Sri Lanka foreign reserves fall to 7-year low in March

Click here to read the Full Report                                                                                                                                                     (LBO) – Sri Lanka’s external reserves have fallen to a 6.9 year low after country’s reserves dropped almost 9 percent to 5.12 billion US dollars in March 2017, a research note showed. Central Bank has purchased 192.23 million dollars of foreign exchange from commercial banks at market rates in March while selling just 13 million dollars in the month.
Foreign currency reserves dipped 11 percent to 4.16 billion US dollars and reserves in Gold were 0.89 billion US dollars.

Central Bank’s Treasury bill holdings were up from 211.32 billion rupees in February to 233.32 billion rupees in March.

First Capital said in a research note that the sudden increase in the market liquidity towards the latter part of the month and renewed foreign and local buying interest resulted in yields dipping by 10-25bps specifically in the 2 year to 15 year bonds.

“Amidst the increasing activity, some selling pressure was observed during the last week of the month creating an overall net foreign outflow of 0.42 billion rupees in March 2017.”

“In spite of mid-long tenure yields dipping, a jump in the short tenure was observed.”

During the year up to 12 April 2017, Sri Lanka rupee has depreciated against the US dollar by 1.2 percent.

First Capital Holdings further highlighted that the money market continued to stay in deficit due to heavy foreign debt repayments.

Sri Lankan shares up 1 pct as foreign buying hits near 3-yr high

Reuters: Sri Lankan shares rose more than one percent to end at a six-month high on Wednesday as foreign investors increased the pace of stock purchases, with the net single-day inflow hitting its highest in nearly three years.

Foreign investors net bought shares worth 4.32 billion rupees ($28.42 million), led by buying in top lender Commercial bank of Ceylon on Wednesday, the highest since May 9, 2014, exchange data showed.

Commercial bank of Ceylon jumped 3.2 percent and accounted for about 84 percent of the day's turnover.

Overseas investors have bought equities worth a net 9.72 billion in 19 straight sessions, taking the year-to-date net foreign inflow into equities to 12.22 billion rupees.

The Colombo stock index ended 1.01 percent firmer at 6,446.80, its highest close since Oct. 21. The market his risen in 13 sessions out of 14.

The index has climbed 7.9 percent in the 14 sessions up to Wednesday.

"Renewed foreign buying interest is coming in. But still, we do not see local investors, except for a few retail investors," said Prashan Fernando, CEO at Acuity Stockbrokers.

Sri Lanka is in the process of raising up to $1.5 billion through sovereign bonds in the near future.

Turnover stood at 5.17 billion rupees ($34.01 million), the highest since Dec. 8 and more than three times this year's daily average of 863.7 million rupees.

Conglomerate John Keells Holdings Plc rose 1.1 percent, while private listed lender Sampath bank posted 3.7 percent growth on the day.

($1 = 152.0000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Vyas Mohan)

Sri Lanka Resus Energy buys firm with hydropower plant license

ECONOMYNEXT – Resus Energy, a Sri Lankan renewable energy company that owns and operates hydro power plants, said it bought a firm with approval for a small hydro power plant in Kegalle district for 20.3 million rupees.

A stock exchange filing said Resus Energy, formerly Hemas Power, had bought 45,005 voting shares, being the total issued capital of JB Power (Pvt) Ltd.

JB Power has approvals to develop a 700 kilowatt hydropower plant in the Kegalle district.

Resus Energy operates three hydropower plants with a capacity of 7MW.

Sri Lankan brewer invests in restaurants subsidiary

ECONOMYNEXT - Ceylon Beverage Holdings Ltd., a Sri Lankan brewer, said it invested more money in Pubs ‘N Places (Private) Ltd. (PNP), a fully owned subsidiary that owns and franchises out restaurants.

A stock exchange filing said Ceylon Beverage Holdings subscribed to 26 million shares in Pubs ‘N Places (Private) Ltd. at 10 rupees each, worth 261.9 million rupees, by capitalising part of the current account it has with its parent to infuse further share capital into PNP.

Ceylon Beverage Holdings is part of the Carson group that has a controlling stake in Lion Brewery (Ceylon) PLC, another Carson group firm.

Forex, regulatory controls delay overseas Sri Lankan hydropower investment

ECONOMYNEXT – An investment by a Sri Lankan firm to buy a minihydro power plant in Uganda has been delayed by foreign exchange controls and approval by the overseas electricity regulator.

Sri Lanka’s Vidullanka Plc said in a stock exchange filing that there is a delay in getting approval from the Exchange Control Department of Sri Lanka’s Central Bank and the Electricity Regulatory Authority of Uganda.

Vidullanka planned to issue new shares to Timex Garments (Pvt) Ltd. in a private placement to partly fund the acquisition of the Timex Bukinda Hydro (U) Ltd.

Timex Bukinda Hydro has got all approvals except a power purchase agreement for the 6.5MW Bukinda small hydro power plant.

But Vidullanka Plc said the proceedings of the proposed private placement of shares to Timex Garments to buy Timex Bukinda Hydro (Uganda) Ltd. will be delayed since regulatory approvals were pending.

Retail investors get full allotment in Sri Lanka’s RIL Property IPO

ECONOMYNEXT – Sri Lankan retail investors who applied for up to 12,500 or 100,000 rupees worth of shares in the share issue by RIL Property Limited (RIL) have been given full allotments, a stock exchange filing said.

It said 692 retail investors had applied for a total of 1.6 million shares in the initial public offer of RIL Property, the owner and operator of commercial office space in the Sri Lankan capital Colombo.

RIL Property offered 120 million ordinary voting shares in the IPO to raise 960 million rupees, with the issue being oversubscribed on opening day itself.

NDB Capital Holdings Limited (NCAP), the cornerstone investor in the IPO, which had committed to subscribe for up to 25 million shares worth 200 million rupees, had been allotted a minimum of 15 million shares.

Applications for up to 15 million shares, for which there were 114, will also be given 100 percent of the shares applied for, the statement said.

There were two applications for over 15 million shares who would be given the minimum 15 million shares plus 23 percent of the shares applied for above the minimum.

Tougher Sri Lanka stock exchange rules on qualified audit opinions

ECONOMYNEXT – Among proposed changes to the Sri Lankan stock exchange’s listing rules are tougher disclosure requirements on qualified audit opinions in company financial statements.

The proposed changes, on which public comments are invited, cover modified audit opinion and emphasis of matter on going concern, according to the Colombo Stock Exchange.

At present CSE listing rules do not contain any rules on action to be taken by the CSE in the event the audit opinion in the annual report is found to be a “modified audit opinion” or contains an “emphasis of matter on going concern”.

A modified audit opinion in the annual report would be a non-compliance with Rule 7.5 (a) of the CSE Listing Rules.

The CSE proposes a new rule on the Independent Auditor’s Report on the audited financial statements of listed firms which contains a qualified audit opinion.

Under the new rule, the listed firm must give to the CSE for public release an ‘impact report’ containing a detailed description on the impact of the audit qualification to the financial statements.

The impact report shall at a minimum contain cumulative impact on profit or loss, net assets, total assets, turnover/total income, earnings per share and any other financial item(s) which may be impacted due to qualified audit opinion, the CSE said.

Where the listed firm is a parent entity, the audit opinion must cover the financial statements of the group.

Listed companies will also be required make an announcement to the market via the CSE on the qualified audit opinion, stating remedial action adopted or proposed to resolve the matters set out in the qualified opinion.

Sri Lanka 03-month Treasury Bill yield at 9.73-pct

ECONOMYNEXT – Yields on Sri Lankan Treasury Bills edged up at Wednesday’s auction with the 03-month bill yield up one basis point to 9.73%, the public debt department of the Central Bank said.

The 06-month bill yield rose 02 basis points to 10.79% and the 01-year bill yield went up 02 basis points to 11.11%, a statement said.

The public debt department got bids worth Rs73 billion and accepted bids worth Rs21 billion.

Sri Lankan shares rise on foreign buying; blue chips gain

Reuters: Sri Lankan shares rose on Tuesday as foreign investors bought blue chips, with the market seeing overseas fund inflows for 18 consecutive sessions.

Foreign investors net bought shares worth 172.8 million rupees on Tuesday. They have bought equities worth a net 5.4 billion rupees ($35.57 million) in 18 straight sessions, taking the year-to-date net foreign inflow into equities to 7.9 billion rupees.

The Colombo stock index ended 0.5 percent firmer at 6,382.37 after falling on Monday for the first time in 12 sessions on profit taking.

The index had climbed 7.2 percent over 11 sessions up to Wednesday. The market was closed for Sri Lanka's traditional new year holidays on Thursday and Friday.

"Foreign buying is very strong at the moment which is a very good sign. Foreigners are bullish," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

"We expect short-term profit taking, but the market will gain after some strong inflows from sovereign bond (as it will lend support to the rupee)."

Sri Lankan authorities are in the process of raising up to $1.5 billion through sovereign bonds in the near future.

Turnover stood at 836.1 million rupees, more than this year's daily average of 775.6 million rupees.

Shares in top mobile phone operator Dialog Axiata gained 2.7 percent, while conglomerate John Keells Holdings Plc rose 1.1 percent.

($1 = 151.8000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Vyas Mohan)