Sri Lankan shares hit 2-month closing low on foreign selling

Reuters: Sri Lankan shares fell to a near two-month closing low on Friday on foreign selling, while investors waited for clarity on new taxes introduced in the national budget and on key legislations.

The Colombo stock index ended 0.66 percent weaker at 6,413.68, its lowest close since Sept. 26. The index fell 1.1 percent during the week, but is still up 3 percent for the year so far.

Turnover stood at 596.4 million rupees on Friday, less than this year’s average of around 953.3 million rupees.

“It is turning into a typical year-end market. But, we expect to see foreign activity supporting the market. They see value in some select shares,” said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

Foreign investors net sold equities worth 117.5 million rupees ($764,476) on Friday, but they have bought a net 18.4 billion rupees worth of stocks so far this year.

Top fixed-line phone operator Sri Lanka Telecom fell 5.4 percent and Lion Brewery Ceylon Plc lost 4.9 percent, dragging the overall index down.

Analysts said political worries over delay in local government polls and a lack of clarity over budget and two other key policy measures also weighed on sentiment.

A court on Wednesday issued a stay order on a legislation that cleared the island nation’s Election Commission to hold local government polls in which the coalition partners of the government have decided to contest separately.

Finance Minister Mangala Samaraweera imposed new taxes on motor vehicles, telecoms, banks and liquor in the 2018 budget presented earlier this month, with the final budget vote scheduled for Dec. 9.

Analysts said market participants have sought more clarity on these taxes and that there could be some amendments to these proposals before the final vote.

The government also released gazette notifications on the Inland Revenue Act and the Exchange Control Act, with investors waiting for clarification on the new legislations. 

($1 = 153.7000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Vyas Mohan)

Amana Takaful Group nets Rs.128.5 mn pre-tax profit in 3Q

Amana Takaful Groups’ growth and profit momentum continued into the 3rd Quarter netting in a pre-tax result of Rs. 128.5 million for the period ending September 2017. This compares with a loss of Rs 96.5 million in the same period last year.

With a modest 7% upside on Gross Written Premium(GWP) of Rs. 2.8 billion for the 9 months, the re-structured group has been able to harness a return of Rs. 285 Million on its investment assets in a relatively lackluster environment. Amana Takaful PLC, Amana Takaful Life PLC and Amana Takaful Maldives have all positively contributed to this performance.

“Steering a delicate balance of Portfolio restructure, a selective Under-writing & prudent risk appetite, tight productivity measures together with a robust claims management ethos, the Group is better positioned now to meet and exceed stakeholder expectations,” Group Chairman, Tyeab Akbarally said.

Amana Takaful PLC generated a GWP of 1.32 billion, 10% ahead over the corresponding period in 2016. The profit efore tax out-turn of Rs.46 million compares with a loss of Rs 111 million in 2016. A better than expected performance of 32% on the non-Motor classes, Medical and Micro Takaful segments totally mitigated the downside in motor revenue. Claims on account of the recent flood were disbursed on time and in full. Motor loss ratios improved significantly to 58% vs 76% a year ago. Performance of the company’s new product lines has been exemplary.

The combined ratio has improved markedly to 102% from 118% a year earlier. Following a conscious decision to re-align its portfolio strategy, Amana Takaful Life PLC, listed on the CSE in August 2016, more than doubled its profit to Rs. 32 Million in the nine months to September, from the previous period’s result of Rs. 14 Million.

On account of phasing out a product line, the total GWP in the nine months is 95% of the previous year. However, the long term endowment life plans continue to grow in line with expectations, boosting the Life Fund by 11%.

The off-shore operation Amana Takaful Maldives PLC, the only listed entity among industry players in the Maldives Stock Exchange, chugged along steadily with 7% growth in GWP, 61% upside in profit before tax compared to the previous year, while defending its market share despite the advent of new competition. Hereto, new product lines have delivered promising performance. Productivity measures have mitigated the rise in re-takaful expenditure and an upsurge in claims cost.

Both Amana Takaful PLC and Amana Takaful Maldives PLC emerged winners of the Gold Award for single entity Takaful operators at the recent Islamic Finance Forum for South Asia.
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