Sri Lanka may charge taxes on listed bonds issued from this month

ECONOMYNEXT - Sri Lanka is likely to exempt taxes on future interest of bonds issued before the budget in November, but is likely to tax bonds issued after, officials said.

Sri Lanka had exempted taxes on interest income on listed debentures in recent years, which will be redeemed five years or more in the future.

Deputy Treasury Secretary S R Attyalle said there was a view that future interest of the existing debentures issued before the budget should be exempt.

Finance Minister Ravi Karunanayake was also considering it, he said.

Analysts say charging tax on debentures issued earlier, where the promise of a tax-free status was given, will be similar to a retrospective tax.

The new law will come into effect from April 2017.

There is a debate whether to charge the tax from interest on debentures issued from November 2016 to March 2017.

Attygalle said the old bonds were issued and sold based on the calculation of a tax-free status and it was practically difficult to reverse it.

But bonds issued from now onwards can be done on new taxes, he said.

Colombo Stock Exchange Market Review – 15th Nov 2016

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Colombo Stock Exchange Trade Summary 15-Nov-2016

Colombo bourse remained in negative territory on the week’s opening day despite the higher foreign participation. All Share index declined by 9.43 index points or 0.15% to end at 6,406.16 while 20-scrip S&P SL 20 index lost 6.18 index points or 0.17% to close at 3,583.79.

Index losses were driven by price depreciation in John Keells Holdings (closed at LKR 147.50, -1.3%), Vallibel One (closed at LKR 20.50, -4.7%) and DFCC Bank (closed at LKR 122.90, -2.7%). However, gains recorded in Ceylon Tobacco (closed at LKR 874.90, 2.1%) and Hemas Holdings (closed at LKR 102.60, +4.5%) eased downward pressure.

Daily market turnover was LKR 470mn. John Keells Holdings was the top contributor to the turnover with LKR 184mn followed by Commercial Bank (LKR 174mn). Two Negotiated deals were recorded in Commercial Bank where 1.1mn shares changed hands at LKR 148.00. Hatton National Bank (LKR 17mn), Ceylon Grain Elevators (LKR 12mn) and Sampath Bank (LKR 12mn) were among top contributors.

Losers outweighed the gainers 92 to 33, while 68 scripts remained unchanged. High investor activity was witnessed in John Keells Holdings, Lanka IOC, Chevron Lubricants and Access Engineering. Lanka IOC advanced by 1.7% during the session to LKR 35.90 supported by positive earnings release.

Foreign investors were net sellers with a net foreign outflow of LKR 125mn, after eight consecutive sessions of inflows. Foreign participation was 61%. Net foreign outflows were seen in John Keells Holdings (LKR 180mn), Chevron Lubricants (LKR 4mn), Janashakthi Insurance (LKR 0.2mn) while net foreign inflow was mainly seen in Hatton National Bank (LKR 17mn).
Source: LSL

Sri Lankan shares hit 2-week closing low; budget proposals weigh

Reuters: Sri Lankan shares on Tuesday hit a two-week closing low in thin trade as investor sentiment was dented by last week's budget proposals that were announced to revise corporate and withholding taxes and boost revenue.

The government aims to boost its 2017 tax revenue by 27 percent to 1.82 trillion rupees ($12.36 billion) year on year, to meet a commitment given to the International Monetary Fund in return for a $1.5 billion loan in May.

The benchmark index of the Colombo Stock Exchange ended down 0.15 percent at 6,406.16, hitting its lowest close since Nov. 1.

Foreign investors were net sellers for the first time in nine sessions; they sold a net 125.4 million rupees worth of shares on Tuesday. They have net sold 1.01 billion rupees worth of shares so far this year.

"Things are very slow as investors are awaiting direction and more clarity on the taxes imposed by the budget," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

"Increases in various taxes, including the withholding tax and corporate tax, have impacted the capital markets."

Analysts said the increase in various taxes and fees will reduce the disposable income of the people and challenge the consumption-led growth.

Turnover was 470.3 million rupees, less than this year's daily average of 707.3 million rupees.

Shares of conglomerate John Keels Holdings Plc fell 1.34 percent while Dialog Axiata Plc dropped 1.79 percent.

($1 = 147.3000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips)

NDB records PAS of Rs. 2 bn registering growth momentum in Q3

National Development Bank PLC and its Group companies together referred to as the NDB Group, recorded a PAS of LKR 1,965 million for the first nine months of 2016. Although a 14% reduction compared to the first nine months of 2015, the quarter recorded an accelerated growth in PAS, which was LKR 882 million for the quarter as compared with LKR 535 million for Q2 and LKR 548 million for Q1 2016.

Total operating income of the Bank for the period under review was LKR 9,339 million, an increase of 1% over the comparative period. Total operating income of the comparative period included a higher Group dividend earned by the Bank compared to the current period. If such Group dividend is eliminated from the comparative period, the Bank’s core banking operations have recorded a commendable growth with a 13% increase in the net interest income and 12% increase in net fee and commission income. The operating income for the Bank excluding Group dividends was a 7% increase over the comparative period.

The Group total operating income was LKR 9,980 million, which was a 4% growth over the comparative period, an equivalent of LKR 367 million. Within Group total operating income, net interest income (NII) was LKR 6,532 million which recorded a commendable growth of 14%. NDB Group’s net fee and commission income recorded a marginal growth of 1%, despite the Bank recording a 12% increase, which was negated by the reduced fee and commission income of the NDB Group’s capital markets cluster. The Group recorded a negative growth in net trading and other operating income, mainly attributable to the increase in the interest rates and the movement in exchange rates. Net gains from financial investments however grew by 11%.

The Group recorded an impairment charge of LKR 1,050 million for the first nine months of 2016 as compared to LKR 545 million in the comparative period. The higher charge during the current period was due to the one off specific provisions made for few customers, based on sound judgement and objective evidence as per the Bank’s impairment policy.

Net operating income after impairment charges was LKR 8,930 million, a marginal negative growth of 2% compared to the comparative period. Total operating expenses of the Group grew by 6% to LKR 5,328 million. The Group has been able to contain its cost growth at stable levels over the year.

The Group’s balance sheet grew by 6% to close the first nine months at a total assets figure of LKR 334 billion. This was an incremental asset growth of LKR 19 billion over end December 2015 and LKR 13 billion over the end of the first half of 2016.

Within total assets, loans and receivables to customers grew by 6%, and increment of LKR 12.6 billion over end December 2015. This growth in loans and receivables is satisfactory given the competitive interest rates and constrained liquidity conditions experienced in the industry. The YoY loan growth was 15%. Furthermore, the Bank has sustained its asset quality despite the volume increase, with only a marginal increase recorded in non-performing loans (NPL) ratio of 2.44% from 2.43% in December 2015.

Customer deposits grew by 5% to reach LKR 193 billion over end December 2015. On a YoY basis, deposits grew by 14%. The CASA ratio of the Bank by the end of Q3 was 23.2% and improvement of same remains a key strategic focus for NDB.

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Colombo Stock Exchange Market Review – 11th Nov 2016

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Colombo Stock Exchange Trade Summary 11-Nov-2016

Budget proposals failed to turn the investor sentiments on Friday and both indices closed with negative returns. All Share index lost 5.19 index points or 0.08% to end at 6,415.59 while 20-scrip S&P SL index shed 3.68 index points of 0.10% to end at 3,589.97. 

Price depreciations in Hemas Holdings (closed at LKR 98.20, -4.7), Nestle Lanka (closed at LKR 2,065.80, -1.6%) and Dialog Axiata (closed at LKR 11.20, -0.9%) drove the index down.

Daily market turnover recorded 32 month low of LKR 112mn. Tokyo Cement topped the turnover with LKR 28mn followed by Serendib Hotels (LKR 16mn), Ceylon Grain Elevators (LKR 7mn) and Tokyo Cement non-voting (LKR 6mn). No crossings were recorded during the session. 

Market breadth was negative where out of 186 counters, 65 slipped, 48 advanced while 73 counters remained unchanged. High investor activity was witnessed in Tokyo Cement, Access Engineering, Ceylon Grain Elevators and Tokyo Cement non-voting. 

Ceylon Tobacco declared the third interim dividend of LKR 16.00 per share. So far during the FY2016, company has declared dividends of LKR 48.30 per share against the total dividend of LKR 45.15 per share in FY2015. 

Foreign investors were net buyers with a net foreign inflow of LKR 2mn. Foreign participation was 4%. Net foreign inflows were seen in Sampath Bank (LKR 3mn) and Watawala Plantations (LKR 0.4mn). Net foreign outflow was mainly seen in John Keells Holdings (LKR 1mn).

Please note that the Colombo Stock Exchange will be closed on Monday (14th November 2016) due to public holiday.

Source: LSL

Sri Lankan shares edge down; volume slumps to 32-mth low after budget

Reuters: Sri Lankan shares closed slightly weaker on Friday while volume slumped to a 32-month low after budget proposals on Thursday to revise corporate and withholding taxes to boost revenue.

The government aims to boost its 2017 tax revenue by 27 percent to 1.82 trillion rupees ($12.36 billion) year on year, to meet a commitment given to the International Monetary Fund in return for a $1.5 billion loan in May.

"There is nothing much to see in the budget. It has failed to give the expected boost to the market," said Danushka Samarasinghe, research head at Softlogic Stockbrokers.

"Increases in various taxes, including the corporate tax, will now add to the continuing negative momentum and also increases in various fees and taxes will reduce disposable income of the people. This will challenge the consumption-led growth."

Turnover was 112.4 million rupees, the lowest since March 17, 2014, and well below this year's daily average of 711.3 million rupees.

The benchmark index of the Colombo Stock Exchange ended 0.08 percent, or 5.19 points, weaker at 6,415.59. It fell 0.4 percent for the week.

Foreign investors bought stocks for an eighth straight session, picking up a net 1.6 million rupees. They have net sold 882.95 million rupees worth of shares so far this year.

Shares of Hemas Holdings Plc fell 4.66 percent while Nestle Lanka Plc declined 1.61 percent and Dialog Axiata Plc dropped 0.88 percent.

($1 = 147.3000 Sri Lankan rupees) 

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

Sri Lanka to list Mobitel, Hyatt other state enterprises: Budget 2017

(LBO) – Sri Lanka’s Finance Minister Ravi Karunanayake said several state-owned enterprises such as Mobitel, Hyatt, Waters Edge, Grand Oriental Hotel will be listed on the Colombo Stock Exchange.

The firms are to be listed during 2017, he said presenting budget proposals for 2017.

“We will also list non-strategic enterprises such as Hyatt, Grand Oriental Hotel, Waters Edge, West Coast, Manthai Salt, Hambanthota Salt and Hilton during 2017,” Karunanayake said, adding the company Mobitel too has requested a listing.

“Broad basing the ownership, it is expected that such listing will allow the government to raise at least USD 1,000 million, to settle our existing uneconomical, questionable and high cost debt that we inherited from the previous regime.”

“We will also inform the Parliament of any other planned listing that may be undertaken during 2017.”

He also proposed that 25 new firms should list on the Colombo Stock Exchange (CSE) during 2017.

The new securities act will be presented in the first quarter in 2017, and a separate board will be set up on the CSE for Small and Medium Enterprises.

SriLankan and Mihin air which has been running at colossal losses are now being commercialised, he added.