Sri Lankan stocks drop to near 3-week closing low; communal clash weighs on market

Reuters: Sri Lankan shares dropped to their lowest close in nearly three weeks on Tuesday amid investors’ concerns about communal violence.

The country declared a nationwide state of emergency for 10 days on Tuesday to stop the spread of violence, after clashes erupted between majority Buddhists and members of the minority Muslim community.

“Market came down with investors worried over the government declaring state of emergency,” said Atchuthan Srirangan, a senior research analyst at First Capital Holdings PLC.

“Investors are waiting to see how foreign investors will react to this state of emergency.”

The Colombo stock index ended 0.3 percent weaker at 6,533.46, following a 0.28 percent drop last week.

Turnover was 436.8 million rupees ($2.82 million), less than half of this year’s daily average of 954.9 million rupees.

Analysts said local investors continued to be on the sidelines as they were still worried about political uncertainty.

Foreign investors bought a net 27.9 million rupees worth of shares on Tuesday, extending the year-to-date net foreign inflow to 6 billion rupees worth of equities so far this year.

Shares of conglomerate John Keells Holdings Plc fell 0.7 percent, Ceylon Tobacco Co Plc ended 0.4 percent weaker and Browns Investments Plc declined 7.7 percent.

Sri Lanka’s two key parties in the ruling coalition last week decided to remain in the ruling coalition, allaying fears of a government collapse.

President Maithripala Sirisena reshuffled his cabinet last week, appointing his prime minister as the law and order minister, after the governing coalition suffered a series of defeats in local elections earlier this month.

However, the changes failed to boost the market as the cabinet reshuffle was not enough to address the election defeats, analysts said. 

($1 = 155.0000 Sri Lankan rupees) 

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

Sierra Cables Plc, wins Rs872mn power cable deal

ECONOMYNEXT - Sri Lanka's Sierra Cables Plc, a publicly traded company had won an 872 million rupee deal to supply cables to state-run Ceylon Electricity Board.

The cabinet of ministers had approved a proposal to buy the cables from Sierra cables for 872.96 million rupees.

Sierra will supply 3x70+54.6+16sqmm aerial bundled cables.

Sierra Cable Plc group lost 8.08 million rupees in December 2017 quarter, down from a profit of 103 million rupees a year earlier.

Revenues fell to 1,086 million rupees in the quarter from 1,102 million a year earlier, costs rose to 932.8 million rupees from 884.7 million rupees and gross profits fell to 133 million rupees from 218 million rupees.

Sri Lanka's Industrial Asphalts leases out flood-hit site

ECONOMYNEXT – Sri Lanka’s Industrial Asphalts (Ceylon) (IAC) has leased out the site of its plant where operations were disrupted operations by floods in May 2016 to a unit of Thailand’s Siam City Cement Public Company Limited.

A stock exchange filing said IAC will lease the site at No. 28/1, New Nuge Road, Peliyagoda, on the banks of the Kelani river, north of Colombo, to Siam City Cement (Lanka) Ltd for 10 years.

The operations of IAC, which makes bituminous products and surface coatings for industry and household use, including road construction and maintenance, will be shifted to another site at Peliyagoda under a new subsidiary.

Sri Lanka's Hapugastenne Plantations expands pepper, cinnamon

ECONOMYNEXT - Sri Lanka's Hapugastenne Plantations has expanded pepper and cinnamon cultivation as well as forestry cover to diversify revenues, boost land use and protect the soil, the firm said.

"We consider it prudent to embark on a diversification strategy whilst reducing dependency on major plantation crops to expand the cinnamon plantations of the Company," Chief Executive Dushanth Ratwatte told shareholders in the annual report.

The firm has identified pepper, cinnamon and cocoa to diversify, from over dependence on tea and rubber. The company had added 24 hectares of cinnamon and planted 10,000 pepper vines using low-shade trees of tea plantation, increasing land use.

The firm had earned revenues of 26 million rupees from cinnamon last year. Another 8 million had come from pepper.

Hapugastenne had planted 800 hectares of rubber over the last 5 years, despite erratic prices making revenues volatile.

The company had also planted 1,493 hectares of timber trees. The plantations were less than 25 years old.

Sri Lanka privatized the plantations in the mid-1990s. Hapugastenne's parent is Finlays group. Finlays UK has given Hapugastenne over 450 million rupees in loans at rates of 3.5 percent to 6.0 percent to invest.

Central Bank cancels CIFL license; legal action against responsible parties

LBO - Monetary Board of the Central Bank has decided to cancel the licence issued to CIFL under the Finance Business Act with effect from today.

Director of the Department of Supervision of Non- Bank Financial Institutions of the Central Bank has also decided to cancel the Certificate of Registration as a Registered Finance Leasing Establishment under the Finance Leasing Act.

Accordingly, CIFL is not permitted to engage in Finance Business under the FBA and to grant new finance lease facilities under FLA with effect from today.

Central Investments and Finance (CIFL), a Licensed Finance Company in Sri Lanka has been facing severe financial problems over the last four years due to mismanagement and various fraudulent activities taken place in the company.

Depositors of the company have failed to withdraw their money over the last four years. All efforts made to revive the company through different strategies have been failed.

“The continuity of current status will further detrimental to the interest of depositors and other stake holders of the company,” the Central Bank said.

“Sri Lanka Deposit Insurance and Liquidity Support Scheme will take necessary actions to pay compensation to the insured depositors under the applicable laws and regulations.”

The Central Bank further said depositors may be able to recover some of their dues in the process of liquidation subject to the priority of claims.

“All debtors of the company are required to pay their dues to the company through a Bank account announced by the company,”

“Central Bank wishes to emphasize that legal actions will be taken against the responsible parties for the mismanagement and fraudulent activities of the company.”