Sri Lanka’s 01-year Treasury yield falls to 10.75-pct

ECONOMYNEXT – Sri Lanka’s one-year Treasury Bill yield fell 10 basis points to 10.75 percent at Wednesday’s auction, according to data from the public debt department of the central bank.

The 06-month bill yield fell 07 basis points to 9.87 percent while 03-month bills were not offered.

The public debt department accepted 16 billion rupees of 01-year bills, the same amount offered, having got bids worth 50 billion rupees.

It also accepted 10 billion rupees of 06-month bills, the same amount offered, having got bids of 19 billion rupees.

Sri Lankan stocks seen offering opportunities despite risks

ECONOMYNEXT – Sri Lanka’s stock market offer “pockets of opportunities” for investors despite risks generated by local political and economic conditions, Asia Securities stock brokers said in its 2019 equity market outlook.

The stock brokerage firm is recommending that clients take positions in stocks with specific growth opportunities in the current environment.

“Asia Securities Research expects the Sri Lankan stock market to offer pockets of opportunities for investors, in the year ahead, despite expectations that 2019 will in general be a challenging year for equities,” the report said.

It noted that the Colombo Stock Exchange’s All Share Price Index (ASPI) currently trades at 8.5x trailing price-to-earnings (P/E) multiple, down from 10.1x at the beginning of 2018.

“Furthermore, the ASPI is trading at a 20% discount to the overall MSCI Emerging Markets (EM) index, which is the largest discount seen in the last five years,” Asia Securities said.

The local “idiosyncratic risks” - largely political and to some extent macroeconomic - led to 9.6 billion rupees (about 50 million US dollars) of foreign fund outflows from the stock market compared to 28.5 billion rupees in inflows in 2017 resulting in the dip in valuations.

Although the outlook for emerging markets has improved, the report said it is likely that Sri Lanka will not see a significant benefit from this trend in the short run, as the local conditions will keep foreign investors on the sidelines.

The main risks include delayed budget reading that creates uncertainty about fiscal measures, and debt maturities of 5.9 billion dollars exacerbated by credit rating downgrade and the resultant pick up in refinance costs.

The uneasy alliance between President Maithripala Sirisena and the government led by Ranil Wickremesinghe, raising concerns on continuing policy divergence, is also among he largest residual risks factored in by investors.

Sirisena triggered a political crisis, and credit rating downgrades, late last year when he sacked Wickremesinghe and replaced him with former president Mahinda Rajapaksa, a decision overturned by Sri Lanka’s supreme court.

Asia Securities said that, given the current high interest rate environment, local high net worth and retail investors may favor fixed income assets and take a wait-and-see approach toward equities.

But they said the market is expected to pick up in the second half of the year as macro-economic conditions improve.

These include re-engaging with funding partners such as the IMF and making progress on other funding lines currently in the pipeline while managing the 1.5 billion dollar sovereign bond repayments in January and April.

Presenting the budget with streamlined fiscal policy, while continuing the reforms agenda, are key development eagerly watched by investors, Asia Securities said.

It also expects a pickup in agriculture and related household income, to translate to better consumer demand, while continued low oil prices and better hydro power generation lead to an improved current account balance. Lower currency depreciation should also strengthen reserves.

Sri Lanka rupee edges lower; stocks slip

Reuters: ** Sri Lanka’s rupee closed slightly weaker on Wednesday in thin trade due to light dollar demand from banks and importers, while worries over political uncertainty and fiscal slippage weighed on investor sentiment. 

** The International Monetary Fund (IMF) will resume discussions with Sri Lanka in February for further disbursal of part of a $1.5 billion loan, the lender said, after a political crisis led to talks being delayed by three months. 

** The rupee ended at 182.30/40 per dollar on Wednesday, compared with 182.15/30 in the previous session, market sources said. Markets were closed on Tuesday for a holiday. On Jan.3, the rupee had fallen to an all-time low of 183.00 against the dollar. 

** The rupee fell 19 percent in 2018, making it one of the worst-performing currencies in Asia, according to Refinitiv data, due to heavy foreign outflows. 

** The rupee has declined about 5 percent since the political crisis started. 

** A series of credit rating downgrades have made it harder for Sri Lanka to borrow as it faces record high repayments of $5.9 billion this year, with $2.6 billion of it due in the first three months. 

** On Tuesday, the island nation’s junior Finance Minister, Eran Wickramaratne, told Reuters that Sri Lanka was considering an offer from Bank of China for a loan of $300 million, which could be raised to $1 billion, to help it meet repayments in the coming months. 

** The central bank on Jan.9 said that the Reserve Bank of India (RBI) had agreed to provide $400 million to it under a regional swap facility and it had also requested a further bilateral swap arrangements of $1 billion. 

** Sri Lankan shares closed slightly weaker, near their more than six-week closing low hit on Friday. 

** The Colombo Stock Index ended 0.13 percent weaker at 5,973.34, hovering near its lowest close since Nov. 26 hit on Friday. The benchmark stock index lost 5 percent in 2018. 

** Turnover was 950.2 million rupees ($5.22 million), more than last year’s daily average of 834 million rupees. 

** Foreign investors sold a net 620.6 million rupees worth of shares on Wednesday. They have been net sellers of 15.3 billion rupees worth of stocks since a political crisis began on Oct. 26. The bond market saw outflows of 77.9 billion rupees between Oct. 25 and Jan. 9, the latest central bank data showed. 

** Foreign investors pulled a net 22.8 billion rupees out of stocks last year, while they net sold 159.8 billion rupees from government securities from January through Dec. 26, bourse and central bank showed data. 

** Sri Lanka President Maithripala Sirisena appointed a cabinet of ministers from his rival party on Dec. 21 after he was forced to reinstate Ranil Wickremesinghe as prime minister, 51 days after he was sacked. 

** The crisis is expected to ease, though tense relations between the two men could cause fiscal problems, analysts say. 

** Sri Lanka plans to increase government spending by 13.2 percent from last year to 4.47 trillion rupees in 2019, the finance ministry said last week. 

($1 = 182.2000 Sri Lankan rupees) 

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

Sri Lanka rupee ends weaker in dull trade

Reuters: ** Sri Lanka’s rupee closed weaker on Monday in thin trade due to dollar demand from banks and importers, while political uncertainty also dented investor sentiment. 

** Sri Lankan shares recovered from a more than six-week closing low hit on Friday to close slightly higher, driven by consumer staples and financials. 

** The Colombo Stock Index ended 0.23 percent firmer at 5,981.02, edging up from its lowest close since Nov. 26 hit on Friday. The benchmark stock index lost 5 percent in 2018. 

** Turnover was 1.5 billion rupees ($8.24 million), well above last year’s daily average of 834 million rupees. 

** Foreign investors sold a net 418.9 million rupees worth of shares on Monday. They have been net sellers of 14.6 billion rupees worth of stocks since a political crisis began on Oct. 26. The bond market saw outflows of 77.9 billion rupees between Oct. 25 and Jan. 9, the latest central bank data showed. 

** Foreign investors pulled a net 22.8 billion rupees out of stocks last year, while they net sold 159.8 billion rupees from government securities from January through Dec. 26, bourse and central bank showed data. 

** The rupee, which traded 182.25 per dollar during the day, ended at 182.15/30 per dollar on Monday, compared with 181.90/182.00 in the previous session, market sources said. On Jan.3, the rupee had fallen to an all-time low of 183.00 against the dollar. 

** The rupee fell 19 percent in 2018, making it one of the worst-performing currencies in Asia, according to Refinitiv data, due to heavy foreign outflows. 

** The rupee has declined about 5 percent since the political crisis started. 

** The central bank said last week it would stick to an exchange rate policy of cautious intervention in times of excessive volatility in the forex market and maintain a competitive exchange rate and support the rebalancing of the current account, thereby supporting a gradual build-up of reserves. 

** The central bank on Wednesday said that the Reserve Bank of India (RBI) had agreed to provide $400 million to it under a regional swap facility and it had also requested a further bilateral swap arrangements of $1 billion. 

** Sri Lanka President Maithripala Sirisena appointed a cabinet of ministers from his rival party on Dec. 21 after he was forced to reinstate Ranil Wickremesinghe as prime minister, 51 days after he was sacked. 

** The crisis is expected to ease, though tense relations between the two men could cause fiscal problems, analysts say. Parliament has approved 1.77 trillion rupees ($9.39 billion) to meet the first four months of expenditure in 2019, averting a government shutdown from Jan. 1. 

** Sri Lanka plans to increase government spending by 13.2 percent from last year to 4.47 trillion rupees ($24.51 billion) in 2019, the finance ministry said on Tuesday. 

** Credit agencies Fitch and S&P downgraded Sri Lanka’s sovereign rating in early December, citing refinancing risks and an uncertain policy outlook. 

($1 = 182.1000 Sri Lankan rupees) 

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

Sri Lanka's Hunas Hotels bought by Serenity Lake Leisure

ECONOMYNEXT - A controlling stake of Sri Lanka's Hunas Falls Hotels Plc, will be bought by a firm called Serenity Lake Leisure (Pvt) Ltd, for 182 rupees per share, a stock exchange filing said, valuing the hotel at 1.05 billion rupees.

The firm's share more than doubled from 79 rupees on January 02 to 160.10 rupees by Friday's market close on take-over speculation.

The firm made a stock exchange filing on January 04 that it was talking to a prospective buyer but the price was not disclosed.

Serenity Lake Leisure (Pvt) Ltd will pay 696.4 million rupees for a 66.2 percent stake of the hotel.

At 187 rupees per share, Hunas Falls is now valued at 1.05 billion rupees, compared to a market value of 444.4 million rupees before the speculation began.

The firm has an asset base of 402 million rupees.

Serenity Lake Leisure will have to make a mandatory offer to purchase all shares from the remaining shareholders, Hunas Falls Hotels parent Hayleys Plc said.

Hunas Falls had not made a profit in the first six months of the year.

Sri Lanka rupee ends steady; shares post over 6-wk closing low

Reuters: ** Sri Lanka’s rupee closed steady on Friday in dull trade as dollar selling by banks offset importer demand for the greenback, while political uncertainty dented investor sentiment. 

** Sri Lankan shares posted a more than six-week closing low. 

** The Colombo Stock Index ended 0.28 percent weaker at 5,967.27, its lowest close since Nov. 26. The trading volume was thin as worried investors awaited political cues after the last quarter’s turmoil. The benchmark stock index lost 5 percent in 2018. 

** Turnover was 814.1 million rupees ($4.48 million), less than last year’s daily average of 834 million rupees. 

** Foreign investors sold a net 143.2 million rupees worth of shares on Friday. They have been net sellers of 14.3 billion rupees worth of stocks since a political crisis began on Oct. 26. The bond market saw outflows of 74.3 billion rupees between Oct. 25 and Jan. 2, the latest central bank data showed. 

** Foreign investors pulled a net 22.8 billion rupees out of stocks last year, while they net sold 159.8 billion rupees from government securities from January through Dec. 26, bourse and central bank showed data. 

** The rupee ended at 181.90/182.00 per dollar on Friday, compared with 181.90/182.10 in the previous session, market sources said. On Jan.3, the rupee had fallen to an all-time low of 183.00 against the dollar. 

** The rupee fell 19 percent in 2018, making it one of the worst-performing currencies in Asia, according to Refinitiv data, due to heavy foreign outflows. 

** The rupee has declined about 5 percent since the political crisis started. 

** The central bank said last week it would stick to an exchange rate policy of cautious intervention in times of excessive volatility in the forex market. 

** The policy is designed to maintain a competitive exchange rate and support the rebalancing of the current account, thereby supporting a gradual build-up of reserves, central bank chief Indrajit Coomaraswamy said last week, unveiling economic policies for 2019. 

** The central bank on Wednesday said that the Reserve Bank of India (RBI) had agreed to provide $400 million to it under a regional swap facility and it had also requested a further bilateral swap arrangements of $1 billion. 

** Sri Lanka President Maithripala Sirisena appointed a cabinet of ministers from his rival party on Dec. 21 after he was forced to reinstate Ranil Wickremesinghe as prime minister, 51 days after he was sacked. 

** The crisis is expected to ease, though tense relations between the two men could cause fiscal problems, analysts say. Parliament has approved 1.77 trillion rupees ($9.39 billion) to meet the first four months of expenditure in 2019, averting a government shutdown from Jan. 1. 

** Sri Lanka plans to increase government spending by 13.2 percent from last year to 4.47 trillion rupees ($24.51 billion) in 2019, the finance ministry said on Tuesday. 

** Credit agencies Fitch and S&P downgraded Sri Lanka’s sovereign rating in early December, citing refinancing risks and an uncertain policy outlook. 

($1 = 181.8000 Sri Lankan rupees) 

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

Sri Lanka rupee rises as banks sell dollars; shares steady near 6-wk closing low

Reuters: ** Sri Lanka’s rupee closed higher on Thursday as banks sold dollars but political uncertainty dented investor sentiment. 

** Sri Lankan shares closed steady near a more than six-week closing low hit in the previous session. 

** The Colombo Stock Index ended 0.03 percent firmer at 5,984.05, narrowly shaved from its lowest close since Nov. 27 hit on Wednesday, in dull trade as worried investors awaited political cues after the last quarter’s turmoil. The benchmark index lost 5 percent in 2018. 

** Turnover was 390.1 million rupees ($2.14 million), less than half of the last year’s daily average of 834 million rupees. 

** Foreign investors sold a net 274 million rupees worth of shares on Thursday. They have been net sellers of 14.1 billion rupees worth of stocks since a political crisis began on Oct. 26. The bond market saw outflows of 74.3 billion rupees between Oct. 25 and Jan. 2, the latest central bank data showed. 

** Foreign investors pulled a net 22.8 billion rupees out of stocks last year, while they net sold 159.8 billion rupees from government securities from January through Dec. 26, bourse and central bank showed data. 

** The rupee ended at 181.90/182.10 per dollar on Thursday, compared with 182.25/40 in the previous session, market sources said. On Jan.3, the rupee had fallen to an all-time low of 183.00 against the dollar. 

** The rupee fell 19 percent in 2018, making it one of the worst-performing currencies in Asia, according to Refinitiv data, due to heavy foreign outflows. 

** The rupee has declined about 5 percent since the political crisis started. 

** The central bank said last week it would stick to an exchange rate policy of cautious intervention in times of excessive volatility in the forex market. 

** The policy is designed to maintain a competitive exchange rate and support the rebalancing of the current account, thereby supporting a gradual build-up of reserves, central bank chief Indrajit Coomaraswamy said last week, unveiling economic policies for 2019. 

** The central bank on Wednesday said that the Reserve Bank of India (RBI) had agreed to provide $400 million to it under a regional swap facility and it had also requested a further bilateral swap arrangements of $1 billion. 

** Sri Lanka President Maithripala Sirisena appointed a cabinet of ministers from his rival party on Dec. 21 after he was forced to reinstate Ranil Wickremesinghe as prime minister, 51 days after he was sacked. 

** The crisis is expected to ease, though tense relations between the two men could cause fiscal problems, analysts say. Parliament has approved 1.77 trillion rupees ($9.39 billion) to meet the first four months of expenditure in 2019, averting a government shutdown from Jan. 1. 

** Sri Lanka plans to increase government spending by 13.2 percent from last year to 4.47 trillion rupees ($24.51 billion) in 2019, the finance ministry said on Tuesday. 

** Credit agencies Fitch and S&P downgraded Sri Lanka’s sovereign rating in early December, citing refinancing risks and an uncertain policy outlook.

($1 = 181.9000 Sri Lankan rupees) 

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