.0000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Biju Dwarakanath)

Colombo Stock Exchange Market Review – 19th Dec 2016

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Colombo Stock Exchange Trade Summary 19-Dec-2016

Colombo bourse extended losses for the fifth straight session amid lackluster trading as investors became passive with the advent of the festive week. ASI closed 18.04 index points (-0.3%) lower at 6,250.57 while S&P SL 20 index shed 9.38 points (-0.3%) to close at 3,512.29.

Bearish sentiments prevailed across the board and out of the 170 scripts traded, only 29 shares gained while 72 saw decline in its share price. Among the losers were Ceylon Tobacco (LKR 850.00,-1.2%), Ceylon Cold Stores (LKR 765.60,-1.9%), Commercial Bank (LKR 143.60, -1.0%) and Overseas Realty (LKR 20.00,-5.2%).

The turnover slid to LKR 261mn. 28% of the turnover came from the only crossing today in Nestle Lanka (36,000 shares at LKR 2,050.00). Accordingly, Nestle (LKR 77mn) become the top contributor to the turnover along with Hemas Holdings (LKR 51mn), John Keells Holdings (LKR 30mn) and HNB- nonvoting (LKR 33mn).

John Keells Holdings (LKR 147.00, -0.1%) was by far the most traded stock today. Further, investor interest was seen in Chevron Lubricants (LKR 160.10, -0.5%), Asia Asset Finance (LKR 1.40) and Ceylon Grain Elevators (LKR 81.40, -2.1%).

After the controversial transaction on last Friday, Seylan Bank closed 5.5% higher at LKR 89.70. Though the media reported of a possible cancellation of the Friday’s transaction, the official announcement is yet to be made.

Peoples’ Leasing managed to close higher at LKR 17.90, +2.3% with the announcement of the anticipated interim dividend of LKR 0.75 per share.

During the session, Orient Finance announced an issue of preference shares to the existing shareholders on the basis of one for 37 at LKR 100.00 per share. However, there were no trades today.

Foreign investors were inactive today and accounted for mere 55% of the market activity. At the end of the trading, net foreign inflow was LKR 66mn. Top net inflows were seen in Hemas Holdings (LKR 51mn), HNB – nonvoting (LKR 22mn) and Nestle Lanka (LKR 3mn while top net outflow was mainly seen in John Keells Holdings (LKR 8mn).
Source: LSL

Sri Lanka govt to revoke BOC's Seylan sale

ECONOMYNEXT - Prime Minister Ranil Wickremesinghe has ordered the reversal of state-owned Bank of Ceylon's controversial sale of a stake in the private Seylan Bank.

The stock market regulator has already been informed of the government's intention to revoke Friday's sale to an unidentified foreign buyer, which some believe could be a front for a local business.

"The Prime Minister acted at lightning speed no sooner he was informed of this illegal sale," Finance Minister Ravi Karunanayake told reporters on the side-lines of a dinner hosted by Foreign Minister Mangala Samaraweera at his official residence in Colombo.

"We can and we are going to reverse the transaction because it is illegal," the minister said.

"The Bank of Ceylon managers did not have authority to sell this stake. The (BOC) board had discussed, but not decided to sell this stake. Heads will roll."

Senior administration officials say two additional general managers of Bank of Ceylon had allegedly authorised the sale without the approval of the board of directors of the bank. The transaction was carried out while BOC's chairman was out of the country.

It is not clear what the threshold of transactions the management or investment committee is allowed to conduct without getting approval from the board. The bank is also known to have liquidated other investments in recent days.

However, the administration feels that any sale of a "strategic stake" requires specific permission.

In terms of the size, a 1.3 billion rupee sale is just 0.08 percent of the 1,678 billion rupee balance sheet of the Bank of Ceylon as of September 2016.

In the annual report, the 1.3 million block of Seylan voting shares is listed in the 'available for sale' portfolio.

"Four months ago, the government had an offer of 140 rupees for a share of Seylan, but it was turned down," another top ministerial source said on Sunday.

Friday's sale of 13 million shares of Seylan was done at 100 rupees, above the market rate of 85 rupees.

However authorities believe the value of the 7.5 percent block could be considerably higher for a strategic investor.

Asked if the decision to reverse the share transaction would have a negative impact on the already lacklustre stock exchange, the minister said it should not discourage genuine investors.

"In fact, our decision should boost the market because it shows we won't allow any hanky-panky."

However, if the buyer was a genuine foreign investor, the effects are less clear, market analysts say.

Richard Pieris Group posts Rs.2.17 bn PBT for first half 2016/17

The Richard Pieris Group ended its first six months on a positive note reporting a Group Revenue of Rs.23.5 bn and a PBT of Rs.2.17 bn.

The reported Revenue and PBT signifies a growth of 12% and 29% respectively over and above the corresponding period of the previous year.

The reported profits represent business profits, and do not include any gains of a capital nature.

The Retail Sector of the group comprises of Arpico Supercentres and Superstores, Arpico Daily Supermarkets and a network of Arpico Showrooms scattered island wide.

The sector continued to focus on consumer promotions to drive footfall and expand basket value through the most anticipated “Top Tips” and “Daily Deals” price drop strategies.

The marketing strategies were further leveraged by securing strategic partnerships with banking and credit card partners offering greater value to customers.

The Arpico Supercenter Brand won the award for the “Excellence in Branding and Marketing” - Retail Sector at the CMO Asia Awards in Singapore during the period under review, becoming the first Sri Lankan modern trade chain to win this accolade among many other Asian competitors.

The Plastics and Distribution Sector comprises a range of products including mattress, water tank, PVC products, rigifoam, rubber products and water pumps. New production line commissioned during this financial year assisted water tanks operation to cater the increased demand.

Rigifoam operation also celebrated its 50 years existence in the market during the period under review. Continuous marketing campaigns and various promotional activities have assisted the sector to gather momentum in its sales volumes.

The Plantation Sector of the Group improved its performance during the first six months of the financial year 2016/17, mainly driven by the solid performance of palm oil.

Production of rubber improved but the prices have declined during the second quarter of the financial year 2016/17. Initiatives such as quality improvements and productivity enhancements were undertaken to improve the performance of the tea segment.

The Retreading business of the sector was affected by the declining demand for retreading tyres in the market. The sector continued to focus on marketing campaigns and effective use of resources.

The Rubber manufacturing sector comprises a range of products including natural latex foam mattresses, pillows, rubber mats, jar sealing rings and small moulded products.

The Latex foam business segment recorded high sales volumes during the period under review due to the aggressive sales and marketing activities.

The Financial Services sector of Richard Pieris Group consists of its own life insurance, stock broking, fund management and a finance company.

Arpico Insurance PLC opened its latest branch in Jaffna during the period under review.

The Group continues to focus on its core business sectors whilst considering many opportunities for further expansions both locally and internationally, a spokesman for the company said.

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