Sri Lanka tourist arrivals up 6.2-pct in May 2018

ECONOMYNEXT - Sri Lanka's tourism arrivals grew 6.2 percent to 129.466 in May 2018 from a year earlier with strong growth in visitors from India and Australia while Chinese visitors fell, data from the state tourism promotion office showed.

Indian visitors grew 23 percent to 34,167 but Maldives fell 19 percent to 4,343 in the fasting month of Ramadan.

Malaysian arrivals fell 23 percent to 1,604, and visitors from the Middle East also fell 22 percent to 1,954.

Chinese visitors fell 7.5 percent to 17,103. But up to May 2018, 149,197 visitors have arrived, up from 117,539 last year.

UK arrivals grew 9.6 percent to 9,337, while visitors from Germany grew 8.7 percent t 6,906.

Arrivals from Australia surged 28 percent to 4,873, after state-run SriLankan Airlines started direct flights. Up to May 42,808 Australians have come, up from 28,734 last year.

Japanese visitors also grew 48.5 percent to 4,229 and US visitors grew 24 percent to 4,123.

In the first five months of the year 1,017,819 tourists have come to Sri Lanka up 14.7 percent from last year.

In 2017, 2,116,407 visitors came with weak arrivals up to May due to a partial airport closure.

Tax hike to trim profits of Sri Lankan life insurers: Fitch

ECONOMYNEXT – Higher taxes are likely to reduce profits of Sri Lankan life insurance companies, Fitch Ratings said in a new report on the sector.

Fitch said it expects changes in the Inland Revenue Act, which came into effect on 1 April 2018, to lower the net profits of life insurers.

Under the new law, surplus distributions to shareholders from policyholder funds and investment income of shareholder funds (less allowable expenses) are taxed at 28%.

Earlier, most of the life insurers paid lower taxes under the ‘investment income minus management fees’ method, which resulted in a lower tax base.

“In addition, distributions to participating life policyholders, which were not taxed previously, are now taxed at 14% and will be increased to 28% from 2021,,” Fitch Ratings said.

However, the rating agency said Sri Lankan insurers are likely to cope with extreme weather events whose increasing frequency has raised risks and industry growth will continue given low insurance penetration.

“Fitch Ratings expects the exposure of Sri Lanka’s non-life insurers to extreme weather-related events to be manageable due to extensive use of reinsurance,” the report said.
“However, reinsurers are seen to be reducing ceding commissions to reflect the increasing risk of catastrophes.” 

Sri Lanka has seen a recurrence of extreme weather-related events – back-to-back floods in May 2018 and over the past two years, and a prolonged drought in several parts of the country.

Fitch Ratings said it believes these extreme weather events may raise long-term risks for insurers’ capital.

But Fitch expects the insurance sector to continue its growth momentum, driven primarily by the rising per capita income, growing awareness on insurance, and considerably lower insurance penetration supporting the growth potential.

Foreign investors sell down some Sri Lanka bonds

ECONOMYNEXT - Foreign investors had sold down about 2.8 billion rupees of bonds in the week to June 2018, amid political uncertainty, in a trend that began about four weeks ago, official data showed.

Foreign investor holdings grew up to April 25 and sales began as the rupee came under pressure and some political uncertainty with President Maithripala Sirisena attacking the main partner in the coalition.

In the week to May 02, foreign bond holdings fell by 5.0 billion rupees from a peak of 323 billion rupees to 318 billion rupees.

By May 23 it was down to 308 billion rupees but it eased on May 30 to 307.28 billion rupees. This week the stock was down to 304.45 billion rupees.

Sri Lanka's central improved monetary policy in the past two weeks, though it cut rates and injected cash in the first weeks of April.

In 2015 the credibility of the peg was lost with a rate cut which led to foreign investor sales, but liquidity injections began long before as credit picked up in the last quarter of 2014.

In the absence of printed money banks that buy bonds from exiting investors cannot also give credit.

Sri Lanka’s Hatton Plantations to build more tea factories

ECONOMYNEXT – Sri Lanka’s Hatton Plantations PLC plans to build more tea factories as it seeks to take advantage of its standalone position and focus on its core business after being separated from Watawala Plantations.

The company intends to maximise on the opportunity which affords it total focus on the production of high quality tea for domestic and international markets, chairman Sunil Wijesinha has said.

“Expecting a quantum leap in the production of high quality tea, fit for our international and domestic markets, we can now synergise our efforts to make our operating theme a reality,” he told shareholders in the company’s annual report.

Hatton Plantations was incorporated in September 2017 to carry out the existing upcountry tea business of Watawala Plantations.

Hatton Plantations is 75.65% owned by Estate Management Services (Private) Limited, a joint venture in which Sunshine Holdings PLC has 60% and Pyramid Wilmar Plantations (Private) Limited 40%.

Wijesinha said its joint venture partner’s input in the area of modern technology is invaluable for operations across the company.

“Building on this platform, we plan to establish state-of-the-art factories in all our estates,” he said.

Hatton Plantations currently is involved in cultivation and production of tea from 14 estates located in the Central Province of Sri Lanka with over 5,000 hectares of arable land at elevations reaching 4,800 feet above sea level.

Operating as a stand-alone company has certain benefits, the company said.

“Chief among them is that HPL can synergise all its efforts at producing premium quality tea, fit for international and domestic markets,” the report said.

“As its stand-alone position allows us to focus purely on production of tea, we currently produce over thirty-five different grades.”

Sri Lanka 01-year Treasury Bill yield falls to 9.49-pct

ECONOMYNEXT – Sri Lanka's 01-year Treasury Bill yield fell 13 basis points to 9.49% at an auction Wednesday, data from the state debt office showed.

The 06-month bill yield also fell, down 06 basis points to 8.87% from last week, the public debt department of the central bank said.

The yield on the 03-month bill remained steady at 8.34% with only 312 million rupees in bids being accepted although 2.5 billion rupees in bills were offered.

The debt office offered 5.0 billion rupees of 12-month bills and accepted 5.68 billion rupees of bids.

It offered 2.5 billion rupees of 06-month bills and accepted 04 billion in bids.

Colombo Stock Exchange (CSE) transfers companies to Watch List due to non-submission of reports

LBO - Colombo Stock Exchange has transferred nine companies to their Watch List with effect from today due to non-submission of interim financial statements for the period ended 31 March 2018.

Accordingly, Anilana hotels and properties, Adam capital, Tess agro, Ceylon & foreign trades, Janashakthi, Ceylon printers, Lucky Lanka milk processing, Office equipment and Paragon Ceylon have been transferred to Watch List.

Hotel developers (Lanka), has also been transferred to Colombo Stock Exchange’s Watch List due to non-submission of annual report 2017.

Sri Lankan shares at more than 5-mth closing low; blue-chips drag

Reuters: Sri Lankan shares fell for a third straight session on Friday and ended at a more than five-month low, dragged down by diversified shares such as John Keells Holdings Plc, brokers said.

The Colombo stock index ended 0.14 percent weaker at 6,354.92, its lowest close since Dec 26.

“It was a slow day and we saw some foreign buying, which is a good sign. But most of the investors are waiting for better bargains,” said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

“Economic concerns and the rupee depreciation are the key concern for investors.”

Most of the investors have adopted a wait-and-watch approach, hoping for some positive news on the economic front, analysts said.

Turnover was 326.2 million rupees ($2.05 million), a third of this year’s daily average of 975.8 million rupees.

Foreign investors bought net 12.5 million rupees worth of equities on Friday. The market, however, has witnessed a year-to-date net foreign outflow of 554.6 million rupees worth of shares.

A weaker rupee, political uncertainty and the recent fuel price hike weighed on sentiment in the past week with local investors remaining on the sidelines as they gauged the impact of the floods that killed 24 people in the island nation last month, brokers said.

The rupee touched a record low of 158.90 per dollar on Thursday owing to the greenback demand from importers.

Shares in the biggest listed lender, Commercial Bank of Ceylon Plc, fell 0.9 percent while Sri Lanka Telecom Plc ended 2.7 percent weaker. Conglomerate John Keells Holdings Plc ended 0.5 percent weaker and Access Engineering Plc lost 4.0 percent. 

($1 = 159.0000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez)