Sri Lankan stocks at 3-month closing low; govt policies, budget eyed

Reuters: Sri Lankan shares fell for a third straight session and closed at their lowest level in three months on Thursday as investors waited for clues from government policies and budget, brokers said.

The main stock index ended 0.14 percent, or 9.87 points, weaker at 7,030.45, its lowest closing since July 14.

Analysts said a government move to implement a budget proposal of a retrospective tax targeting corporates is the main concern for investors.

"The supper gain tax is the cloud that is prevalent," said Yohan Samarakkody, head of research at SC Securities (Pvt) Ltd.

"Economic and policy uncertainty is also a reason for investors to take a step back and look for direction. The situation will be gloomy till the budget."

Analysts said investors were cautious ahead of Prime Minister Ranil Wickremesinghe's policy statement next month outlining his government's economic priorities and the government budget in November.

Turnover stood at 824.9 million rupees ($5.88 million), compared with this year's daily average of 1.11 billion rupees.

Foreign investors, who have been net sellers of 2.77 billion rupees worth of equities so far this year, bought a net 205.9 million rupees worth of shares on Thursday.

Shares of Ceylon Beverage Holdings Plc fell 6.86 percent, while People's Leasing & Finance Plc dropped 2.33 percent and Dialog Axiata Plc fell 0.90 percent.

($1 = 140.2000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Subhranshu Sahu)

CHCL’s holdings on TAP increases to 56%

By Paneetha Ameresekere

Ceylon Finance Today: CHC Investments (Pvt.) Ltd. (CHCL) and connected parties will see their holdings in 'controversial' Taprobane Holdings plc (TAP) increase by 77.06% (242.29 million shares) to 556.7 million shares, constituting 55.52% of TAP's ordinary shares, on a mandatory offer made to buy all of its shares on 15 September, 2015; CHCI's secretaries informed the Colombo Stock Exchange (CSE).

The mandatory offer closed on Monday (12 October). CHCI with parties acting in concert held 314.41 million shares of TAP prior to the mandatory offer. TAP's shares closed unchanged at Rs 5.50 a share at the end of Tuesday's trading.

During the era of the previous regime, one of Taprobane's former directors Dinal Wijemanne was allegedly involved in the sale of The Finance Company, a struggling finance company, shares, apparently at an exorbitant price. It was bought by State owned NSB, which bank's chairman then was Pradeep Kariyawasam, husband of the sitting Chief Justice at that time, Shirani Bandaranayake. The deal was subsequently reversed due to public protests. 

www.ceylontodat.lk

Ashok strengthens hold in Asiri

By Paneetha Ameresekere

Ceylon Finance Today: Asiri Holdings plc, a company controlled by business magnate Ashok Pathirage, saw some 240,000 of its shares bought by its sister company...

Softlogic Holdings plc for a sum of Rs 5.16 million.

Softlogic too is controlled by Pathirage. The deals were done at prices of Rs 21.30 and Rs 21.50 per share respectively. Asiri Hospital's shares closed at Rs 21.50 a share, on Tuesday, unchanged over its previous day's close. 

www.ceylontoday.lk

Oil Market Report - Global demand growth to slow in 2016 closer to long-term trend as price support is likely to wane - IEA

IEA releases Oil Market Report for October

Global demand growth is expected to slow from its five-year high of 1.8 mb/d in 2015 to 1.2 million barrels per day (mb/d) in 2016 – closer towards its long-term trend as previous price support is likely to wane, the IEA Oil Market Report for October informed subscribers. Recent downgrades to the macroeconomic outlook are also filtering through.

World oil supply held steady near 96.6 mb/d in September, as lower non-OPEC production was offset by a slight increase in OPEC crude.

Non-OPEC accounted for just under 40% of the 1.8 mb/d annual increase in total oil output. Lower oil prices and steep spending curbs are expected to cut non-OPEC output by nearly 0.5 mb/d in 2016.

OPEC crude supply rose by 90 0000 barrels per day (90 kb/d) in September to 31.72 mb/d as record Iraqi output more than offset a dip in Saudi supply. A slowdown in forecast demand growth and slightly higher non-OPEC supply lowers the 2016 “call” on OPEC by 0.2 mb/d from last month’s Oil Market Report to 31.1 mb/d.

OECD commercial inventories extended recent gains and rose by 28.8 mb in August to stand at 2 943 mb by end-month. Since this was nearly double the 15.0 mb five-year average build for the month, inventories’ surplus to average levels widened to 204 mb.

The onset of seasonal turnarounds in the OECD and the Former Soviet Union is estimated to have curbed global refinery runs by 1.9 mb/d in September to 79.4 mb/d. Runs remained remarkably strong, particularly in Asia and the Middle East, leaving global throughputs up nearly 2 mb/d from a year ago.

The October Oil Market Report also features an in-depth look at the market's focus on Iran and Iraq as well as a feature on the fallout on oil demand forecasts from the International Monetary Fund's downward revision to its global economic growth estimate for 2015-16. A third article available to OMR subscribers looks at implications of the recent "volatility smile" for options in oil markets.

The Oil Market Report (OMR) is a monthly International Energy Agency publication which provides a view of the state of the international oil market and projections for oil supply and demand 12-18 months ahead.
http://www.iea.org/

Indonesian retail chain to enter Sri Lanka

ECONOMYNEXT – Mitra Adiperkasa (MAPI), one of Indonesia’s biggest retail store chains, is planning to enter the Sri Lankan market, a senior member of the Sri Lanka and Indonesia Business Council said.

Indonesian companies were interested in making use of the opportunities opening up in Sri Lanka, said Jatinder Biala, outgoing president of the business council and head of ISIN Lanka Pvt Ltd., a yarn manufacturer and exporter.

He said that during a visit to Indonesia recently he met the owners of Mitra Adiperkasha (MAP), which operates 1,900 stores, retailing over 150 brands and employing more than 23,000 people in 65 Indonesian cities.

“They have already taken steps to promote their products in Sri Lanka,” Biala said. “Very soon they are opening a subsidiary in Sri Lanka.”

Mitra Adiperkasa, which calls itself a lifestyle retailer in Indonesia, has businesses in retail (clothes, sports and toys), department stores, cafés and restaurants.

It also operates stores of major foreign brands such as Starbucks and Zara in Indonesia under franchise contracts.

Tax breaks for Sri Lanka listed debt may generate high risk bubble

ECONOMYNEXT Listed debentures have mushroomed over the last two years after the State made them tax free in an attempt to boost the debt market.

While it has brought results, the move may also undermine the development of an orderly market based on credit fundamentals.

It has also created a tax shelter for the rich, while the state taxes basic foods like potatoes, cereals, milk and canned fish in a bid to force less affluent workers to bow down to the desires of autarkists.

Most state interventions, which favour sections of the citizenry or one type of economic activity against another have unintended consequences. Such interventions often do not even achieve the objective they set out to do.

Tax breaks to start venture capital companies for example gave tax free luxury cars to their founders but little else.

Sri Lanka Treasuries, bond yields fall across maturities; rupee weaker

ECONOMYNEXT - Sri Lanka's Treasuries yields fell across maturities at Wednesday's auction with the 12-month yield falling 08 basis points to 7.10 percent, data from the state debt office showed, with bond yields also falling during the day.

The 3-month yield fell 05 basis points to 6.73 percent and the 6-month yield fell 03 basis points to 7.04 percent.

The Central Bank accepted 12.5 billion rupees in 3-month bills, 4.8 billion in 6-months and 6.6 billion in 12-month bills totalling 23.9 billion rupees.

There is an estimated 35 billion rupees in bills maturing this week. Over the last two weeks, large volumes of debt has been monetized, generating excess demand and currency pressure.

Bond yields also plunged 30 to 40 basis points before and after the bill auction.

There have been no bond auctions this week and active foreign selling not seen dealer say.

3-year bonds maturing on 15.11.2018 closed at 8.85/95 down from 9.10/20 yesterday.

5-year bonds closed at 01.05.2020 closed down 9.15/20 percent falling as low as 9.10 percent down from yesterday's 9.50/55 percent.

8-year bonds maturing on 01.09.2023 closed down at 9.45/55 percent falling as low as low as 9.40 percent, down from 9.85/95 yesterday.

10-year bonds maturing on 01.08.2025 9. 60/75 down from yesterday's close of 10.00/04 percent.

The 30-year bond maturing on 01.04.2045 was also quoted at 10.75/11.25 percent, dealers said.

In forex markets the rupee opened at 140.50/70 levels and dropped towards 141 and recovered to close at 140.80/90 levels, dealers said.