Sri Lanka stocks steady at over 11-month high ahead of rate decision

(Reuters) - Sri Lanka stocks edged up on Monday to their highest close in more than 11 months ahead of the central bank's monetary policy announcement, led by telecoms and financials, while foreign buying boosted sentiment.

The main stock index edged up 0.06 percent, or 4.05 points, to 6,319.24, its highest close since June 10 last year.

The central bank will release its monetary policy rates at 0200 GMT on Tuesday. The market broadly expects rates to be left steady at their current multi-year lows.

The exchange witnessed net foreign inflows of 178.3 million rupees ($1.4 million) on Monday, extending year-to-date net foreign inflows to 859.8 million.

Shares of top mobile phone operator Dialog Axiata ended up 2.1 percent to 9.70 rupees, while Ceylinco Insurance Plc and NDB Capital Holdings Plc gained 6.2 percent each.

The market has been on a rising trend since mid-March as many investors were compelled to return to the stock market because low interest rates have made fixed-income assets less attractive, stockbrokers said.

The index has risen 1.5 percent in the last seven sessions.

But analysts have raised concerns over sluggish economic growth because of lower credit growth and consumer spending.

Despite a multi-year low interest rate regime, data showed private sector credit grew 4.4 percent in February from a year earlier, the slowest expansion since May 2010, while imports in February fell 6.2 percent on the year.

On Monday, central bank Governor Ajith Nivard Cabraal said Sri Lanka's private sector credit growth would pick up to around 15 percent by the end of this year and continue to improve through 2016.

($1 = 130.3500 Sri Lanka Rupees) 

(Reporting by Shihar Aneez; Editing by Prateek Chatterjee)

Sri Lanka stocks close higher

May 19, 2014 (LBO) - Sri Lanka's stocks closed 0.06 percent higher Monday with banking and telco stocks gaining amid net foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 4.05 points higher at 6,319.24 up 0.06 percent. The S&P SL20 closed 6.38 points lower at 3,472.79, down 0.18 percent.

Turnover was 589.93 million rupees, down from 1.61 billion rupees last Friday with 93 stocks closed positive against 101 negative.

Commercial Bank closed 60 cents lower at 129.00 rupees with market transactions of 67.11 million rupees contributing 12 percent of the turnover while an off market trade of 50.50 million rupees contributing 9 percent of the daily turnover.

JKH’s W0022 warrants closed 1.00 rupee higher at 64.00 rupees and Vallibel One closed 50 cents higher at 20.40 rupees, attracting most number of trades during the day.

Foreign investors bought 255.98 million rupees worth shares while selling 77.65 million rupees worth shares.

Dialog Axiata closed 20 cents higher at 9.70 rupees and Ceylinco Insurance closed 79.10 rupees higher at 1,359.60 rupees, contributing most to the index gain.

NDB Capital Holdings closed 29.20 rupees higher at 499.80 rupees and NDB closed 5.60 rupees higher at 198.60 rupees.

Distilleries closed 2.90 rupees higher at 208.00 rupees and Ceylon Tobacco Company closed 1.50 rupees lower at 1,088.00 rupees.

Lion Brewery Ceylon closed 13.60 rupees lower at 436.40 rupees and Bukit Darah closed 9.90 rupees lower at 660.00 rupees.

Nestle Lanka closed 18.10 rupees lower at 1,970.70 rupees and Cargills Ceylon closed 4.00 rupees lower at 140.00 rupees.

John Keells Holdings closed 1.00 rupee lower at 234.00 rupees and its W0023 warrants closed 40 cents higher at 70.20 rupees.

Commercial High Court judgment on Touchwood due on Wednesday

The Commercial High Court’s ruling on the Touchwood Investments Plc (TWOD) winding up case is expected on Wednesday, a development which analysts describe as being a likely turning-point to ensure good corporate governance and prudent financial management.

All investors of TWOD are eagerly waiting with the hope of recovering their dues through the liquidation of the company, according to a spokesman for parties supporting winding up. The upcoming ruling is anticipated amidst moves by a group of customers separately planning to file complaints with the Criminal Investigation Department (CID) this week.

The Petition to wind-up locally incorporated TWOD was filed in the latter part of July 2013 in the Commercial High Court of Colombo by an aggrieved investor through his lawyers, Messrs FJ & G de Saram, triggered many other investors to intervene and support the winding-up of the company.Many aggrieved investors appeared in Court and recorded their position supporting the winding-up while many others chose to take the backseat and watch the case due to financial constraints. Those, whose entire life savings were guzzled by TWOD had no financial means to resort to litigation.

The magnitude of the fraud surfaced only after the winding-up Petition was filed in Court. Its share trading was suspended by the SEC and a directive was issued restricting the managements of its assets, all of which took place only after the winding-up Petition was filed in Court.

The Spokesman said if not for the bold decision taken by one of the investors, the magnitude of the fraud committed by the company owned by Roscoe Maloney and its management would not have surfaced and the company would have continued its mismanagement and malpractice, misleading not only the public but also the monitoring bodies such as SEC.

“The company is now completely defunct. There is no registered office. The new management of the company has provided a new address in Nawala as its new registered address, where there is no office. The employees of the company whose salaries have not been paid over one year have now dispersed,” the spokesman claimed.

TWOD has last released interim accounts only up to June 2013, which showed a retained loss of Rs. 500 million.

Investors have lost hope in the new TWOD Chief Executive Officer L.W. Kiwlegedara’s promises in reviving the company. TWOD also made history in the legal system of Sri Lanka, by misleading and disrespecting Court by issuing personal cheques from Kiwlegedera’s bank account with the hope of settling the creditors of the company, which were dishonoured.

“If the company is wound-up, all assets will be liquidated and the investors will be paid off. Even though their full investment may not be recovered, the investors are of the view that ‘getting something is better than getting nothing’. If however the company is not wound-up, the management will be given one last golden opportunity to sell the assets of the company to their benefit, with the brand name ‘Touchwood’ entering the list of major financial scandals,” the spokesman alleged.

Those in support of the new management of TWOD however expect the company to be given an opportunity to make good with revival plans as some measures of ensuring stability had been made in the interim period.
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CSE lets primary dealers trade listed corporate debt

The Stock Exchange has invited primary dealers and debt market specialists to register as trading members of the Colombo Stock Exchange (CSE) for debt securities. Three primary dealers have already obtained trading membership and the fourth primary dealer has submitted an application to the CSE. 

These members are in addition to the existing debt trading members, Chief Operating Officer of the CSE Renuke Wijayawardhane disclosed.

The CSE has taken a series of aggressive measures to promote a vibrant corporate debt market and provide companies an opportunity to raise debt capital, while providing investors with an opportunity for diversification by investing in fixed income instruments.

The measures taken by the CSE seek to serve the needs of all stakeholders and include the admission of primary dealers as trading members, simplifying the requirements to issuer companies when issuing corporate debt securities, and providing the required training for stock brokers on debt instruments.

Pursuant to a decision taken in 2013, the admission of primary dealers as trading members, it is expected that experienced debt dealers would facilitate a more liquid secondary market for the corporate debt securities on the CSE, while utilising their experience in dealing in government debt securities.

The introduction of primary dealers as new debt trading members is pursuant to the policy initiatives taken by the joint SEC and CSE Committee on ‘Development of the Corporate Bond Market’ and is one of the tenants within the SEC’s 10 point plan for developing the capital market, CEO of the CSE Rajeeva Bandaranaike explained .

The creation of a more liquid secondary market for corporate debt securities would help investors, particularly retail investors, to benefit from investing and trading in a new asset class through the CSE.

To make the secondary market for corporate debt securities more vibrant, the CSE plans to introduce a REPO mechanism in the automated trading system. The CSE is currently having discussions with primary dealers and other market participants with the concurrence of the Central Bank in this regard.

As a means of encouraging companies to list corporate debt securities on the CSE, the Listing Rules have been eased, by minimising the paperwork required, especially for existing listed companies, when issuing new debt securities.

The CSE is also reviewing the Member Rules of the CSE to include provisions applicable to the debt dealers who will be transacting in debt securities.

CSE Head of Market Development Niroshan Wijesundere commenting on the training aspect said that investment advisors of broker firms were given training on operating in the new automated trading system version 7.14, upgraded during 2013. The training program consisted of a theoretical session and a practical session. During the latter session investment advisors were given a familiarisation on debt trading in the automated trading system and the CSE will repeat this program regularly.

The CSE is also reviewing the transaction costs relating to corporate debt securities, which would result in ensuring a more competitive pricing for secondary trading of corporate debt.

The CSE in 2013 saw 28 corporate debt IPOs raising over Rs. 68.2 billion, with a corporate debt market capitalisation of Rs. 165.7 billion. The new initiatives are expected to build on this momentum.
www.ft.lk

NEF continues strong fund performance; declares dividends

National Asset Management Ltd. (NAMAL) HAS paid a dividend of Rs. 1 per unit to the unit holders of the flagship National Equity Fund (NEF) for the year ended 31 March 2014.

Avancka Herat, Executive Director and Chief Investment Officer of NAMAL, said: “NEF was the best performing fund in the unit trust industry in both FY12 and FY13 with its superior long term track record in the industry. The fund has achieved a CAGR of 15.1% since inception in December 1991 and has generated a return of 38.35% in the last 24 months.”

NEF currently has Rs. 2 billion assets under management. NEF has paid dividends annually since inception, at a historical average of Rs 1.20 during the 23 year period, even when equity market performance was weak.

NAMAL is Sri Lanka’s first unit trust management company, having commenced operations in 1991, with a 23-year track record of successfully investing in equities and debt markets. NAMAL currently has Rs. 15 b under management, which includes eight unit trusts and private portfolio management contracts for corporates.

Principal shareholders of NAMAL are Union Bank of Colombo PLC and DFCC Bank PLC.

www.ft.lk

The Kingsbury hotel in Sri Lanka in profits after make-over

May 18, 2014 (LBO) - The Kingsbury hotel in Colombo which was re-branded and rebuilt after being taken over by Sri Lanka's Hayleys group has posted the profits of 42 million rupees the March 2014 quarter, interim accounts showed.

The firm reported earnings of 20 cents per share for the quarter.

In the March 2013 quarter the firm lost 108 million rupees a year earlier after being closed for refurbishment.

The Kingsbury posted revenues of 610 million rupees in the March quarter up from 165.8 million rupees a year earlier. It posted gross profits of 302 million rupees after direct costs of 288 million rupees.

The firm posted net profits of 69 million rupees in the December quarter on revenues of 627 million rupees.

In the full year to March, it posted profits of 32.7 million rupees on revenues of 2.2 billion rupees.

Sri Lanka NDB Bank net up 135-pct

May 17, 2014 (LBO) - Profits at Sri Lanka's National Development Bank rose 135 percent from a year earlier to 1.19 billion rupees in the March 2014 quarter, amid positive loan growth, interim accounts showed.

The bank was recovering from a low base following a sharp decline in profits the previous year, but there were gains across business segments this quarter, with 6 percent loan and net interest income growth.

The bank reported earnings of 29.66 rupees per share.

Interest income rose 3 percent to 5.1 billion rupees in the quarter and interest expenses fell 3 percent to 3.2 billion rupees and the bank grew net interest income 16 percent to 1.86 billion rupees.

The bank grew loans 6 percent to 144 billion rupees and financial investments - loans and receivables to 25 billion rupees from 16 billion rupees.

Loan losses were 125 million rupees, up from 23 million rupees.

Fee income rose 54 percent to 594 million rupees. Trading gains rose 68 percent to 716 million rupees.

Group total assets grew 12 percent to 197 billion rupees and net assets were up 1 percent to 24.7 billion rupees.