Colombo Stock Exchange Market Review – 03rd Jan 2017

(Click here)

Colombo Stock Exchange Trade Summary 03-Jan-2017

Colombo Bourse extended losses on Tuesday with both indices closing on negative territory for the third straight session. ASI lost 33.75 index points or 0.5% to close at 6,159.12 while S&P SL 20 index edged 34.10 index points (-1.0%) lower to close at 3,438.40. The bearish sentiments were seen across the board with losers outweighing gainers 93 to 30. 71 shares remained unchanged.

John Keells Holdings dominated days’ trading, contributing nearly 71% of the turnover. The counter hit a low of LKR 138.10 but managed to close at LKR 139.00 (-0.7%). Among other blue-chips, Melstacorp (LKR 55.00, -5.2%), Hemas Holdings (LKR 96.20, -3.8%) and Aitken Spence (LKR 64.00, -6.6%) led losers while Carsons Cumberbatch (LKR 190.00, +9.3%) and Bukit Darah (LKR 289.90, +3.5%) closed higher on thin volume.

Market turnover was LKR 354mn. Top contribution of LKR 250mn came from John Keells Holdings which saw 1.2mn shares trading hands at LKR 138.50-139.00 per share. The next best contributions came from Sampath Bank (LKR 10mn) and Teejay Lanka (LKR 9mn).

Melstacorp extended its losing streak to the third day with share closing at LKR 55.00 down by 5.2%. During its first three-days of trading the counter has lost 20% from the indicative price of LKR 69.00. Further, Chevron Lubricants (LKR 155.50, -1.0%), Teejay Lanka (LKR 42.00, -1.2%) and Ceylon Grain Elevators (LKR 80.00, -2.4%) lost ground today amid relatively high level of trading activity.

Foreign investors were net sellers with a net foreign outflow of LKR 44mn. Top net outflows were seen in John Keells Holdings (LKR 52mn), Seylan Bank (LKR 5mn) and Teejay Lanka (LKR 2mn) while top net inflow was mainly seen in Sampath Bank (LKR 7mn). Foreign investor activity accounted for 24% of the market turnover.
Source: LSL

Sri Lanka shares end at 9-month low; Keells down

Reuters: Sri Lankan shares fell for a third straight session on Tuesday, hitting a nine-month closing low, as investors sold shares of market heavyweight John Keells Holdings Plc amid worries over a weakening rupee and rising interest rates.

The Colombo stock index ended down 0.54 percent at 6,159.12, its lowest close since April 5. The bourse fell 9.7 percent in 2016, its second straight annual decline.

The bourse dipped into oversold territory on Tuesday with the 14-day relative strength index at 29.238 points versus Monday's 33.320, Thomson Reuters data showed. A level between 30 and 70 indicates the market is neutral.

"Keells selling brought the market down. A high net worth investor is selling Keells and that keeps market worried," said Reshan Kurukulasuriya, chief operating officer, Richard Pieris Securities (Pvt) Ltd.

Shares in John Keells Holdings ended 0.71 percent lower.

In dollar terms, Sri Lanka's stock market fell 13 percent in 2016, performing worse than emerging markets like Malaysia , Thailand, Indonesia and Singapore .

Stockbrokers said Sri Lanka's failure to attract foreign direct investment and lack of investor confidence due to a reversal in some budget policies weighed on the market and on the rupee, which fell 3.9 percent in 2016 and continues to be weak.

Turnover stood at 353.9 million rupees ($2.36 million).

Foreign investors sold a net 43.5 million rupees of equities on Tuesday, extending the net foreign outflow in the first two days of the year to 69.9 million rupees.

Shares in Hemas Holdings Plc dropped 3.8 percent while Aitken Spence Plc fell 6.57 percent.

($1 = 149.8000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

Taxes hit - CTC announces 20% layoff of employees

In the backdrop of the sharp decline in sales volumes, Ceylon Tobacco Company PLC (CTC) said in a statement yesterday it has been compelled to change its manufacturing operation in Colombo from three shifts to two.

This latest move by the company comes in the wake of the 45% reduction in sales during the last quarter of the year as a result of the excise hike on 4 October, and the imposition of 15% VAT on 1 November.

The reduction in the number of shifts means that CTC will face a 20% headcount cut in its factory, a measure its Managing Director and Chief Executive Officer Michael Koest said it has been forced to take to ensure the future sustainability of the company.

“The recent moves by the Government to increase taxes on legal cigarettes has directly impacted our operations in Sri Lanka. It places the sustainability of a business that has been legally operating in Sri Lanka for over a century in jeopardy,” said Koest. This is the first headcount reduction by the company since 2007.

Commenting further on the impact of the tax hikes, Koest said: “The high prices of legal cigarettes have driven smokers to products such as beedi or smuggled cigarettes while putting severe pressure on our volumes. So clearly smokers are substituting legal cigarettes with cheaper and illegal alternatives. As a result, the Government has lost over 10 billion in revenue during the last quarter of 2016. This defeats some of the Government’s major objectives such as improving public health and increasing revenue.”

Over the years CTC has been recognised for its productivity standards and one of the few companies in Sri Lanka that boasts of a lean and efficient operation. Koest explained that any further increases in taxes on cigarettes will therefore have far flung consequences that would impact the livelihoods supported across the company’s value chain.

“Currently CTC directly and indirectly employs over 46,000 persons and over 300,000 livelihoods are dependent on our industry at various stages of operations from farming to distribution and sales. Tobacco leaf is sourced in Sri Lanka from over 20,000 farmers. Cigarettes are processed in our factories and finished goods are distributed by 16 distributors via over 72,000 retailers islandwide. We infuse over Rs. 8 b to the rural economy annually through our farming and retailing activities,” he elaborated.

Only recently the company announced that it had plans to shut down four leaf depots.

www.ft.lk

Sri Lanka’s Tourist arrivals in 2016 top 2 million

By Charumini de Silva

Tourism Development Minister John Amaratunga yesterday confirmed that Sri Lanka had exceeded a tourist arrival target of two million for 2016.

“Sri Lanka’s tourist arrivals hit a record high in 2016 by surpassing two million,” said the Minister, who is remaining upbeat over the industry’s progress, which is expecting revenue of over $ 3.5 billion and 2.2 million tourist arrivals. He said the official figures would be released during the course of this week. The Minister said the industry would record an income of $ 4.5 billion this year with 2.5 million tourist arrivals as Sri Lanka gains much attention from tourists globally as the most popular and safest tourist destination in South Asia. “Tourism is progressing and within the next three years the sector will be the top foreign exchange earner,” Amaratunga added.

According to Sri Lanka Tourism Development Authority data, tourist arrivals to Sri Lanka in November rose by 16% to 167,217 persons, bringing the total for 11 months to 1.82 million, up by 15%. 

www.ft.lk