Access Realties leases prime land in Sri Lankan capital for Rs1.1bn

ECONOMYNEXT – Sri Lanka’s Access Realties has got 114.56 perches of prime land in the capital Colombo for 1.1 billion rupees on a 99-year lease, the state information office said in a statement.

The Cabinet of ministers this week approved a proposal by Patali Champika Ranawaka, Minister of Megapolis and Western Development, to lease the land at Mudalige Mawatha, in Union Place, Colombo 2.

Access Realties is the commercial real estate development arm of the Access Engineering construction group.

Sri Lanka’s MTD Walkers reveals rating downgrade after regulator query

ECONOMYNEXT – Sri Lanka’s MTD Walkers said its rating had been downgraded to [SL]BB- with negative outlook from [SL]BB+ with negative outlook, by ICRA Lanka Ltd, a rating agency.

The stock exchange announcement came in response to a query by the Colombo Stock Exchange.

The downgrade by ICRA Lanka Limited, a subsidiary of ICRA Limited, which is part of Moody’s Investors Service, had been done in May this year.

MTD Walkers, which has been making losses, said it had “incorrectly assumed the availability of the rating online at the ICRA Lanka website would be considered as adequate disclosure of price sensitive information."

It assured the CSE that all future rating revisions are released in line with stock exchange rules.

Suzuki small cars dominate Sri Lanka August vehicle registrations

ECONOMYNEXT – Suzuki small cars continued to dominate new and pre-owned vehicle registrations in Sri Lanka in August as well as hybrids, an analysis by an equities research house shows.

In the brand-new segment, August recorded 890 units, marginally down from 904 units the previous month and 1,183 units 12 months ago, JB Securities, a Colombo-based brokerage said.

Small cars below 1,000 cc accounted for 93.4% of total volumes, it said.

“Maruti/Suzuki continued to be the market leader accounting for 465 units – 255 Wagon Rs, 150 Altos and 60 Celerio models,” the report said.

Financing’s share was 54.6%, slightly down from 55.2% the previous month.

“Preowned cars recorded 6,112 units in August, marginally down from 6,258 units in July but almost 200% up from 12 months ago,” JB Securities said.

Small cars accounted for 89.4% of total volumes – 5,466 units.

“Suzuki accounted for the bulk of small cars, recording 3,726 units,” JB Securities said.

The report said 650cc Suzuki models accounted for 3,486 units comprising mainly Wagon R followed by Spacia.

Next came Toyota with 1,493 units of which 1,000 cc models accounted for 1,020 units, mainly Vitz.

Financing’s share was 55.5% in line with the previous month.

Sri Lanka 3-month Treasuries yield rise 49bp at auction

ECONOMYNEXT - Sri Lanka' 3-month Treasury bill yields rose 49 basis points to 8.56 percent at Wednesday's auction up from 8.07 percent two weeks ago, data from the state debt office showed, giving support to the rupee.

The 12-month yield rose 46 basis points to 9.51 percent.

The debt office, which is a unit of the central bank offered 3.0 billion rupees of 3-month bills and accepted 1.8 billion rupees and accepted 3,302 billion rupees of bids.

Analysts say in the past the central bank had perpetuated balance of payments crises by intervening in Treasury bill auctions, buying bills held by banks with printed money by rejecting real bids to increase rupee reserves in banks and manipulating the yield curve downward up to 3-months or more.

But if the three month rates are market-determined it will support the rupee, long time watchers of Sri Lanka's unstable soft-peg say.

Last week an entire auction was rejected generating fears that money would be printed up to three months or more, keeping not only overnight rates down but further down the yield curve.

Any money printed into the banks by taking Treasury bills of banks, into the balance sheet of the central bank then end up as credit imports in the forex market, while loan-to-deposit ratios of lenders deteriorate.

However the central bank injected term money only up to 7 days and kept the overnight market short, by over 30 billion rupees, generating more support for the rupee. Overnight markets have been short for the past 7 days.

The faster the rupee pressure ends, the faster people can get back to normal work, and interest rates can normalize, analysts say.

Bond yield have risen in recent days amid liquidity shortages. The auction also narrowed the gap between bills and bonds.

Morisons de-listing deadlocked on Sri Lanka rule

ECONOMYNEXT - A proposed de-listing Sri Lanka's Morisons Plc, has hit a road block after minority shareholders opposed proposal for the parent to buy up remaining shares under existing rules which has also deadlocked other attempts to take firms private.

Sri Lanka has imposed tight minimum float rules - which critics have said is in some ways than the New York Stock Exchange - forcing many firms to go out of the stock exchange and de-list.

"…[T]he resolutions for the delisting of the Company from the Colombo Stock Exchange were not adopted by the shareholders of the company at the Extraordinary General Meeting…" the Morisons said in a stock exchange filing.

Under Sri Lanka's rules on de-listing minority shareholders present at the meeting have to approve a de-listing by a show of hands without regard to the stake of the controlling shareholder.

The rule has prevented several firms from de-listing, despite the offer of prices above market to take firms private.

Hemas Holdings Plc, the parent of Morisons, had offered 850 rupees for what is called an 'ordinary share' in Sri Lanka and 700 rupees for a non-voting share. In August Morisons ordinary shares traded at 625 rupees and non-voting shares at 531.70 rupees.

Under general principles accepted internationally ordinary shares are supposed to rank 'pari pasu' or equal.

Earlier a unit of AIA Insurance was also unable to de-list despite offering an above market price. Insurance firms were at one time encouraged to list for governance and transparency.

The coercive minimum float rule also created an extraordinary situation of forcing Property Development, a unit of state-run Bank of Ceylon to de-list and go back into state hands, at a time when calls are being made for state firms to be listed, partly to improve governance. Even in communist nations, small stakes of state firms are being listed.

However minority shareholders blocked the de-listing of Property Development as well, with the aid of the rule requiring a show of hands.

In a well-functioning market firms can be taken private voluntarily provided the controlling shareholders have large majority of shares.

There are fears that the inability to take firms private, like in well-functioning markets will eventually discourage owners of private firms from coming for listings in the first place.

Sri Lanka rupee recovers from record low; stocks down amid foreign outflows

Reuters: The Sri Lankan rupee recovered on Friday to close firmer on central bank intervention after the currency touched its record low hit in the previous session, while shares fell for a second straight session amid foreign outflows.

** The rupee touched its all-time low of 169.40 per dollar hit on Thursday on importer demand for the greenback and foreign selling in government securities, but intervention by the central bank helped the currency close firmer, market sources said.

** The rupee ended at 169.15/30 per dollar, compared with the previous close of 169.35/55.

** The rupee has weakened 4.7 percent so far this month against the dollar after a 1.2 percent drop in the previous month, and has declined 10.2 percent so far this year.

** The Colombo stock index fell 0.12 percent to 5,862.18. The index hit its lowest close since Dec. 18, 2013 on Tuesday.

** Data from the central bank showed foreign investors sold government securities worth a net 8.8 billion rupees ($52.19 million) in the week ended Sept. 19, the highest since the week to Dec. 6. Sri Lanka has suffered a net outflow of 62.3 billion rupees in securities so far this year.

** Stock market turnover was 663.1 million rupees ($3.92 million) on Friday, less than this year’s daily average of 787.8 million rupees.

** Foreign investors sold a net 58.1 million rupees worth of shares on Friday, extending the year-to-date net foreign outflow to 5.83 billion rupees worth of equities. 

($1 = 169.0000 Sri Lankan rupees) 

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