Sri Lanka shares end at over 1-week high

Sri Lankan shares gained on Wednesday to end at their highest in more than a week as investors bought beaten-down stocks, but concerns over a higher budget deficit and economic growth dampened investor sentiment, brokers said.

Sri Lanka's share trading was halted for 17 minutes in early trade due to a power failure.

The benchmark share index ended 0.85 percent up at 6,021.37, its highest close since March 4.

Investors preferred fixed interest rate bearing assets over shares due to a rise in yields on treasury bills, which are hovering at two-year highs, and on the central bank's unexpected interest rate hike in mid-February, dealers said.

"Despite uncertainties, the market ended up. Selling pressure was absorbed for the day, but it is difficult to say for how long," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

"Selling pressure is still there as investors are waiting to see the direction of the economy. At the moment, there is a gloomy economic outlook."

Sri Lanka's economy is expected to grow 5.3 percent in 2016, data from the state statistics office showed, but analysts say tight monetary and fiscal policies may curb its growth.

The $82.2 billion economy expanded at a sluggish 2.5 percent in the December quarter, down from an upwardly revised 5.6 percent in the previous quarter.

Analysts and economists worry slower growth could reduce corporate earnings of some listed firms.

Turnover stood at 921.9 million rupees, more than this year's daily average of 777.4 million rupees.

Foreign investors sold 221.4 million rupees ($1.53 million) worth of shares on Wednesday, extending the net foreign outflow so far this year to 656.8 million rupees worth of shares.

Shares in Lanka ORIX Leasing Company Plc jumped 6.41 percent, while Hemas Holdings Plc rose 2.15 percent and Sri Lanka telecom Plc rose 2.60 percent.

The central bank rejected all bids at a weekly t-bill auction on Wednesday for a second week after yields on short tenure bonds hit two-year highs after the central bank's unexpected hike in interest rates in mid-February.

"The rejection is to curb the high yields, but this is not sustainable as the government's short term financing including the maturing treasury bills would put more pressure on the government finances," said Shiran Fernando, an analyst at Colombo-based Frontier Research. 

($1 = 144.8500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

Sri Lankan shares end weaker; further fall expected

Reuters: Sri Lankan shares edged down on Tuesday, falling for a second session amid fears of further declines due to worries over a higher budget deficit and economic growth, brokers said.

The benchmark share index closed 0.15 percent lower at 5,970.40.

Investors preferred fixed interest rate bearing assets over shares due to a rise in yields on treasury bills, which are hovering at two-year highs, and on the central bank's unexpected interest rate hike in mid-February, dealers said.

"The market should decline as the economy is running into a sharp fiscal problem. The recovery would take longer as there is no visible trigger compared to what we saw after the war," said an analyst, asking not to be named.

The island nation's economy grew at 4.8 percent last year, slowing from the previous year's 4.9 percent, government data showed on Tuesday, while it expanded 2.5 percent in the December quarter, down from a revised 5.6 percent in the previous quarter.

Foreign investors sold 16.7 million rupees ($115,331) worth of shares on Tuesday, extending the net foreign outflow so far this year to 435.4 million rupees worth of shares.

Turnover stood at 731.4 million rupees, below this year's daily average of 774.4 million rupees.

Shares in Ceylinco Insurance Plc fell 0.79 percent while biggest listed lender Commercial Bank of Ceylon Plc eased 1.23 percent. 

($1 = 144.8000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

Sri Lanka’s Hayleys acquires 75-pct stake in Fentons for Rs963mn

(LBO) – Sri Lanka’s Hayleys has acquired 75 percent of the equity stake of Fentons Limited for 963 million rupees, the Company said in a stock exchange filing.

Fentons, established in 1921 is a leading electrical and mechanical engineering solutions provider for Building Systems and ICT Infrastructure.

“The management of Hayleys believes that there is a strong strategic fit between the two organizations,” the company said.

‘The acquisition will positively contribute to the Hayleys Group’s turnover and profitability considering the growing demand in the country’s infrastructure and support services sector.”

Sri Lanka gives official go ahead for China Port City

(LBO) – Sri Lanka’s government officially informed the Chinese investors of resuming the construction of the Port City project in capital Colombo, yesterday one year after its suspension, a foreign news agency reported.

According to China’s state media, Xinhua Sri Lanka’s Ministry of Ports and Shipping, in an official letter to the CHEC Port City Colombo (Pvt) Ltd, said that the company could resume the construction of the project immediately.

“At its meeting held on March 9, 2016, the Cabinet of Ministers has granted approval for the project to resume immediately,” the letter said.

“Accordingly the suspension effected by my letter dated March 6, 2015, is hereby withdrawn with effect from today (Monday).”

Earlier, Sri Lanka’s Prime Minister Ranil Wickremesinghe said that the country plans to have a ‘unique financial and business district’ in Colombo when the sea reclamation project by a Chinese firm is resumed.

The much talked project was under water for a long period of time as the new administration questioned project approvals by the last regime.

The builders of Sri Lanka’s Chinese-funded port city project told LBO in an earlier interview they were awaiting a positive reply from the government after the suspension of work citing environment concerns by the administration which came in to power in January.

The 1.4 billion US dollar Port City is to be constructed between the Southern edge of the new Colombo South Port and the Fort Lighthouse.

The total area of sea to be reclaimed is 252 hectares.

The Port City is expected to boost the local economy by generating millions of dollars upon its completion and generate over 80,000 jobs.

The project includes a marina and yacht club, a central boulevard, a sea view apartment complex and a five-star hotel, shopping and entertainment center, office space, a mini golf course, and many other modern facilities.

Sri Lankan share index falls below key 6,000 support level

Sri Lankan share index fell on Monday, snapping a two-session gaining streak as it declined below a key support level of 6,000 points, with foreign investors exiting the island nation's risk assets, brokers said.

The benchmark share index fell 0.67 percent or 40.52 points to 5,979.43.

The index had gained 2.7 percent in the last two sessions through Friday due to a technical rebound.

Investors prefered fixed interest rate bearing assets over shares due to a rise in the yields on treasury bills, which are hovering at two-year highs, in tandem with the central bank's unexpected interest rates hike in mid-February, dealers said.

"Economy is also fragile. Still we are at a critical stage, so there is not a lot of buying," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

"Only high risk takers are buying. Retailers, institutions and others are still out of the market and we expect the market to trade between 5,800 and 6,000 points in short term."

Foreign investors were net sellers for a second striaght session, unwinding 155.9 million rupees ($1.08 million) worth of shares on Monday, extending the net foreign outflow so far this year to 418.7 million rupees worth of shares.

Turnover stood at 719.3 million rupees, below this year's daily average of 775.3 million rupees.

Shares in conglomerate John Keells Holdings Plc fell 1.95 percent, while Hatton National Bank Plc declined 2.04 percent. 

($1 = 144.8000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)

Union Bank records impressive growth in '15

Union Bank of Colombo PLC (UBC) and its subsidiaries concluded 2015 with a notable business performance; reflectedbya226% increase in post-tax profit that signals the strong growth momentum mobilised within the year.

The principal source of income from the Bank's fund based operations escalated to Rs.2,022 mn in 2015. This is an increase of Rs. 259 Mn or 15% compared to Rs.1,763 mn recorded in the previous year. It is a noteworthy achievement, given the substantial reduction in interest spreads experienced by the Bank during the year.

Net Interest margins dropped due to decreasing spreads and increased investments made in Unit Trusts during the year. Return on the Unit Trust investments are reflected under Net Trading Income of the Bank.

The Bank's Loans and Advances stood at Rs. 40,095 mn as at 2015 year-end. This is a Rs. 14,151 mn (55%) growth in comparison to the previous year, and is the highest absolute growth achieved by the Bank since its inception. The Deposits Base of UBC stood at Rs. 37,652 mn as at year-end. This is a Rs. 9,844 mn (35%) growth in comparison to 2014.

The growth in Fixed Deposits was recorded asRs. 7,719 mn.

The Bank focused on an aggressive CASA (Current and Savings Accounts) drive which was supported by several strategic initiatives such as; the expansion of the off-site ATM network, introduction of Debit Cards, setting up a dedicated sales force and rebranding the branch outlook. CASA recorded a growth of 33% in comparison to 2014.

The Fee and Commission Income of the Bank was Rs. 226 mn which translates to a year-on-year growth of 15%.

UBC reported a Net Trading Income of Rs. 278 mn, which is a significant growth of 189% year-on-year.

This was due to an increase in investments made in the Unit Trusts. In 2015, UBC made a strategic decision to exit the equity trading portfolio and held no trading stocks as at the year end.

Other Operating Income of the Bank was Rs. 359 mn, which reflects a growth of 28% year-on-year.

This was mainly attributed to the 73% growth reported in Foreign Exchange gains.

The Bank was affected with one of the highest NPL ratios in the industry in mid-2014.

The NPL ratio improved significantly to 2.7% as at the reporting date. NPL ratios as at the end of 2014 was 7.4%. Reflecting a noteworthy improvement in portfolio quality, the Credit Loss Expense of the Bank reduced to Rs.176 mn from Rs. 541 mn in 2014.

Operating expenses of the Bank was Rs. 2,334 mn which is a 42% increase year-on-year.

This was mainly due to the strategic investments which included the expansion of network and reach along with investments made in technology and human resources during the year.

The Bank maintained a healthy Liquid Assets Ratio throughout the year. UBC continued to maintain a healthy Capital Adequacy Ratio which is well above the regulatory requirement, reporting a 24% core capital ratio as at the year-end.

The Group, consisting of the Bank and its two subsidiaries - UB Finance Company Limited and National Assets Management Limited reported robust results in 2015. The Group reported pre and post-tax profits of Rs. 292 mn and Rs. 255 mn, compared to Rs. 161 mn and Rs. 78 mn reported in 2014.

The Group recorded significant volume growth in terms of loans and advances growing its portfolio to Rs. 45.5 bn in 2015, an increase of 56% year-on-year.

This was a result of the Bank's intention to grow the book aggressively while maintaining a profitable mix. The Bank contributed to 88% of the Group's total loans and advances.

The Group also recorded a significant increase in customer deposits recording a portfolio of Rs. 41.6 mn in 2015, a growth of 37% year-on-year. The Bank contributed 90% of the Group's total customer deposits. Fixed Deposits accounted for 78% of the total deposits base and grew by 39% year-on-year.

The Group reported a 15% increase in fee based operations. Trading and other income also reported a strong performance, recording a growth of 35% year-on-year. Director and Chief Executive Officer, Union Bank, Indrajit Wickramasinghe said, "We have completed a successful year of strong financial results, and significant reforms towards laying a solid foundation for more ambitious growth in the years to come."

www.sundayobserver.lk

Dhammika interested in more healthcare business

Dhammika Perera, Sri Lanka’s biggest entrepreneur/businessman, increased his presence in the healthcare sector, buying a larger stake in Nawaloka Hospitals (NHL) and raising his total holding to 24 per cent on Thursday. He told the Business Times that he’s interested in this sector and that he’s open to more deals such as this, triggering speculation in the stock market as to whether his interest would extend to opening a hospital chain in his organisation. Some 305.9 million Nawaloka shares were traded in three crossings at Rs 4 on Thursday early noon.

The NSB held 17.7894 million NHL shares as at last September and top market investor, Dr. S Senthilverl who held 309.5 million NHL shares or nearly 22 per cent, sold some 13.6 per cent to Mr. Perera, according to a stock market disclosure. Earlier on February 23, Dr. Senthilverl, a Director of Nawaloka Hospitals sold Rs.20 million Nawaloka Hospitals shares at Rs.3.80 per share to Mr. Perera who had also purchased the EPF’s stake of 1.76 per cent last week. “I bought some shares last month,” Mr. Perera said. The hospital is controlled by its Chairman Jayantha Dharmadasa with 32.83 per cent and Nawaloka Construction Company with 31.34 per cent. (DEC)

www.sundaytimes.lk