Sri Lankan shares hit more than 6-mth closing high

Reuters - Sri Lankan shares hit a more than six-month closing high on Thursday as retail investors too joined a market rally led by heavy foreign buying over the last 20 sessions.

Foreign investors net bought 697.5 million rupees worth equities on Thursday, after buying a net 4.32 billion rupees ($28.42 million) worth of shares on Wednesday, the highest since May 9, 2014, exchange data showed.

Foreign investors have bought equities worth a net 10.42 billion in 20 straight sessions, taking the year-to-date net foreign inflow into equities to 12.9 billion rupees.

On Thursday, the Colombo stock index ended 0.9 percent firmer at 6,505.28, its highest close since Oct. 12.

The index has climbed 8.9 percent in the 15 sessions up to Thursday, having risen for 14 outs of 15 sessions so far.

"Foreigners are buying in large quantities and we saw some retail investors also buying stocks in a gradual manner," said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

"The bullish run will prevail if the central bank can maintain the interest rate at the current level."

The central bank last month raised the key policy rates by 25 basis points.

Turnover stood at 1.44 billion rupees ($9.48 million), more than this year's daily average of 863.7 million rupees.

Large cap Nestle Lanka PLC jumped 3.8 percent, while top mobile phone operator Dialog Axiata closed 3.5 percent firmer.

($1 = 151.9500 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Biju Dwarakanath)

Sri Lanka's Dialog Telecom, customers pay Rs317bn to state

ECONOMYNEXT - Sri Lanka's Dialog Telecom paid income taxes and levies of 31.7 billion rupees to the state, on net revenues of 86.7 billion rupees, data published by the firm said.

The firm itself paid 10.7 billion rupees in fees and levies to the government Dialog Chief Hans Wijayasuriya told shareholders in the annual report.

Dialog pays income taxes at a 2 percent of revenue under a long term deal with the Board of Investment concession, which can be a high rate of taxation in a low margin business or a low rate in a high margin business.

Telecom firms also pay frequency fees to the Telecom regulator.

The group reported 1.5 billion rupees of corporate tax and pre-tax profits of 10.5 billion rupees, up from 6.7 billion rupees a year earlier. The core telecom firm reported pre-tax profits of 11.9 billion rupees.

Turnover taxes of 21 billion rupees on revenues of 86.7 billion rupees indicates that telecom users pay around 24 percent in turnover taxes in a country with maximum 15 percent value added tax rate.

Sri Lanka's current administration ratecheted up taxes on telecom firms in what was called 'revenge taxes' undermining the country's standing as a safe destination for investment.

Sri Lanka's telecom sector became a tax cash cow for the government following de-regulation and privatization of the sector under then Telecom Minister Mangala Samaraweera.

Samaraweera broke a state monopoly in fixed services and licenses more mobile players. Telecom privatization ended 10-year waiting lists, as well as low call connection rates in a congested network.

Prices initially spiked amid tariff rebalancing involving slashing of global termination fees, and fell amid increased competition later.

Indra Silva sells 3.5% COMBank stake for Rs. 4.3 b; foreigners buy

* Foreign net inflow tops Rs. 12 b year-to-date with Rs. 10 b coming in the past 19 market days

High networth investor and Indra Traders Chairman Indra Silva yesterday sold 3.5% stake in Commercial Bank, the largest non-state entity, for Rs. 4.3 billion, with several institutional foreign investors collecting quantities.

Deals on 29.7 million shares of COMBank worth Rs. 4.3 billion were done at the Colombo stock market yesterday, boosting its turnover to Rs. 5.17 billion, the highest since 8 December and more than three times this year’s daily average of Rs. 863.7 million.

Net foreign buying yesterday was the highest since 9 May 2014, and boosted the year-to-date inflow to Rs. 12.22 billion. Of that nearly Rs. 10 billion had come within the past 19 consecutive market days. COMBank shares closed at Rs. 139.70, up Rs. 4.40 or 3.25%.

Prior to yesterday, Silva was the largest individual shareholder and second largest of COMBank with a 9.91% stake.

Analysts believe Silva sold partly to book profit as well as reinvest in the 1 for 10 Rights Issue of COMBank at Rs. 113.60 each (Voting share).

The XR date of COMBank shares is 22 May with the last date for acceptance and payments being 12 June. Silva will need only Rs. 940 million to fully subscribe for his quota of Rights. Overall positive sentiments yesterday boosted the All Share Index by 1%, helping to close at a level, the highest since 21 October. The market has risen in 13 sessions out of 14. The index has climbed 7.9% 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,” Acuity Stockbrokers CEO Prashan Fernando was quoted as saying by Reuters.

NDB Equities said both ASPI and S&P SL20 closed in green due to price gains in counters such as John Keells Holdings, Commercial Bank and Sampath Bank.

It said crossings were witnessed in Commercial Bank, John Keells Holdings and Sanasa Development Bank, accounting for 84.5% of turnover.

Mixed interest was observed in Tokyo Cement Company nonvoting and Sampath Bank while retail interest was noted in Teejay Lanka.

Meanwhile, foreigners remained active, closing as net buyers mainly due to foreign purchases in Commercial Bank. Total foreign purchases accounted for 90.9% of turnover.

The Banks, Finance and Insurance sector was the top contributor to the market turnover (due to Commercial Bank and Sampath Bank) whilst the sector index gained 1.48%. The share price of Sampath Bank increased by Rs. 9.60 (3.69%) to close at Rs. 269.90. The Telecommunications sector was the second highest contributor to the market turnover (due to Dialog Axiata) whilst the sector index increased by 1.33%. The share price of Dialog Axiata gained Rs. 0.10 (0.87%) to close at Rs. 11.60.

John Keells Holdings and Tokyo Cement Company nonvoting were also included amongst the top turnover contributors. The share price of John Keells Holdings moved up by Rs. 3.00 (1.98%) to close at Rs. 154.70. The share price of Tokyo Cement Company nonvoting recorded a gain of Rs. 0.90 (1.53%) to close at Rs. 59.90.

SC Securities said Vallibel One gained by 7.56% to Rs. 18.50 and LOLC by 4% to Rs. 76.80. “Out of the 222 counters traded, 27 companies declined while 145 companies closed higher,” it added.

Continuing its trailblazing performance, Commercial Bank in 2016 reported profit before income tax of Rs. 20.051 billion, marking the end of a spectacular year in which it made history as the first private bank in Sri Lanka to surpass a trillion rupees in assets. Loan book and deposits both grew by more than Rs. 100 billion in 2016.

Commercial Bank will be raising Rs. 10 billion via its Rights Issue to boost its Tier 1 Capital and facilitate future business growth of the bank.
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