EPF follows streamlined methodology in investing in CSE and Unit Trusts

By Bandula Sirimanna

The Employees Provident Fund (EPF) has been directed to follow a transparent and standardised methodology in making investments in Colombo Stock Exchange (CSE) and Unit Trusts following an evaluation made during a period of seven years from January 1 – 2010 to December 31 – 2016.

The criteria followed by the fund and operating procedures accepted by the fund when purchasing or selling unit trusts and which quotes were called from the public had been investigated during the evaluation, Labour Ministry sources revealed.

The establishment of accepted operating procedures for the sale or purchase of unit trusts for which bids are called by private limited companies and at the Colombo Stock Exchange has also been taken into consideration during this 7-year period, a senior official of the ministry told the Business Times.

The basic information pertaining to the buying and selling of shares of companies such as Ceylon Grain Elevators, Vallible One, Central Finance, Hotel Galadari, Hotel Lighthouse, Laughs Gas, Dimo, Browns, LOLC, Sri Lanka Capital Holdings and The Finance Co. had been vigorously scrutinised.

The aim was to find out as to whether the EPF had violated any law of the Colombo Stock Exchange or Securities and Exchange Commission when engaging in the transaction of shares, especially in the transactions related to buying and selling of shares of commercial banks, he said.

Capital losses or gains sustained as a result of those transactions and details of officers who issued orders for the purchase/sale of unit trusts and details of officers who carried out those transactions as well as the transaction values of the EPF during the seven period have been compiled.

These details are to be submitted to the Committee on Public Accounts for its consideration, he disclosed.

However with the introduction of new methodology all investments are now being made with the approval of an Investment Committee while the Monetary Board’s prior approvals were obtained for investments outside government securities.

The ministry’s Risk Management Department has been entrusted with the responsibility of overseeing the investment activities of EPF and formulates risk parameters for investments including revision of the investment and trading guideline, he added.

Some of the investments by the government’s two funds (EPF and ETF) during the former regime were made in companies that were not doing too well, raising questions from the then opposition.

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Union Bank: 37% growth in post-tax profit in 1Q18

Union Bank has reported a pre-tax profit and VAT of Rs 246 million in the first quarter 2018, up by 47 per cent from the same 2017 quarter, the bank said in results released to the market.

“A significant growth in core banking operations contributed to the robust performance of the bank during the period under review, while prudent cost and revenue management drove growth in profits over the corresponding period in 2017,” it said.

Fee and commission income which mainly comprises of deposit related fees, trade and remittances, loans, cards and other fees increased by 18 per cent to Rs. 224 million
“A strong performance by the Treasury function resulted in capital gains of Rs. 69 million against Rs. 11 million in the corresponding period last year. Total operating income rose to Rs. 271 million,” the statement said.

Post-tax profit was up by 37 per cent to Rs. 130 million.

The group, comprising the bank and its two subsidiaries, UB Finance Company Ltd and National Asset Management Ltd reported a post-tax of Rs. 154 million, up by 28 per cent year-on-year.

Commenting on the latest results, Union Bank’s Director/CEO Indrajit Wickramasinghe said, “strengthened by its three-year growth strategy, Union Bank is now ready to take on the next phase of its expansion and growth”.

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Sri Lanka's Chevron Lubricants revenue, profits slide continues to 2018

ECONOMYNEXT - Sri Lanka's Chevron Lubricants profits fell 15 percent to 697 million rupees in the March 2018 quarter from a year earlier, while revenues slid 4 percent on top of a 9 percent drop last year, interim accounts showed.

The firm reported earnings of 2.91 rupees per share. The stock closed at 91.30 rupees, down 1.40 on Friday.

Revenues fell 4 percent to 2.97 billion rupees in the quarter, while cost of sales were flat at 1.71 billion rupees, and gross profits fell 10 percent to 1.26 billion rupees.

Chevron Lubricants is the former monopoly lubricant unit of state-run Ceylon Petroleum Corporation which was privatized to Caltex which later merged with Chevron Corporation.

After an import monopoly ended, the firm also enjoyed a blending monopoly, at the expense of consumer sovereignty.

Now there are three blending plants in the island, leading to competition.

Chevron told shareholders in the annual report that volumes fell 10 percent last year, amid competition and weaker purchasing power after a drought and inflation ate away at income, especially in the retail segment.

Sri Lanka sells 5-year dollar bonds for 5.65-pct

ECONOMYNEXT - Sri Lanka has sold 20.2 million US dollars of 5-year securities styled Sri Lanka Development Bonds at a fixed rate of 5.6563 percent and 20 million 4-year bonds at 5.5575 percent, the state debt office said.

The tradable bonds are mostly targeted at domestic banks and investors qualified to hold dollar assets.

The debt office also sold 7.5 million dollars of 2-year fixed rate bonds at 5.2 percent. The settlement is on May 01.

The debt office called offers for 100 million dollars of bonds.

It got bids of 7.56 million dollars for 2 year fixed bonds. It also got 95.77 million dollar in bids for 2-year floating and, and 218 million dollars for 3 year floating, which were not accepted. There were no bids for 3 year fixed rates.

There were 30 million dollars of orders for the 4-year bonds and 30.02 million dollars for 5-year bonds.

Sri Lankan stocks edge up on buying in blue chips

Reuters: Sri Lankan shares ended slightly firmer on Friday with block deals in blue chips pushing up the day’s turnover to a more than three-week high, although political uncertainty dampened investor appetite for risk assets, stockbrokers said.

The market has been waiting for signs of political stability after President Maithripala Sirisena suspended parliament until May 8. A cabinet reshuffle was expected on Monday, but government sources said it had been delayed.

Fitch Ratings said on Thursday that recent political developments in Sri Lanka have created some uncertainty over reform momentum and fiscal consolidation, and prolonged upheaval could undermine investor confidence ahead of large external debt maturities in 2019-22.

The Colombo stock index ended 0.14 percent firmer at 6,531.06. The index lost 0.15 percent on week.

Shares of Distilleries Company of Sri Lanka Plc closed 4.3 percent higher, while Lanka ORIX Leasing Company Plc rose 1.6 percent.

Conglomerate John Keells Holding Plc, which accounted for 58.8 percent of the day’s turnover, ended down 0.1 percent.

“Today, we saw a large turnover after long time coming from some crossings (block trades) in some blue chips. Other than that there were no big trades as most of the investors are still on the sidelines,” said Atchuthan Srirangan, assistant manager - research at First Capital Holdings PLC.

“The investors are still on the sidelines waiting to see the direction of the prevailing political uncertainty and the rupee currency.”

Turnover stood at 971.9 million rupees ($6.17 million), the highest since April 4, but less than this year’s daily average of 1.1 billion rupees.

Foreign investors sold shares worth a net 53 million rupees on Friday, extending the year to date net foreign outflow to 938.6 million rupees worth of equities so far this year.

Stock, bond and foreign exchange markets are closed on Monday for a public holiday and markets will resume trading on Tuesday. 

($1 = 157.6000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)

Sri Lankan stocks slip as political uncertainty continues; banks weigh

Reuters: Sri Lankan shares edged down in dull trade on Thursday and settled near their lowest close in more than one week hit earlier in the week as continued political uncertainty dampened sentiment, stockbrokers said.

The market has been awaiting signs of political stability after President Maithripala Sirisena suspended parliament until May 8. A cabinet reshuffle was expected on Monday, but government sources said it had been delayed.

Fitch Rating agency on Thursday said that recent political developments in Sri Lanka have created some uncertainty over reform momentum and fiscal consolidation, and prolonged upheaval could undermine investor confidence ahead of large external debt maturities in 2019-22.

The Colombo stock index ended 0.18 percent weaker at 6,521.74. The index gained 0.88 percent last week.

“Market is down because of a fall in banking shares,” said Dimantha Mathew, head of research, First Capital Holdings.

“Most of the investors are still on the sideline due to the prevailing political uncertainty.”

Turnover stood at 390.2 million rupees ($2.47 million), around a third of this year’s daily average of 1.1 billion rupees.

Foreign investors bought shares worth a net 2.9 million rupees on Thursday, but they have been net sellers of 885.7 million rupees worth of equities so far this year.

Shares of Lanka ORIX Leasing Company Plc fell 3.1 percent while Chevron Lubricants Lanka Plc ended 4.6 percent weaker.

Biggest listed lender Commercial Bank of Ceylon closed 0.1 percent down and Carson Cumberbatch Plc lost 2.8 percent. 

($1 = 157.7000 Sri Lankan rupees) 

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

CSE requests clients of barred broker firms to transfer their stocks

LBO – Colombo Stock Exchange on Tuesday requested the clients of stockbroker firms whose trading activities have been prohibited due to non-compliance, to transfer their securities portfolios to any other firm if they want.

The CSE further revealed that these barred broker firms will only be permitted to resume all trading activities no sooner they comply with the Minimum Capital Adequacy Requirements and Minimum Shareholders’ Fund Requirement, as applicable.

The following four stockbroker firms have been prohibited from carrying out trading activities due to non-compliance with Rule 5.1.1 and Rule 5.2.1 of the stockbroker rules.

Renuka Tower mixed development project begins in Sri Lankan capital

ECONMYNEXT – Sri Lanka’s Renuka Holdings group said one of its subsidiaries had started construction work on a high rise mixed development property in which equity investment will be over Rs3.2 billion, partly funded by a foreign investor.

The subsidiary, Galle Face Properties Ltd. had started construction work on the 32-storey ‘Renuka Tower’ in the Colombo 3 ward on 22 April, a stock exchange filing said.

The mixed development project will have ‘A grade’ office space, office amenities, service suites, recreational areas and ample parking, it said.

It is situated between Beira Lake and the Galle Face Green esplanade.

The project will be funded with a mix of debt and equity, with part of the latter coming from a prospective overseas investor, the company said.

Sri Lanka 01-year Treasuries yield falls to 9.59-pct

ECONOMYNEXT – Sri Lankan Treasury Bill yields fell again at an auction Wednesday with the one-year Treasury Bill yield down 06 basis points to 9.59% from 9.65% last week, data from the state debt office showed.

The debt office accepted 25 billion rupees in bids from the market for the one-year bills, after offering only 20 billion rupees of bills and getting bids worth almost 70 billion rupees.

Bids for 5.0 billion rupees of 6-month bills were rejected but the debt office accepted 3.0 billion rupees in 3-month bills, the same amount offered, with its yield dropping 05 basis points to 8.10%.

Sri Lanka’s Bogala Graphite back in profit in March quarter

ECONOMYNEXT – Sri Lankan graphite miner Bogala Graphite bounced back into profit in the March 2018 quarter with net earnings of Rs44 million from a loss of Rs4.2 million the year before when the mine was closed after a fatal accident.

Sales of the firm, controlled by Germany's Graphit Kropfmuhl Gmbh, rose 25% to Rs224 million in the period, according to interim results filed with the stock exchange.

Bogala Graphite Lanka had made a loss of Rs.17.1 million in 2017 as the mine was closed from January to June 2017 after a mine worker died and also because of the cost of an early retirement scheme to shed staff.

Sri Lankan stocks gain on foreign buying

Reuters: Sri Lankan shares edged higher on Wednesday from their lowest close in more than one week as foreign buying provided some support to the market amid continued political uncertainty, stockbrokers said.

Foreign investors bought shares worth a net 315.9 million rupees ($2.0 million) on Wednesday, but they have been net sellers of 999.5 million rupees worth of equities so far this year.

The market has been awaiting signs of political stability after President Maithripala Sirisena suspended parliament until May 8. A cabinet reshuffle was expected on Monday, but government sources said it had been delayed.

The Colombo stock index ended 0.26 percent firmer at 6,533.63, edging up from its lowest close since April 16 hit on Tuesday. The index gained 0.88 percent last week.

“High level of foreign interest in banking shares such as Sampath Bank helped the index,” said Dimantha Mathew, head of research, First Capital Holdings.

“We have also seen some interest in blue chips after a while.”

Turnover stood at 845.4 million rupees, less than this year’s daily average of 1.1 billion rupees.

Shares of conglomerate John Keells Holdings Plc rose 1.9 percent, while Ceylon Cold Stores Plc ended 3.2 percent firmer.

Distilleries Company of Sri Lanka Plc closed 2.4 percent higher and Sampath Bank gained 1.3 percent. 

($1 = 157.6000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

Sri Lankan stocks end weaker; cabinet reshuffle awaited

Reuters: Sri Lankan share index ended marginally lower in thin trading on Tuesday as continued political uncertainty dampened sentiment, stockbrokers said.

The market has been awaiting signs of political stability after President Maithripala Sirisena suspended parliament until May 8. A cabinet reshuffle was expected on Monday, but government sources said it had been delayed.

The Colombo stock index ended 0.13 percent weaker at 6,516.71, its lowest close since April 16. The index gained 0.88 percent last week.

Turnover stood at 356.8 million rupees ($2.3 million), less than a third of this year’s daily average of 1.2 billion rupees.

Shares in Ceylon Tobacco Company Plc fell 1 percent, while Distilleries Company of Sri Lanka Plc closed 2.3 percent down and Softlogic Holdings Plc ended 4.0 percent weaker.

Foreign investors sold shares worth a net 25.8 million rupees on Tuesday, but they have been net sellers of 1.2 billion rupees worth of equities so far this year. 

($1 = 156.8500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

Sri Lankan stocks hit 1-week low; all eyes on cabinet reshuffle

Reuters: Sri Lankan share index ended marginally weaker on Monday, hitting a one-week closing low, as investors awaited fresh cues as a new cabinet is expected to be sworn in this week, stockbrokers said.

The market has been waiting for some political stability after President Maithripala Sirisena suspended parliament until May 8, brokers said. The cabinet reshuffle was expected on Monday, but government sources said it has been delayed.

The Colombo stock index ended 0.24 percent weaker at 6,525.17, its lowest close since April 16. The index gained 0.88 percent last week.

“The sentiment has not yet improved. The market is awaiting the cabinet reshuffle to see some political stability,” said Prashan Fernando, CEO at Acuity Stockbrokers.

Turnover stood at 554.8 million rupees ($3.54 million), around half of this year’s daily average of 1.1 billion rupees.

Shares in Distilleries Company of Sri Lanka Plc fell 2.7 percent while Ceylinco Insurance Plc ended 2.3 percent weaker and Cargills (Ceylon) Plc closed 1.2 percent down.

Foreign investors bought shares worth a net 100.5 million rupees on Monday, but they have been net sellers of 1.2 billion rupees worth of equities so far this year. 

($1 = 156.7000 Sri Lankan rupees) 

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

Resus Energy gears to feed more power to national grid

Hydro electricity is the oldest and the principal source of electricity generation in Sri Lanka. Its unique geography renders the country perfectly suited for hydropower generation through large scale and mini hydropower plants. Joining the latest technologies with an environmentally responsible business proposition to generate renewable and sustainable energy, Resus Energy PLC operates several such mini hydropower plants in Sri Lanka.

While increasingly supporting the national effort to develop renewable energy resources in Sri Lanka, Resus Energy PLC last week acquired Sierra Power (Pvt) Ltd and is currently developing its hydropower project in the Nuwara Eliya district. Fed by the Madulla Oya, the project will feed an estimated 2 MW to the national grid.

The Company is also currently developing two more mini hydro power projects, both in their construction stages; the Ranwala Oya Project in the Kegalle district and Hulu Ganga Project in the Kandy District, both of which are estimated to contribute up to 700 KW and 1.9 MW respectively.

As a company that is truly interested in the people and the planet in pursuit of its primary business goals, Resus Energy PLC, believes in creating a shared value that benefits all its stakeholders. Towards this end, we consistently strive to make sure that our carbon footprint remains at an absolute minimal level even as we scale up on our operations. Resus Energy PLC gives priority to ensure that none of its operations have negative impacts on the environment, said Managing Director of Resus Energy PLC, Kishan Nanayakkara.

In the recent past Resus Energy PLC completed two more mini hydropower projects in its continuing efforts to further increase its supply to the national grid. In 2016 was the Gomale Oya mini hydropower project in Maliboda, and in 2017 was the Moragaha Oya mini hydropower project in Kandy, both generating an additional 1.4 MW and 1.5 MW respectively to the grid.

We take great pride in our hydropower generation operations and in our ability to transmit over 30GWh of electricity to the national grid that eventually powers our nation. We take great responsibility in harnessing renewable and sustainable energy and to also ensure that all our projects have little or no impact on the environment. We intend to work very hard towards more efficient extraction of power and use sustainable technology as available to do so in the future, Nanayakkara added.

Resus Energy PLC took its initial steps in renewables in 2007 with the development of 2.0MW Giddawa mini hydropower project in Teldeniya using water from the HuluGanga.

This was followed in 2010, with the acquisition 2.6MW Upper Agra Oya mini hydropower project in Lindula.

In 2011 it developed and commissioned the 2.4MW Upper Magal Ganga hydropower project in Maliboda,

While the core growth strategy of Resus Energy PLC is centred around hydropower, the company has also been consistently exploring other renewable energy sources such as solar power, wind power and biomass. Resus Energy PLC has been awarded the rights for two 01 MW each solar power plants feeding into the Ampara grid substation under the CEB’s Sooraya Bala Sangramaya Phase 1, that it is currently under pre-development stage.

Over the last few years Resus Energy PLC has been consistently recognised for its successful efforts. The company won in the Bronze category at The National Green Awards (Okanda Power Grid Pvt. Ltd.) for the Upper Magalganga Hydropower Power Project in 2017. It also won Silver at the CA Sri Lanka Annual Report Awards in 2015, 2016 and 2017, and, was a Runner Up in the SME Category at the ACCA Sustainability Reporting Awards in 2017.

Designed and developed using expert local knowledge, the latest technology and a true passion for nature conservation, Resus Energy projects are all planned and executed sustainably and responsibly. All project development budgets also include a considerable portion to develop the surrounding communities of each project.

Resus Energy PLC has provided infrastructural development to public properties, scholarship funds, community programs and employment to the surrounding communities of its projects. As a forerunner in renewable and sustainable energy and, focussed and efficient innovations, Resus Energy PLC is well placed to contribute more towards powering the nation in the future.

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Richard Pieris Finance to merge with Chilaw Finance

LBO - Sri Lanka’s Richard Pieris Finance Ltd, will merge with Chilaw Finance PLC.

The merger will see Richard Pieris Finance Ltd. asset base grow by 16 billion rupees with a projected growth of 1.7 billion rupees Profit Before Tax by 2020.

It will also see a rapid expansion of its branch network and will double its customer base.

Chevron optimistic of delivering shareholder value despite stiff competition

Although Chevron Lubricants PLC, among the higher dividend payers quoted on the Colombo Stock Exchange, had seen after-tax profits fall 26% last year to Rs. 2.565 billion, in an environment of intense competition in the lubricants market, both the company’s chairman, Mr. Rochna Kaul, and MD CEO Kishu Gomes were cautiously optimistic of the future.

Kaul attributed the decline in net earnings mainly to margin erosion as a result of increased input costs and decline in volumes due to intense competition. He noted in the company’s recent annual report that the company had declared and paid three interim dividends totaling to Rs. 10 per share and a fourth interim dividend of Rs. 2.25 per share was declared last February.

He expected competition in lubricants to further increase with the anticipated issue of licenses to new entrants remarking that the lack of an effective mechanism to control illegal operators in the industry remains. But due to the strength of their brand and access to technology advanced products, he expressed optimism that "we will be able to deliver shareholder value."

Kaul also commented favorably of the launch of a public awareness campaign by the ministry during the last quarter of 2017 to educate consumers in "choosing lubricant products cautiously without falling prey to gray market products."

Gomes described 2017 as a challenging year for Chevron with profits dipping 26% from the previous year when they were able to capitalize on favorable input costs.

"The steep rise in base oil costs, compounded by the depreciation of the LKR against the USD and the gradual increase in commodity prices, caused a significant inflationary pressure on costs during the year," he said.

While distribution costs increased substantially compared to the previous year particularly due to the 0.5% increase in the lubricant license fee (subject to a Rs. 10 million cap) to 0.75% resulting in the fee going up from Rs. 10 million to Rs. 74 million.

They had increased prices to counter mounting cost pressure but this strategy was not effective in the retail market with consumer disposable income depressed by rising inflation. Adverse weather due to prolonged drought and floods had affected several districts disrupting regular momentum of economic activities and also curtailed lubricant consumption.

They had responded to intense price competition and had achieved some volume gains during the latter part of the year but at the expense of lower margins.

But there were some noteworthy successes like a toll blending arrangement with YAMAHA to blend and supply that brand genuine oil under the YAMALUBE brand to be sold via the local YAMAHA distributor. They also had an agreement with Abans Auto to blend and supply motorcycle oils co-branded with Havoline. Among other wins, they had contracted into supplying oils to power plants.

Focus on export markets had had continued with exports to Bangladesh growing and exports to the Maldives sustained.

Commenting on the outlook, Gomes said that the country’s lubricant industry was mature and competitive with 13 players and three blending plants operating with excess capacity. The government "may" issue additional licenses during the year, further changing the competitive landscape.

"While the company has access to latest product innovations and robust channel strategy, our ability to command the right price and influence customers to purchase packed products rather than loose sales will largely determine our future profitability," he said. "Sustained growth in the export markets will also be crucial for our success."

The directors of the company are RM Kaul, Kishu Gomes, Teek Hong Kee, Deva Rodrigo, Harsha Amarasekera and Anura Perera.

www.island.lk

Due diligence continues on possible sale of Weligama Marriot

Financial and legal due diligence by HPL Hotels and Resorts (Pte) Ltd. Of Singapore regarding the possible acquisition of the new Marriot Hotel in Weligama has not yet been finalized, East West Properties PLC said in a Stock Exchange filing on Friday

East West which was responding to an April 11 inquiry on this matter said that they will inform the CSE of the outcome of this due diligence once the process is completed.

A stock exchange filing in early March said East West Properties had signed a letter of intent to sell 72% of the shares of Weligama Hotel Properties Ltd. to HPL Hotels and Resorts Pte Ltd Singapore.

Weligama Hotel Properties Ltd built the Marriott Weligama Bay Resort & Spa, situated in Weligama Bay, a popular tourist resort.

The resort is the first in Sri Lanka to be managed and branded by Marriott, the international hotel operator. HPL Hotels & Resorts has also made a proposal to invest in and upgrade the colonial-era Grand Oriental Hotel (GOH) overlooking Colombo port.

www.island.lk

Sampath follows 2017 practice in allotting additional shares in 2018 rights issue

Applicants get up to 2,100 shares plus very small percentage of balance sought

Sampath Bank’s rights issue of approx. 50.13 million shares allotted in the proportion of three for 13 shares held at a price of Rs. 250 per share has been fully subscribed with applications for additional shares comfortably absorbing the lag of unsubscribed shares.

"Refund cheques for additional share applications that could not be accommodated were sent out last week," a broker said. "Each applicant for additional shares was allotted up to a maximum of 2,100 shares and a very small percentage of the balance."

Analysts noted that with large applications for additional shares over and above entitlements coming in from many shareholders, the bank which followed the scheme of allotment utilized in the rights issue in November last year could not allot as many shares per applicant as last time.

"While up to 9,000 shares per applicant for additional were accommodated last time, this time it was possible only to allot up to a maximum of 2,100 shares plus a very small percentage of the balance," an analyst said.

Over and above the ceiling of 2,100 a small fraction of the balance sought was granted. "I got 36 shares on that account after applying for 10,000," one subscriber said.

"Given the gap between the issue price and the trading price, subscribers did very well," the analyst said.

The previous Rights Issue 2017 saw Sampath raising Rs. 7.6 billion new equity (zero cost capital) by the issue of approx. 31 million new shares, priced at Rs. 245 each, in the proportion of one new share for every six held.

This year’s rights issue saw the allotment of 50.13 million (approx) new shares issued at Rs. 250 a share on the proportion of three for 13 held to be listed on April 23.

Sampath also announced its scrip dividend dates to the CSE last week. The date of entitlement will be Apr. 26 and the share will trade XD from Apr. 27. The scrip dividend will be one new share for (approx) 19.728 shares held on April 26 trading XD from April 27.

The Sampath share traded above Rs. 300 on the CSE in recent days with Friday’s price ranging between Rs. 305.10 and Rs. 308.

www.island.lk

Nestle delivers Rs. 50 divided per share despite sluggish consumer demand & rocketing raw material prices

Nestle Lanka PLC, one of the country’s biggest and most profitable conglomerates, has faced a challenging 2017 but by utilizing enhanced cost saving measures and focusing on driving efficiencies across the value chain to partly mitigate the impact of weather-related consumer demand decline for its products, unprecedented increase in raw material prices and increased VAT, its chairman, Mr. Suresh Narayanan, said in the company’s recently released annual report.

Although there was a 3.1% increase in revenue to Rs. 37.6 billion from Rs. 36.46 billion a year earlier, in the year ended Dec. 31, 2017, profit after tax declined to Rs. 3.63 billion from Rs. 4.4 billion in the previous year.

Net assets per share declined to Rs. 89.58 from Rs. 102.05, earnings per share were down to Rs. 67.64 from Rs. 81.87 and dividend per share to Rs. 50 from the previous year’s Rs. 80.

"2017 proved to be another very challenging year," Ms. Shivani Hegde reported, "as we managed sluggish consumer demand and rising cost pressures. I am proud to note however that the dedication and commitment of people and business partners helped us to mitigate the significant external challenges we faced in the year."

Noting that Nestle continued to believe in the long-term prospects of the Sri Lanka market and had initiated a five billion rupee investment in early 2017 to expand production capacity for dairy and coconut based products, she said.

"This investment will be funded through a judicious combination of internal accruals and borrowings," Hegde said.

The year had seen the "renovation and innovation" of the Nestle product portfolio. They procured fresh milk supplies from nearly 20,000 dairy farmers. Their popular Maggi chicken noodles had been renovated include eight popular Lankan spices.

"I am confident that our hard work in 2017 will help us further progress this year and strengthen our ability to capture sizable opportunities in 2018," she concluded.

Nestle has introduce a range of three sauces – tomato, chilli and oyster – under the Maggi brand and a reduced sugar Nescafe premix addressing current consumer needs for healthier beverage options. Similarly their spicy Maggi ‘hot’ noodles have been reformulated with reduced salt and fat while maintaining taste.

Nestle SA with 90.82% of the company is the dominant shareholder with all other nearly 5,300 shareholders on the register owning less than 1%. The Nestle share traded at a high of Rs. 2,310 and a low of Rs. 1,600 during the year closing at Rs. 1,626.

The directors of the company are Messrs. Suresh Narayanan, Ms. Shivani Hegde, S. Duggal, JK Singla, Gurucharan Grover, Mahen Dayananda and R., Seevaratnam.

www.island.lk

Sri Lankan stocks end higher in light trade; banks, telcos lead

Reuters: Sri Lankan share index ended slightly firmer in a holiday-shortened trading session on Friday, hovering near a five-week closing high hit earlier in the week, as investors picked up banking and telecommunication shares.

Many market participants continued to stay away due to extended holidays after the Sinhala-Tamil New Year festival last weekend, brokers said.

The market was closed at 0630 GMT on Friday due to a half-a-day bank holiday.

The Colombo stock index ended 0.19 percent firmer at 6,540.97. The index gained 0.88 percent during the week.

“Blue-chip counters pushed the index higher in low trade as most investors are on the sidelines,” said Atchuthan Srirangan, assistant manager - research, First Capital Holdings PLC.

“Some crossings helped to boost the turnover.”

Turnover stood at 418.5 million rupees ($2.68 million), less than half of this year’s daily average of 1.1 billion rupees.

Shares of Lanka ORIX Leasing Company Plc ended 1.5 percent firmer, while Union Bank Plc closed up 4.9 percent and Sri Lanka Telecom Plc ended up 1.8 percent.

The market has been waiting for some political stability after President Maithripala Sirisena suspended parliament until May 8, brokers said.

Foreign investors sold shares worth a net 5.3 million rupees on Friday, extending the year-to-date net foreign outflow to 1.28 billion rupees worth of equities.

The central bank unexpectedly cut its key lending rate by 25 basis points early this month, as policy makers sought to revitalise an economy growing at its weakest pace in 16 years and facing heightened political uncertainty.

($1 = 156.3000 Sri Lankan rupees0 

(Reporting by Ranga Sirilal and Shihar Aneez, Editing by Sherry Jacob-Phillips)

Sri Lanka gold, jewellery price up after tax hike

ECONOMYNEXT - Sri Lanka's 24-carat gold price had risen to 62,000 rupees for an 8.00 gram sovereign after a 15 percent tax hike by the government, jewellers in Colombo said.

Before the New Year, gold was trading around 53,000 to 54,000 rupees for 8.00 grams.

Jewellery grade 22 carat gold was quoted around 59,000 - 60,000 rupees a sovereign, up from around 50,000-51.000 rupees before the tax hike.

The tax on gold is expected to increase smuggling into the country, while legal imports fall.

Due to a 10 percent import duty at 3 percent value added tax in India, gold imported to Sri Lanka was being smuggled into India giving a profits to smugglers in the island.

Sri Lanka's TAFL says exports of parent chicks up, weak domestic demand

ECONOMYNEXT - Sri Lanka's Three Acre Farms, a breeder farm and poultry processing firm said exports of parent stocks rose in 2017, while domestic demand fell as inflation and taxes rose after a currency collapse killing demand for eggs and meat amid a drought.

Sri Lanka being a country without avian flu had helped exports of parent stock chicks, the firm said. Its breeder farms unit had earned revenues of 1.84 billion rupees.

"…[G]rowth was upheld by exports of broiler Parent Stock Day Old Chicks (PS DOCs) to regional countries, which increased by a commendable 28 percent over exports in 2016, but a further increase in revenue was forestalled by a lower demand for layer DOCs due to an unstable egg market," the firm told shareholders.

"However, the Group maintained its revenue from Broiler Day Old Chicks (DOC) despite the glut in the chicken market by ensuring supplies of quality DOC and trust and confidence of our brand."

The company said a drought and floods had also affected. Meanwhile the currency had also depreciated. Higher inflation and a hike in sales taxes was also negative.

Sri Lanka's rupee collapsed from 131 to 150 levels from late 2015 to 2016 and continued to be pushed down by the central bank as it was targeting a real effective exchange rate index.

A currency collapse and the inflation that comes in its wake kills disposable incomes of people, and recouping of forex reserves after slowing credit also hits demand.

However poultry firms get demand support from the tourism sector.

TAFL said in 2017 it earned revenues of 2,401 rupees down 6 percent from 2,543 million a year earlier. Profits fell to 656 million from 814 million rupees.

After the 2011/2012 balance payments crisis and currency collapse, Three Acre Farms killed day old chicks as demand suddenly fell. Profits shrank to 36 million rupees from 170 million.

Sri Lanka 01-year Treasuries yield drops to 9.65-pct

ECONOMYNEXT – Sri Lanka’s one-year Treasury Bill yield fell further at an auction Wednesday, falling by 06 basis points to 9.65% from 9.71% last week, data from the state debt office showed.

The debt office accepted 24 billion rupees in bids from the market, after offering only 18 billion rupees of bills and getting bids worth 62 billion rupees.

Bids for 6 billion rupees of 6-month bills were rejected but the debt office accepted 4.0 billion rupees in 3-momth bills, the same amount offered, with its yield dropping 2 basis points to 8.15%.

Sri Lanka’s Cargills Bank to list in 2020

ECONOMYNEXT – Sri Lanka’s Cargills Bank, owned by the Cargills group, is to list on the Colombo stock exchange in 2020, the bank’s chairman Louis Page has said.

“The bank is working towards listing its shares in the CSE in 2020,” he said in the bank’s annual report for 2017 which was just released.
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The largest shareholders of Cargills Bank Limited are Cargills (Ceylon) with a 39.71% stake and CT Holdings with 25.29%.

The Employees’ Provident Fund is the third largest shareholder with a 4.98% stake. About 26% of Cargills Bank shares are held by institutions.

Sri Lanka’s Cargills gets ok for banking counters at all supermarkets

ECONOMYNEXT – Sri Lanka’s Cargills Bank, owned by the Cargills group, has got regulatory approval to operate banking counters at all its Food City supermarkets islandwide, helping it keep costs low.

The bank’s chairman Louis Page said a key competitive advantage of Cargills Bank centred on the retail network of over 350 Cargills Food City outlets spread across the length and breadth of the country.

“The Cargills outlets offer banking customers convenience with low overhead for the bank,” he said in the bank’s annual report for 2017 which was just released.

The bank is converting Cargills Food City (CFC) cashier counters to banking counters.

“During the year the bank was able to obtain approval for all its CFC outlets to operate as banking agencies,” the report said.

The year under review saw the opening of 3 new branches in Wattala, Ratnapura and Kaduruwela in September, October and December.

The report said that with technology being a strategic priority, Cargills Bank has been able to enable the deposit and withdrawal of funds 365 days of the year, from 8 am to 11 pm., by converting supermarket checkouts to simple but versatile banking counters.

“This complements the bank’s ability to compete in a non-traditional banking space where there is much untapped potential amongst hitherto excluded segments and the SME sector of the country.”

Cargills Bank said it will increase investments and focus on electronic and mobile banking channels to augment the extensive retail banking channels at CFC and carve out a niche by serving the underbanked and offering the best in customer convenience.

“Our unique retail and SME- focused and technology- led model, with the aim of offering customers new paradigms in convenience and speed of service, is based on an “Operational Expenditure model” rather than a Capital Expenditure based one,” it said.

“This approach places us on a firmer foundation of lower costs with greater agility and nimbleness to adapt to rapidly evolving technology.”

Sri Lanka Telecom sees data revenue growing, margins falling

ECONOMYNEXT – Sri Lanka Telecom said broadband data will dominate revenue despite thinning margins and rising capital expenditure with the telco developing its own over-the-top (OTT) platforms for voice, audio, picture and video messaging services like WhatsApp and Viber.

SLT has invested over 70 billion rupees over the last two years to expand a fibre optic network for faster broadband.

"In terms of the telco industry, growth will focus on broadband-related digital services. Broadband revenues will dominate the income statement within the next three years," SLT Chairman Kumarasinghe Sirisena told shareholders in the company's 2017 annual report.

However, the fibre network with broadband speeds up to 100Mbps will boost third party OTT consumption eating into SLT's own traditional voice and messaging revenue.

"The year 2017 was another turbulent year for the global and local telecommunication industry as revenue from IDD and other traditional avenues declined due to the threat from OTT players," SLT said in its 2017 annual report.

Also, "margins from data are decreasing while the capital expenditure in infrastructure is on the rise," it said.

However, the telco said it doesn't see OTT's as a threat.

"The usage boosted by OTT consumption will fill up the broadband 'pipes', thereby contributing towards better return on investment," the telco said, adding that it would develop its own OTT platforms.

In 2017, revenue from broadband and 'data and other services' was 27 billion rupees at company level, accounting for nearly 60 percent of total revenue of 44.5 billion rupees.

The share of broadband and 'data and other services' to revenue was 38% percent in 2012.

SLT has connected 315 government establishments to the fibre optic network, and will add 545 more by the end of 2018.

It has also connected 2 million homes to the fibre network by the end of 2017 both in terms of fixed and mobile broadband.

SLT also provides IPTV on both its copper and fibre network.

Sri Lankan stocks slip as investors sell select blue chips

Reuters: Sri Lankan share index slipped on Thursday from a five-week closing high hit the previous day, snapping a six-session winning streak, as investors offloaded select blue-chip stocks in low volumes.

Many market participants stayed away due to extended holidays after the Sinhala-Tamil New Year festival last weekend, brokers said.

The Colombo stock index ended 0.36 percent weaker at 6,528.57, slipping from its highest close since March 13 hit on Wednesday. The index gained 0.44 percent last week.

“Market came down on blue-chip selling in low volumes,” said Atchuthan Srirangan, assistant manager - research, First Capital Holdings PLC.

“Just 159 shares of Ceylon Tobacco Co (CTC) were traded. The small volume of selling in CTC dragged the market down,” he added.

Turnover stood at 269.8 million rupees ($1.73 million), less than a quarter of this year’s daily average of 1.11 billion rupees.

Shares of Ceylon Tobacco ended 2.5 percent weaker, while Lanka ORIX Leasing Company Plc closed 2.2 percent down and Melstacorp Ltd closed 1.00 percent lower.

The market has been waiting for some political stability after President Maithripala Sirisena suspended parliament until May 8, brokers said.

Foreign investors bought shares worth a net 57.1 million rupees on Thursday, but they have net sold 1.27 billion rupees worth of equities so far this year.

The central bank unexpectedly cut its key lending rate by 25 basis points early this month, as policy makers sought to revitalise an economy growing at its weakest pace in 16 years and facing heightened political uncertainty.

($1 = 156.1500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez, Editing by Sherry Jacob-Phillips)

Sri Lankan stocks extend gains, hit 5-week closing high

Reuters: Sri Lankan share index ended at its highest close in more than five weeks on Wednesday, gaining for a sixth straight session, but many market participants stayed away due to extended holidays after the Sinhala-Tamil New Year festival last weekend.

The Colombo stock index ended 0.12 percent higher at 6,551.83, its highest close since March 13. The index gained 0.44 percent last week.

Turnover stood at 188.3 million rupees ($1.21 million), well below this year’s daily average of 1.13 billion rupees.

“The turnover level was very low with most investors still on holiday. The index, however, is up on blue-chip buying in low volumes,” said Atchuthan Srirangan, assistant manager - research, First Capital Holdings PLC.

Shares of Ceylon Tobacco Company Plc ended 2.8 percent higher, while the biggest listed lender Commercial Bank of Ceylon Plc closed up 1.1 percent, conglomerate John Keells Holdings Plc closed 0.4 percent higher.

The market was waiting for some political stability after President Maithripala Sirisena suspended parliament until May 8, brokers said.

Foreign investors bought shares worth a net 24.3 million rupees on Wednesday, but they have net sold 1.33 billion rupees worth of equities so far this year.

The central bank unexpectedly cut its key lending rate by 25 basis points early this month, as policy makers sought to revitalise an economy growing at its weakest pace in 16 years and facing heightened political uncertainty.

($1 = 156.2500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez, Editing by Sherry Jacob-Phillips

Sri Lanka car registrations up in March, Wagon-R leads

ECONOMYNEXT - Sri Lanka's vehicle purchases rose 6.5 percent in March 2018 from a year earlier, with car registration up 107 percent to 5,968 units with Suzuki Wagon-R becoming the market leader after a tax change, an analysis of vehicle registry data shows.

In March 2,380 Wagon-Rs were registered up from only 626 a year earlier, JB Securities, a Colombo-based equities brokerage said.

Indian-made Maruti vehicles were market leaders before Mercantilist crackdown on car imports after the central bank triggered a balance of payments crisis by printing money in 2015 and 2016. A recent tax change made Wagon-Rs more affordable.

"Maruti Alto recorded 17 units in the month, as a point of reference in Sep 2015 there were 7,556 units registered – another case of how government policy can tilt the playing field so precipitously," JP Securities said in a note to clients.

"Under the unit method of duty the taxes on a 660 cc hybrid engine found on most Japanese small cars is LKR 825,000, on an 800cc Alto it is LKR 1.4 million although the landed price of the former is probably 50% less."

Sri Lanka's politicians and bureaucrats, who get tax free and tax slashed cars also cracked down on three wheeler's raising taxes and squeezing credit in the wake of the money printing bout, denying mobility to lower income segments in another vicious intervention, freedom advocates say.

Three wheeler registrations were down 54 percent to 1,525 units in March 2018.

Before the crackdown by Sri Lanka's rulers, people imported between 6,000 to 10,000 three-wheeler units a months. In rural areas the three-wheeler is a the only public transport available.

They were also used by craftsmen like carpenters and masons as personal transport, and small business owners until the crackdown.

Sri Lankan shares hit 5-week closing high in thin trade

Reuters: Sri Lankan shares hit a five-week closing high in thin trade on Tuesday, rising for a fifth straight session, as many market participants stayed away due to extended holidays after the Sinhala-Tamil New Year festival over the weekend, brokers said.

The Colombo stock index ended 0.74 percent higher at 6,544.25, its highest close since March 13. The index gained 0.44 percent last week.

Shares of Distilleries Company of Sri Lanka Plc rose 10.2 percent, while Melstacorp Ltd ended 1 percent higher. Ceylinco Insurance Plc rose 5.2 percent, while fixed line telephone operator Sri Lanka Telecom Plc closed 2.2 percent firmer.

Turnover stood at 315.4 million rupees ($2.02 million), less than this year’s daily average of 1.13 billion rupees.

“Market is up on low volumes. Lack of investors in the market resulted in the low volumes, most investors are on holidays and not active still,” said Dimantha Mathew, head of research, First Capital Holdings.

The market was waiting for some political stability after President Maithripala Sirisena suspended parliament until May 8, brokers said.

Foreign investors bought shares worth a net 9.5 million rupees on Tuesday, but they have net sold 1.36 billion rupees worth of equities so far this year.

The central bank unexpectedly cut its key lending rate by 25 basis points last week, as policy makers sought to revitalise an economy growing at its weakest pace in 16 years and facing heightened political uncertainty. 

($1 = 156.2000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Biju Dwarakanath)

Sri Lanka Nations Trust Bank, SLT, People's Leasing debt issues oversubscribed

ECONOMYNEXT - Sri Lanka's Nations Trust Bank said its 3.5 billion Basel-III-compliant debenture issue was oversubscribed on opening day last Wednesday (11).

Sri Lanka Telecom and finance company People's Leasing and Finance Plc which also opened debenture issues Wednesday, closed the same day after being oversubscribed.

Sri Lanka Telecom said it raised 7 billion rupees and People's Leasing and Finance said it collected 6 billion rupees.

Nations Trust Bank's five-year debentures have a 12.65 percent coupon rate paid every six months or 13 percent interest paid annually.

People's Leasing debentures comprise tenures of four and five years. The four year debenture carries a coupon rate of 12.40 percent and the five year debenture 12.80 percent.

Sri Lanka's Telecom's 10-year debentures have a 12.75 percent coupon rate.

Four year risk-free government bonds closed 9.60/65 in two-way quotes Thursday, a five year bond was quoted at 9.75/85. Ten-year bonds were quoted at 10.10/15, according to Wealth Trust Securities.

Nations Trust last traded at 80.10 rupees, Sri Lanka Telecom at 28.70 rupees and People's Leasing at 15.80 rupees.

Sri Lankan shares hit near 6-week closing high; turnover slumps to 4-year low

Reuters: Sri Lankan shares rose slightly on Monday and posted their highest close in nearly six weeks in light trade, as many market participants were on extended holidays after the Sinhala-Tamil New Year festival over the weekend, brokers said.

Turnover was 101.9 million rupees ($653,833.81), the lowest since March 17, 2014, and less than a 10th of this year’s daily average of 1.16 billion rupees.

“Many people are on vacation and we expect the same to continue until the end of this week,” said Prashan Fernando, CEO, Acuity Stockbrokers.

The Colombo stock index rose for a fourth straight session and ended 0.19 percent higher at 6,496.44, its highest close since Feb. 1. The index gained 0.44 percent last week.

Brokers said the market was awaiting some political stability after President Maithripala Sirisena suspended the parliament until May 8.

The president will reshuffle the cabinet soon, cabinet spokesman Rajitha Senaratne said on Wednesday, after some ministers defected and voted for the no confidence motion against Prime Minister Ranil Wickremesinghe.

Foreign investors sold shares worth a net 8.1 million rupees on Monday, extending the net foreign outflow from equities to 1.36 billion rupees.

Shares of Distilleries Company of Sri Lanka Plc rose 6.2 percent, while fuel retailer Lanka IOC closed 5.2 percent firmer.

The central bank unexpectedly cut its key lending rate by 25 basis points on Wednesday, as policy makers sought to revitalise an economy growing at its weakest pace in 16 years and facing heightened political uncertainty. 

($1 = 155.8500 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lanka hotel group Citrus Leisure to drop Kalpitiya hotel

ECONOMYNEXT - Hikkaduwa Beach Resorts Plc, a unit of Sri Lanka's Citrus Leisure, said it was seeking shareholder approval to abandon plans to develop an Ayurveda Resort and Spa in Kalpitiya and will use 283.5 million rupees from anpublic offering to settle debts.

A feasibility study on the proposed resort found that Kalpitiya was not ideal location for the project after raising funds from a public offer, the company said.
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"The assessment was that Kalpitiya will not be an attractive location to build a star class resort in the foreseeable future due to several factors including the unavailability of required infrastructure facilities," the company said in a stock exchange filing.

Hikkaduwa Beach Resorts Plc will now dispose its lands and use the funds to develop other projects.

In 2017, the company, a unit of Sri Lanka's Citrus Leisure, absorbed three other listed hotel companies of the group as part of a restructure: Waskaduwa Beach Resort Plc, Kalpitiya Beach Resort Plc and Passikudah Beach Resort Plc.

Hikkaduwa Beach was trading 20 cents lower at 7.10 rupees Friday.

Sri Lankan shares hit near 4-wk closing high in thin trade ahead of holidays

Reuters: Sri Lankan shares on Thursday rose to a near four-week closing high led by financials amid lean trading ahead of the Sinhala-Tamil New Year this week, brokers said.

Markets will be closed for a public holiday on Friday on account of the New Year.

The Colombo stock index ended 0.51 percent higher at 6,483.92, its highest close since March 19. The index has gained 0.44 percent this week.

“It was a lacklustre day though the index rose. Most of the investors are on leave,” said Prashan Fernando, CEO, Acuity Stockbrokers.

“After the holidays, investors will be looking for political stability. It will be the key for investor confidence.”

Cabinet Spokesman Rajitha Senaratne on Wednesday said President Maithripala Sirisena will reshuffle the cabinet soon after some ministers defected the cabinet and voted for the no confidence motion against Prime Minister Ranil Wickremesinghe.

The day’s turnover was 356.9 million rupees ($2.29 million), less than a third of this year’s daily average of 1.16 billion rupees.

Foreign investors sold shares worth a net 102.1 million rupees on Thursday, extending the net foreign outflow from equities to 1.36 billion rupees.

Market sentiment improved after Prime Minister Ranil Wickremesinghe survived a no-confidence motion last week, dealers said.

Capital Trust closed 4.3 percent higher, while top conglomerate John Keells Holdings closed 0.5 percent stronger.

The central bank unexpectedly cut its key lending rate by 25 basis points on Wednesday, as policy makers sought to revitalise an economy growing at its weakest pace in 16 years and facing heightened political uncertainty.

($1 = 155.6000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Vyas Mohan)

Colombo’s Port City ready for investors

LBO - CHEC Port City Colombo (Pvt) Ltd., presented the Development Control Regulations (DCR) for the Colombo Port City project.to the authorities, Tuesday.

“This is a signal for the marketing team to sell it as real estate,” Minister of Megapolis and Western Province Development Champika Ranawaka said at the presentation ceremony in Colombo.

“The DCR will benchmark standards for the the rest of country as well.“

The DCR was prepared by Surbana Jurong, a Singaporean urban design consultancy and Atkins, a UK-based engineering consultancy.

When complete the city will have reclaimed 269 hectares with 116 hectares being handed over to China Communications Construction Company (CCCC), which is the parent company of China Harbour Engineering Company (CHEC).

The remaining land, which will be owned by the Sri Lankan Government and will be divided with 62 hectares to be used to set up a financial city and 91 hectares to be used as public spaces.

Sri Lanka to lose half a million tax payers from new law

ECONOMYNEXT - Sri Lanka will lose 500,000 employed who were pay as you earn (PAYE) tax payers under a new law that came into effect in on April 01, the finance ministry said.

The current administration lifted a tax free slab to 1.2 million rupees a year but removed 50,000 allowance for transport and also telephone allowances.

The finance ministry said as a result 500,000 out of 1.2 million PAYE tax payers will be out of the tax system.

The balance will now have to pay a higher rate of tax.

The administration however came of the promise of broadening that tax base and charging lower rates.

The finance ministry said there was no truth in claims that everyone above 18 years will be made to have a tax file.

Meanwhile state worker show get tax slashed cars will not have to pay tax on the benefits. Private citizens on the other hand have to pay rates in excess of 200 percent to buy a car.

Critics say successive administrations have used hard working people outside the state as second class citizens and tax machines.

The finance ministry said senior citizens will not have to pay any tax on interest unless they made sums in excess of 125,000 rupees as interest a month.

Sri Lanka Treasuries yield drop 20bp

ECONOMYNEXT - Sri Lanka's 12-month Treasuries yield dropped 20 basis points from a week earlier to 9.71 percent at Tuesday's auction, data from the state debt office showed.

The debt office accepted 28 billion rupees in bids from the market, after offering only 16 billion rupees of bills.

No bids were accepted after offering 5 billion rupees of 3-month bills and 7.0 billion in 6-momth bills.

Before the auction one year bills were quoted around 9.53/60 percent. After the auction 12-month paper was quoted around 9.60/70 percent, dealers said.

Sri Lanka's bill and bond yields rose amid political uncertainty from February and short term rates spiked in last week of March amid a tax change and seasonal demand for cash.

The central bank cut the ceiling policy rate by 25 basis points on April 04 to 8.50 percent and has printed money below the rate though overnight auctions to keep rates down.

Chevron Sri Lanka unit says competition increasing, margins eroding

ECONOMYNEXT – Chevron Lubricants Lanka has said profit margins were getting squeezed with intensifying competition and rising costs and the industry struggling with excess blending capacity.

Net profit at Chevron’s Sri Lanka unit fell 26% to Rs. 2.6 billion in 2017 from a year ago.

“The decline in net earnings was mainly due to margin erosion as a result of increased input costs and decline in volumes due to intense competition,” Rochna Kaul, Chevron Lankan chairperson told shareholders in the firm’s annual report.

Managing Director Kishu Gomes said Chevron Lubricants Lanka’s volumes and revenues dropped by 10% and 9%, respectively in 2017.

“The decline in volumes was primarily a result of the decline in sales in the domestic retail market, while we recorded healthy growth stemming from exports to Bangladesh,” he said.

Sri Lanka’s lubricant industry is mature and competitive with thirteen players and three blending plants operating with excess capacity, Gomes said.

“The government may issue additional licenses during the year, which will further change the competitive landscape.”

The steep rise in base oil cost, compounded by the depreciation of the rupee against the US dollar and the gradual increase in commodity prices, caused significant inflationary pressure on costs during the year, Gomes said.

To counter the mounting cost pressure, the company increased prices.

However, this strategy was not effective in the retail market, as consumer disposable income was compressed by the rise in inflation, Gomes said.

Prolonged droughts and floods affecting several districts disrupted the regular momentum of economic activities during the year, which also curtailed lubricant consumption, he added.

“The rise in consumer inflation and disruption of economic activities due to inclement weather may have also resulted in longer oil drain intervals than usual amongst a segment of consumers.”

Sri Lanka's sovereign bond issue rated B+(EXP): Fitch

ECONOMYNEXT - Fitch Ratings has assigned a B+(EXP) rating to Sri Lanka's sovereign bond issue of 5 and 10 year tenors with initial price guidance of around 6 to 7 percent.
A sovereign bond has a minimum size of 500 million dollars.

Sri Lanka was planning to raise up to 1.5 billion dollars in sovereign bonds this year depending on market conditions.

Fitch Ratings' statement is as follows:

Fitch Ratings has assigned Sri Lanka's upcoming US dollar-denominated bonds an expected rating of 'B+(EXP)'.

The expected rating is in line with Sri Lanka's Long-Term Foreign-Currency Issuer Default Rating (IDR) of 'B+' with a Stable Outlook.

RATING SENSITIVITIES
The rating would be sensitive to any changes in Sri Lanka's Long-Term Foreign-Currency IDR. In February 2018, Fitch affirmed Sri Lanka's Long-Term Foreign-Currency IDR at 'B+' with a Stable Outlook. The Long-Term Local-Currency IDR is also 'B+' with a Stable Outlook.

Sri Lanka 10-year sovereign bond guidance narrowed to 6.75-pct

ECONOMYNEXT - The pricing of Sri Lanka's 10-year sovereign bond that was launched Wednesday has been narrowed to 6.75 percent and while that of a 5-year bond has been narrowed to 5.75 percent, a media report said.

Bloomberg Newswires said the sale was launched earlier Wednesday with initial guidance of around 7-prce for the 10 year and 6-percent for the 5-year.

Sri Lanka started selling 5 and 10 year sovereign bonds on Wednesday starting with Asia and the issue is expected to close with the US markets closing.

Sri Lanka last sold a 10 year bond in May 2017, at 6.2 percent, when the US 10-year Treasuries yield was 2.35 percent, indicating a risk premium of 2.85 percent.

US bond yields have been around 2.6 percent for 5-year ad and 2.79 for 10 year in recent days.

The sale is managed by Citibank, Deutsche Bank, HSBC, JPMorgan and Standard Chartered.

Sri Lanka is going to the market amid some volatility in international markets with more Fed rates hikes expected later in the year.

Sri Lanka launches 5, 10-year sovereign bonds

ECONOMYNEXT - Sri Lanka has launched a sovereign bond sale offering 5 and 10 year tenors with initial price guidance of around 6 to 7 percent.

A sovereign bond has a minimum size of 500 million dollars.

Sri Lanka was planning to raise up to 1.5 billion dollars in sovereign bonds this year depending on market conditions.

Bloomberg Newswires said the 5-year bond had an initial price guidance of around 6 percent and the 10 year about 7 percent.

Sri Lanka's 2027 sovereign bond sold last year which is now 9 years was quoted around 6.57 percent levels, on Wednesday dealers said.

Sri Lanka's 2022 bond was quoted around 5.28 percent.

US bond yields have been around 2.6 percent for 5-year ad and 2.79 for 10 year in recent days.

Sri Lankan shares end higher; foreigners sell

Reuters:Sri Lankan shares ended slightly firmer on Wednesday led by blue-chip stocks in thin trade, while foreign selling boosted turnover with most local investors on leave ahead of the Sinhala-Tamil New Year this week, brokers said.

Foreign selling accounted for 80 percent of the day’s turnover of 553 million rupees ($3.55 million), less than half of this year’s daily average of 1.17 billion rupees.

Foreign investors exited mainly by selling Softlogic Finance Plc, brokers said. Shares in Softlogic Finance, which accounted for 60 percent of the day’s turnover, however, ended 0.6 percent lower.

The Colombo stock index ended 0.18 percent higher at 6,451.17.

Foreign investors sold shares worth net 420.8 million rupees on Wednesday, extending the net foreign outflow to 1.25 billion rupees from equities.

“It was a very dull day as most local investors are on leave,” said Atchuthan Srirangan, assistant research manager, First Capital Holdings Plc.

Market sentiment improved after Prime Minister Ranil Wickremesinghe survived a no-confidence motion last week, dealers said.

Top fixed-phone line operator Sri Lanka Telecom closed 6.3 percent higher, while Hatton National Bank ended up 1.8 percent.

Dealers expect the stock market to be tepid this week ahead of the Sinhala-Tamil New Year on April 14.

The central bank unexpectedly cut its key lending rate by 25 basis points on Wednesday, as policy makers sought to revitalise an economy growing at its weakest pace in 16 years and facing heightened political uncertainty.

The index fell 0.33 percent last week and dropped 1.14 percent in March.

($1 = 155.6000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Sherry Jacob-Phillips)

Sri Lankan shares pull away from 11-week closing low

Reuters: Sri Lankan shares on Monday recovered from their lowest close in 11 weeks in thin trade ahead of the Sinhala-Tamil New Year this week, brokers said.

The Colombo stock index ended 0.14 percent higher at 6,439.83, recovering from its lowest close since Jan. 23 hit in the previous session.

The turnover stood at 499.1 million rupees ($3.21 million), less than half of this year’s daily average of 1.18 billion rupees.

Market sentiment has improved after Prime Minister Ranil Wickremesinghe survived a no-confidence motion last week, dealers said.

“But still, the market is waiting for some more clarity in the political front. The holidays are also weighing on the trading,” said Prashan Fernando, CEO, Acuity Stockbrokers.

Top listed lender Commercial Bank of Ceylon gained 1.1 percent, Capital Trust closed 3.7 percent up, while John Keells Holdings edged up 0.1 percent.

Foreign investors sold shares worth net 43.4 million rupees on Tuesday, extending the net foreign outflow to 831.7 million rupees from equities.

Dealers expect the stock market to be tepid this week ahead of the Sinhala-Tamil New Year on April 14.

The central bank unexpectedly cut its key lending rate by 25 basis points on Wednesday, as policy makers sought to revitalise an economy growing at its weakest pace in 16 years and facing heightened political uncertainty.

The index fell 0.33 percent last week and dropped 1.14 percent in March. 

($1 = 155.4500 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Vyas Mohan)

Sri Lanka's Dialog Axiata retains AAA(lka) Fitch rating

ECONOMYNEXT – Sri Lanka's Dialog Axiata has retained its AAA(lka)'/Stable Fitch rating given its market leadership in the growing mobile and pay-TV industry segments and strong growth in data services revenue, expected to exceed a quarter of total sales.

Fitch Ratings said in a statement Dialog is in a position to gain revenue market share from smaller telcos, with its superior 3G/4G networks capability.

“It has a solid financial profile with a revenue growth of 8%-9%, stable operating EBITDAR margin of around 35%-37%, and low Fitch-forecast 2018 FFO adjusted net leverage of 1.2x.”

The full statement follows:

Fitch Ratings-Singapore/Colombo-04 April 2018: Fitch Ratings-Singapore/Colombo- 4 April 2018: Fitch Ratings has affirmed Sri Lanka-based telecom company Dialog Axiata PLC's National Long-Term Rating at 'AAA(lka)'. The Outlook is Stable.

KEY RATING DRIVERS

Market-Leading Position: Dialog's standalone credit profile of 'AAA(lka)' is underpinned by its market leadership in the growing mobile and pay-TV industry segments. We believe the company is in a position to gain revenue market share from smaller telcos, with its superior 3G/4G networks capability. It has a solid financial profile with a revenue growth of 8%-9%, stable operating EBITDAR margin of around 35%-37%, and low Fitch-forecast 2018 FFO adjusted net leverage of 1.2x.

High Ratings Headroom: We believe Dialog would receive support from its 83%-parent, Axiata Group Berhad (Axiata) of Malaysia, if its standalone credit profile were to weaken. Dialog and its parent continue to have moderate linkages, which include sharing key management personnel, a common name and common creditors, which could result in reputational risk to Axiata should Dialog fail.

Unaffected by CTF Acquisition: Dialog's rating is unaffected by the acquisition of Colombo Trust Finance PLC (CTF), a small non-bank financial institution, for LKR1.3 billion completed in November 2017. Dialog is likely to use it to expand its digital financial services strategy and supplement its payment settlement platform. Dialog is likely to infuse equity of LKR2.05 billion in CTF during 2018-2020 in order to meet an enhanced minimum regulatory capital requirement of LKR2.5 billion by 1 January 2021. CTF's capital structure should then be strong enough to prevent becoming a cash drain on Dialog over the rating horizon.

We have fully deconsolidated CTF's debt (which is mainly in the form of deposits) and EBITDA from Dialog in our analysis.

Proposed Taxes Credit Negative: Fitch believes that Dialog's 2018 operating EBITDAR margin could narrow to 31%-33% (2017: 38%) and its FFO adjusted net leverage could deteriorate to 1.4x-1.6x (2017: 1.1x) if it were to pay an additional LKR4 billion-6 billion taxes for its mobile towers as proposed by the government. However, we believe there is a high level of uncertainty about the implementation of the taxes and we have not therefore factored these into our base case. Nevertheless, we would expect Dialog's ratings to remain unaffected, even if the taxes were implemented, given the high ratings headroom.

The Sri Lankan government's 2018 budget, announced on 9 November 2017, proposes to tax mobile operators LKR200,000 per tower each month.

High-Single-Digit Revenue Growth: We expect Dialog's revenue to grow by 8%-9% (2017: 8.5%) during 2018-2019, driven by data services revenue growth of 30%-35% (2017: 39%) and supported by the removal of the 25% telco levy on data services in September 2017. We believe that data services' revenue contribution (2017: 21%) to consolidated revenue will rise to over 25% in 2018.

Stable Profitability: Barring proposed tower taxes, we forecast Dialog's operating EBITDAR margin to remain stable around 35%-37% as larger economies of scale in the data segment will support falling profitability on the voice and text segments. Strong data growth is supported by the proliferation of smartphones, with over half of new smartphones activated on Dialog's network being 4G-enabled.

Negative FCF on Large Capex: We forecast a small free cash flow (FCF) deficit during 2018-2019 as cash flow from operations will fall short of Dialog's large, ongoing capex plan and dividend commitments. The company will continue to invest about 28%-30% of its revenue in capex each year to expand its 4G networks and its optical fibre infrastructure. We expect dividends to increase to around LKR3.7 billion-LKR4.3 billion (2017: LKR3.2 billion) during 2018-2019.

Debt-Funded M&A: Some industry consolidation is likely, with ongoing intense competition in the mobile segment where smaller telcos are unprofitable and face high investment requirements. We believe Dialog and Sri Lanka Telecom PLC (SLT, B+/AAA(lka)/Stable) could acquire smaller telcos to strengthen their market position and consolidate spectrum assets. Dialog's ratings have sufficient headroom for a debt-funded acquisition of a smaller telco for around LKR10 billion-12 billion.

DERIVATION SUMMARY

Dialog's business risk profile is stronger than that of similarly rated national peers, given its market-leading position in Sri Lanka's mobile industry, stable cash generation, and integrated service offerings. Dialog has a larger revenue base and better operating EBITDAR margin than the fixed-line market leader, SLT, but this is offset by Dialog's higher exposure to the crowded mobile market.

Dialog has a larger operating scale compared with hard-liquor market leader Distilleries Company of Sri Lanka PLC (DIST, AAA(lka)/Rating Watch Negative), given the fragmented nature of the alcoholic beverage industry. DIST is also exposed to more regulatory risk in the form of recurrent increases in indirect taxation, but these risks are counterbalanced by its substantially stronger FCF

Dialog has a larger operating scale and a wider operating EBITDAR margin than Hemas Holdings PLC (AA-(lka)/Stable), which is a diversified conglomerate with exposure to pharmaceuticals, fast-moving consumer goods, leisure and transport. Hemas is the largest private retail pharmaceuticals distributor in the country and second-largest home care and personal care manufacturer. Hemas's FFO adjusted net leverage is likely to be similar to that of Dialog over the medium term.

KEY ASSUMPTIONS

Fitch's Key Assumptions Within the Rating Case Include:

- High-single-digit revenue growth during 2018-2019 (2017: 8.5%)
- Operating EBITDAR margin to remain stable at around 35%- 37% during 2018-2019 (2017:37.8%).
- Capex/revenue to remain high at around 28%-30% (2017: 32%).
- Dividend pay-out to increase to LKR3.7 billion-4.3 billion during 2018-2019 (2017: LKR3.2 billion)
- Proposed mobile tower taxes are not implemented.
- Deconsolidated CTF's financials from Dialog.

RATING SENSITIVITIES

Developments That May, Individually or Collectively, Lead to Positive Rating Action Include:

- There is no scope for an upgrade as Dialog is at the highest rating on the Sri Lankan National Ratings scale

Developments That May, Individually or Collectively, Lead to Negative Rating Action Include:

- FFO adjusted net leverage above 3.5x, provided there is no further strengthening of rating linkages with the parent, Axiata.

LIQUIDITY

Solid Liquidity: At end-2017, Dialog had sufficient unrestricted cash balance of LKR7.9 billion and undrawn committed bank facilities of LKR13.6 billion to pay for its short-term debt maturities of about LKR11 billion. 

Dialog has strong access to local banks, being among the largest corporates in Sri Lanka. Debt consists mainly of a USD149 million syndicated facility and LKR10 billion bank loan.

Sri Lanka's Melsta Regal Finance rating watch revised after Fairfax take-over

ECONOMYNEXT - Fitch Ratings said an 'A+(lka)' rating of Sri Lanka's Melsta Regal Finance has been revised to 'evolving' from 'negative' after Fairfax Financial Holdings of Cananda said it was taking over the firm.

"The Rating Watch Evolving reflects the uncertainty of the announced acquisition's impact on MRF's rating," Fitch said.

"We believe Fairfax has the ability to provide extraordinary support to MRF if required, but there is a lack of clarity on the probability of support from Fairfax and MRF's importance to its new ultimate parent."

A Fairfax led consortium said it will pay 2.5 billion rupees to Melstacorp Plc, to buy 100 percent of Melta Regal Finance though Bluestone1 (Pvt) Ltd.

The full statement is reproduced below:

Fitch Revises Rating Watch on Melsta Regal Finance to Evolving from Negative
Fitch Ratings-Colombo-05 April 2018: Fitch Ratings has revised the Rating Watch on Melsta Regal Finance Ltd's (MRF) National Long-Term Rating of 'A+(lka)' to Evolving from Negative.

The rating action follows the announcement dated 2 April 2018 that a consortium led by Fairfax Financial Holdings Limited of Canada (Fairfax) will acquire 100% of the equity in Sri Lanka-based MRF from its current parent, Melstacorp PLC (MC) for LKR2.5 billion. Fairfax will be the single largest shareholder of MRF after the completion of the transaction with effective control of 70% of the company via Bluestone1 (Private) Limited, a special purpose vehicle established for the acquisition of MRF.

MRF's rating of 'A+(lka)' was driven by Fitch's expectation of support from the Melstacorp group through parent MC. However, Fitch believes that support from MC can no longer be relied upon.

KEY RATING DRIVERS

The Rating Watch Evolving reflects the uncertainty of the announced acquisition's impact on MRF's rating. We believe Fairfax has the ability to provide extraordinary support to MRF if required, but there is a lack of clarity on the probability of support from Fairfax and MRF's importance to its new ultimate parent.

MRF's rating will be reassessed in the event that support from Fairfax cannot be relied upon, and will be downgraded by multiple rating categories to its standalone level, which is materially weaker than the current support-driven National Long-Term Rating.

RATING SENSITIVITIES

MRF's rating could be upgraded if Fitch determines that Fairfax would be willing to provide extraordinary support to MRF, if required.

The National Long-Term Rating would most likely be downgraded, possibly to MRF's standalone profile, if the agency views that Fairfax's support cannot be relied upon. This is likely to see MRF downgraded to the 'B' category on the National Rating scale.

Sri Lanka listed firms seek Rs20bn in debt ahead of New Year

ECONOMYNEXT - Debt issues of up to 20 billion rupees of two state-controlled listed companies, Sri Lanka Telecom and People's Leasing and Finance, and private bank Nations Trust will open on 11 April two days prior to the Sinhala and Tamil New Year, the Colombo Stock Exchange said.

The stock exchange on Friday said it approved the three debenture issues which will be listed.

People's Leasing closed 10 cents lower at 15.70 rupees, Sri Lanka Telecom fell 20 cents to 26.90 rupees and Nations Trust fell 1 rupee to 80.20 rupees.

People's Leasing and Finance PLC, a unit of state-controlled People's Bank, is hoping to raise 6 billion rupees in debt capital.

The finance company offering 40 million listed, rated, unsecured, senior redeemable debentures at 100 each valued at 4 billion rupees.

If oversubscribed People's Leasing may offer a further 20 million debentures at the same price for 2 billion rupees.

The debentures are rated AA-(lka) by Fitch Ratings.

People's Bank's Investment Banking Unit is managing the issue.

State-controlled Sri Lanka Telecom's 7 billion rupee debenture issue rated AAA(lka) by Fitch also opens 11 April.

The telco is offering 50 million senior, unsecured, redeemable, rated debentures at 100 rupees each for 5 billion rupees.

If oversubscribed Sri Lanka Telecom may exercise an option to offer 20 million more debentures in two stages for 2 billion rupees.

Acuity Partners is managing the issue.

Private bank Nations Trust is offering 35 million debentures at 100 rupees each for 3.5 billion rupees, with an option to double the issue if oversubscribed which could see the bank raise 7 billion rupees.

Sri Lanka tourist arrivals up 24-pct in March, Chinese visitors down

ECONOMYNEXT – Tourist arrivals into Sri Lanka rose 24.1% to 233,382 in March 2018 from a year ago, despite violence against minority Moslems that prompted the government to impose a state of emergency and led to cancellations of hotel bookings.

The largest source market for tourists in March was India, followed by United Kingdom and Germany, with the number of visitors from China dropping, the Sri Lanka Tourism Development Authority said.

The island received 707,924 tourists up to 31st March 2018 this year, up 17.1% from last year with almost 94% of them coming by air and rest by sea.

Europe continued to be the largest regional source of tourist traffic to Sri Lanka with 53% of the total traffic received in March 2018, Asia and the Pacific accounting for 38 % of the total traffic, America 7%, Middle East 1% and Africa 1%.

India, United Kingdom, Germany, China and France were Sri Lanka’s top five international tourist generating markets in March this year.

India was the largest source of tourist traffic to Sri Lanka with 13% of the total traffic received in March 2018, and up 13% to 30,583 from last year.

The United Kingdom accounted for 13% of the total traffic, while Germany, China and France accounted for 11%, 9% and 6%.

Arrivals from China, which had been one of the fastest growing markets, fell by almost 5% in March 2018 to 21,101.

Sri Lankan stock index hits 11-week closing low ahead of holidays

Reuters: Sri Lankan share index on Monday touched its lowest close in 11 weeks, pulled down by blue-chips stocks in a moderate turnover, as many market participants were on leave ahead of the traditional Sinhala-Tamil New Year this week, brokers said.

The Colombo stock index ended 0.38 percent down at 6,431.10, its lowest close since Jan. 23.

The turnover stood at 679.7 million rupees ($4.37 million), below this year’s daily average of around 1.2 billion rupees.

Market sentiment has improved after Prime Minister Ranil Wickremesinghe survived a no-confidence motion last week, dealers said.

“The turnover was due to some block trade on three stocks. The market wants further direction on the political angle,” said Prashan Fernando, CEO, Acuity Stockbrokers.

“Even before we could observe much reaction to the no-confidence vote, we are going in for a long holiday.”

Ceylinco Insurance (non-voting), John Keells Holdings and Hemas Holdings, which were mainly traded via block deals, together accounted for around 88 percent of the day’s turnover.

Ceylinco Insurance ended 2 percent lower, John Keells closed 0.7 percent lower, Distilleries Company of Sri Lanka Plc ended 7.6 percent lower, and Hatton National Bank closed down 1 percent.

Diversified conglomerate Hemas Holdings ended 0.8 percent higher.

Foreign investors bought shares worth net 102.3 million rupees on Monday, but they have net sold 788.3 million rupees worth of equities.

Dealers expect the stock market to be tepid this week ahead of the Sinhala-Tamil New Year on April 14.

The central bank unexpectedly cut its key lending rate by 25 basis points on Wednesday, as policy makers sought to revitalise an economy growing at its weakest pace in 16 years and facing heightened political uncertainty.

The index fell 0.33 percent last week and dropped 1.14 percent in March.

($1 = 155.4500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez, Editing by Sherry Jacob-Phillips)

Sri Lankan stocks end lower; turnover hits 15-week low

Reuters: Sri Lankan shares slipped on Friday from their highest close in a week hit in the previous session, led by blue-chip stocks with the day’s turnover slumping to a 15-week low ahead of the traditional Sinhala-Tamil New Year later next week, brokers said.

The turnover stood at 134.6 million rupees ($866,152), its lowest since Dec. 22, 2017, and well below this year’s daily average of around 1.2 billion rupees.

The Colombo stock index ended 0.3 percent down at 6,455.32, edging down from its highest close since March 29 hit on Thursday.

The central bank unexpectedly cut its key lending rate by 25 basis points on Wednesday, as policy makers sought to revitalise an economy growing at its weakest pace in 16 years and facing heightened political uncertainty.

The index fell 0.33 percent during the week and dropped 1.14 percent last month.

“Market conditions were extremely slow with the festival season ahead. Foreign outflow is also continuing,” said Dimantha Mathew, head of research, First Capital Holdings.

Foreign investors sold shares worth net 19.1 million rupees on Friday extending the year-to-date net foreign outflow to 890.7 million rupees worth of equities.

Shares in Distilleries Company of Sri Lanka Plc ended 3.2 percent lower, while Dialog Axiata Plc closed 0.7 percent down, Soflogic Holdings Plc ended 2.6 percent weaker and John Keells Holdings Plc closed 0.3 percent lower.

($1 = 155.4000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez, Editing by Sherry Jacob-Phillips)

Sri Lankan stocks climb to 1-week high; foreign buying boosts turnover

Reuters: Sri Lankan shares climbed on Thursday to their highest close in one week as Prime Minister Ranil Wickremesinghe survived a no-confidence motion, easing political uncertainty, dealers said.

Wickremesinghe won the motion as late on Wednesday as a majority of legislators voted to support his coalition government but the instability caused may damage its reform agenda.

The Colombo stock index ended 0.47 percent up at 6,474.70, edging up from its lowest close since March 28 hit on Wednesday.

The stock market gains come a day after the central bank unexpectedly cut its key lending rate by 25 basis points, as policy makers sought to revitalise an economy growing at its weakest pace in 16 years and facing heightened political uncertainty.

The index climbed 0.51 percent last week, its first weekly gain in five, but dropped 1.14 percent last month.

Distilleries Company of Sri Lanka Plc rose 4.8 percent.

“There was an initial spike with some buying interest in Distilleries, while foreign buying dominated the turnover levels,” said Dimantha Mathew, head of research, First Capital Holdings.

The turnover stood at 993.4 million rupees ($6.39 million), lower than this year’s daily average of around 1.2 billion rupees.

Foreign investors bought shares worth net 421.9 million rupees on Thursday, but they have been net sellers of 871.6 million rupees worth equities so far this year.

Ceylon Tobacco Company Plc ended 0.8 percent higher, while Lanka ORIX Leasing Company Plc rose 2.3 percent and Hatton National Bank Plc firmed 0.9 percent. 

($1 = 155.4000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

Sri Lankan stocks fall to 1-week low as political woes weigh

Reuters: Sri Lankan shares fell on Wednesday to their lowest in one week as political uncertainty hurt sentiment ahead of a no-confidence vote against Prime Minister Ranil Wickremesinghe, brokers said.

The prime minister faces the vote at around 1600 GMT that could go down to the wire and lead to political instability in the island nation, even if the government manages to scrape a win.

Meanwhile, Sri Lanka’s central bank unexpectedly cut its key lending rate by 25 basis points on Wednesday, as policy makers sought to revitalise an economy growing at its weakest pace in 16 years and facing heightened political uncertainty.

The Colombo stock index ended 0.22 percent down at 6,444.41, its lowest close since March 28.

The index climbed 0.51 percent last week, its first weekly gain in five, but dropped 1.14 percent last month.

“Market is down due to weak buying interest from the local investors as they are waiting for direction after the no-confidence motion,” said Dimantha Mathew, head of research, First Capital Holdings.

“The biggest deterrent is the political uncertainty. The rate cut did not have an impact today.”

The turnover stood at 1.2 billion rupees ($7.7 million), same as this year’s daily average of around 1.2 billion rupees.

Foreign investors sold shares worth net 152.9 million rupees on Wednesday, extending the year-to-date net foreign outflow to 1.29 billion rupees worth equities.

Shares in Distillers Sri Lanka Plc fell 16.7 percent and Ceylon Cold Stores Plc ended 2.1 percent down. 

($1 = 155.8500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

Sri Lankan stocks end higher on illiquid shares; no-confidence vote weighs

Reuters: Sri Lankan share index ended firmer on Tuesday, edging up from its nine-week closing low hit last week, as investors picked up illiquid shares of Distilleries Company of Sri Lanka Plc, but political woes over a no-confidence motion against the prime minister weighed on sentiment, brokers said.

The Colombo stock index ended 0.13 percent firmer at 6,458.33, edging up from its lowest close since Jan. 23 hit on Wednesday.

The index climbed 0.51 percent last week, its first weekly gain in five, but dropped 1.14 percent last month.

“The overall investor sentiment was on a wait-and-watch mode ahead of the no-confidence motion. There were some activities on illiquid distilleries, which moved the market up today,” said Dimantha Mathew, head of research, First Capital Holdings.

The turnover stood at 530.1 million rupees ($3.40 million), less than this year’s daily average of around 1.2 billion rupees.

Foreign investors sold shares worth net 128.2 million rupees on Tuesday, extending the year-to-date net foreign outflow to 1.14 billion rupees worth equities.

Political uncertainty and worries over a slowing economy weighed on sentiment, brokers said.

Prime Minister Ranil Wickremesinghe is facing a no-confidence motion, which will be debated on Wednesday before voting, with analysts saying support from many political parties will be needed for Wickremesinghe to clear the vote.

Cautious investors await the outcome of the rate announcement, said analysts.

Sri Lanka’s central bank is expected to keep key interest rates unchanged on Wednesday after a rate review, but economists in a Reuters poll are not ruling out the possibility of a rate cut to help bolster economic growth that has slipped to a 16-year low.

Shares in conglomerate John Keells Holdings Plc ended 0.25 percent higher, while Overseas Realty Ceylon Plc ended 6.1 percent up and Distillers Sri Lanka Plc closed 5 percent higher.

Sri Lanka’s economy grew by 3.1 percent in 2017, the slowest in 16 years and well below the 4.5 percent seen in 2016, revised government data released showed last week.

($1 = 155.7500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez, Editing by Sherry Jacob-Phillips)