Sri Lankan shares extend gains on foreign inflows

Reuters: Sri Lankan shares ended at their highest level in over a year as foreign investors continued to buy blue chips after an annual trade concession worth $300 million from the European Union (EU) added fuel to a rally that started towards the end of March.

Index heavyweight John Keells Holdings Plc ended almost one percent higher on foreign buying. The benchmark index has risen nearly 11 percent since March 31.

The EU on Tuesday said Sri Lanka has regained a lucrative trade concession, mainly for its top exports garments.

The Colombo stock index ended 0.39 percent firmer at 6,718.34, its highest close since Jan. 8, 2016.

Turnover stood at 1.75 billion rupees ($11.48 million), well above this year's daily average of 899.5 million rupees.

"Foreign interest is continuing in blue chips," said Atchuthan Srirangan, a senior research analyst at First Capital Holdings PLC.

Foreign investors net bought shares worth 902.6 million rupees, extending the year-to-date net foreign inflows to 18 billion rupees.

Reduction of 11-38 basis points in T-bill yields in the last four weeks, stable currency on expectation of inflows from foreign borrowing, and an IMF statement on the disbursement of the third tranche of a $1.5 billion loan, have helped boost sentiment, analysts said.,,

Shares in Ceylon Cold Stores Plc rose 4.4 percent while Ceylon Tobacco Company Plc rose 1.4 percent and John Keells Holdings Plc gained 0.9 percent. 

($1 = 152.4000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)

Sri Lanka to receive GSP+ concessions from May 19

Rigorous monitoring of Sri Lanka’s conduct on 27 international conventions

By Sanath Nanayakkare

The European Union will remove a significant part of the remaining import duties on Sri Lankan products entering the EU market with effect from May 19 in exchange for the country's commitment to ratify and effectively implement some 27 international conventions it has signed up to.

The Delegation of the European Union to Sri Lanka and the Maldives told the media in Colombo yesterday that as is the case for all countries benefiting from GSP Plus, the removal of customs duties for Sri Lanka would be accompanied by rigorous monitoring on an annual basis of Sri Lanka's commitment to implement 27 international conventions on human rights, labour conditions, protection of the environment and good governance.

"Granting access to the GSP+ scheme does not mean that the situation of the beneficiary country with respect to the 27 international conventions is fully satisfactory. Instead, it offers the incentive of increased trade access in return for further progress towards the full implementation of those conventions, and provides a platform for engagement with beneficiaries on all problematic areas. If we looked for perfect compliance with these international conventions, no country on earth would receive the GSP+ concessions, the EU said.

The granting of EU concessions involves the full removal of duties on 66% of tariff lines, covering a wide array of products, including textiles and fisheries. The removal of duties will come into force a day after publication in the official Journal of the European Union, of the restoration of GSP Plus, which is expected to be on Friday, this week.

Trade Commissioner Cecilia Malmström said, "Granting GSP+ to Sri Lanka aims to provide the opportunity to develop further economically, including creating more and better jobs for all Sri Lankans, on a sound foundation that advances human and labour rights, and in a manner that is environmentally sustainable. It is also a vote of confidence from the European Union that the Sri Lankan government will maintain the progress it has made in implementing the international conventions. At the same time, no one is pretending that the situation is perfect. The process of replacing the Prevention of Terrorism Act still needs to be completed. There are still too many incidents of torture, there are still children being forced into marriage, there are still laws that discriminate against sections of Sri Lankan society. We want to see an end to these practices.

The EU will work closely with the government and Non-Governmental Organisations to rigorously monitor progress."

"If Sri Lanka continues to make necessary progress, then the country has the chance to benefit from the scheme until it achieves Upper Middle Income country status for three consecutive years. On current trends, that should mean that Sri Lanka will benefit from GSP+ until at least 2021. The EU is Sri Lanka's biggest export market, accounting for nearly one-third of Sri Lanka's global exports. In 2016, total bilateral trade amounted to almost €4 billion, and EU imports from Sri Lanka amounted to €2.6 billion. The removal of import duties will provide a total of immediate benefits worth in excess of EUR 300 million a year. The value of the scheme could be worth many times more, particularly if Sri Lanka uses the opportunity to diversify its economy, the EU Delegation in Colombo said.

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