Sri Lanka bond commission raises red flag over EPF stock market scams

ECONOMYNEXT - A presidential commission of inquiry into Sri Lanka's largest securities fraud involving rigged bond auctions in 2015 and 2016 had drawn a red flag over alleged frauds in the stock purchases by central bank managed Employees Provident Fund from 2010.

The commission said transactions of the EPF retirement fund on the stock exchange from 2010 onwards should be examined, and consideration should also be given to probe the losses of the central bank itself around the period.

The commission said there were allegations in the public domain that the EPF engaged in large scale deals in companies such as the Piramal Glass Ceylon, Galadari Hotels (Lanka) Plc, Laugfs Gas Plc, Ceylon Grain Elevators and Brown and Company, whose prices then crashed.

"Transactions raised the inference of "pumping and dumping" and "market manipulations," the commission report noted.

"There were allegations that, the EPF knowingly acquired Shares which resulted in the EPF incurring substantial losses.

"However, the CBSL is not seen to have taken any substantive action, at that time, to investigate or to clear the air with regard to these allegations even though the trail of the Transactions entered into by EPF was publicly known since these Transactions took place on the Colombo Stock Exchange."

The commission said the "politicization" of the central bank during the last administration and lack of corrective action laid the foundation for the bond frauds committed in 2015 and 2016.

Saman Kumara and Udayaseelan, EFP dealers involved in buying bonds from Perpetual Treasuries in 2015 and 2016, were officers of the fund management division of the EPF during 2010-2012, the commission said.

Perpetual Asset Management (Pvt) Ltd, Perpetual Capital (Pvt) Ltd, were companies that were active in the stock market before 2012, according to evidence given by Perpetual Treasuries Chief Executive Kasun Palisena.

The commission also called for a forensic probe on direct placements of bonds between 2008 and 2015. The commission said the monetary board of the Central Bank had given approval to directly place bond at captive sources - such as the EPF and state banks.

But they had also been placed at primary dealers, apparently with the tacit approval of the monetary board.

There have been allegations that the placement had occurred at questionable rates, even to companies as well as foreign investors.

Sri Lanka calls managers to sell up to US$2bn in sovereign bonds

ECONOMYNEXT - Sri Lanka has called proposals from banks and investment houses to sell up to 2.0 billion US dollars in sovereign bonds in 2018.

The bonds could be sold in single or multiple tranches, the Central Bank said.

Proposals have to be submitted by January 23.

Central Bank Governor Indrajit Coomaraswamy said he would prefer to go to market early in 2018 before the US Fed raised interest rates further.

Rating agencies had upgraded Sri Lanka's sovereign rating on the back of lower budget deficit and higher tax revenues though economic growth slowed as the country recovered from a money printing bout in 2015/2016 as well as a drought.

But data showed that in the third quarter of 2017, job losses in farming and been more than made up for by job gains in industry and services.

Dialog Axiata raises stake in Sri Lankan e-learning firm

ECONOMYNEXT – Sri Lankan mobile phone operator Dialog Axiata has increased its stake in e-learning firm Headstart (Private) Limited to just over 50% by converting bonds to equity.

Headstart creates e-learning programs and owns the digital education portal Guru.lk, a stock exchange filing said.

Dialog said its fully-owned subsidiary Digital Holdings Lanka (Private) Limited now controls 50.59% of Headstart.

The conversion of bonds which raised its stake in Headstart was effected on 1 January 2018.

Sri Lankan shares extend fall on foreign selling

Reuters: Sri Lankan shares fell for a seventh straight session on Thursday and closed at their lowest in nearly three weeks, as foreign investors turned net sellers for the first time in 14 sessions while local players stayed on the sidelines.

Foreign investors, who have been net buyers of 2.7 billion rupees worth shares so far this year, sold equities worth net 279.5 million rupees ($1.82 million) on Thursday, especially banks and blue chips.

They net bought 18.5 billion rupees worth equities in 2017 and 633.5 million rupees in 2016.

The Colombo Stock Index ended 0.45 percent weaker at 6,410.11, its lowest close since Dec. 29. It has shed 2 percent in the past seven sessions.

“Market came down on some foreign selling. But turnover was pushed up by foreign trade,” said Atchuthan Srirangan, a senior research analyst with First Capital Holdings PLC.

Turnover stood at 1.3 billion rupees, higher than last year’s daily average of 915.3 million rupees.

Shares in Commercial Bank of Ceylon Plc dropped 2.8 percent, Hemas Holdings Plc declined 4.1 percent, and Ceylon Cold Stores Plc fell 2.1 percent. 

($1 = 153.8000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lanka 01-year Treasury yield rises to 8.85-pct

ECONOMYNEXT – Sri Lanka’s one-year Treasury Bill yield rose 05 basis points to 8.85% at an auction Wednesday, reversing a falling trend in recent weeks, the central bank’s public debt department said.

The yield on the 06-month bill fell 09 basis points to 7.97% from 8.06% at the last auction, while the 03-month bill was not offered, a statement said.

The public debt department got bids worth Rs51 billion and accepted bids of Rs21.5 billion, the exact amount offered.