Sri Lankan stocks steady as rupee weakness hurts risk appetite

Reuters: Sri Lankan shares ended steady on Tuesday as a weak rupee, which is trading near all-time lows, kept risk appetite muted, stockbrokers said.

Sri Lanka’s president reshuffled his cabinet on Tuesday after the defection of several ministers from his party, but it failed to boost the stock market, which had been looking for an end to the country’s political uncertainty.

The Colombo stock index ended 0.04 percent firmer at 6,533.94. The index lost 0.15 percent last week.

“Cabinet reshuffle had nothing to do with the market. But at least it has ended speculation of uncertainty dragging into future,” said Prashan Fernando, CEO at Acuity Stockbrokers.

“Investors are looking for the stability of the rupee and interest rates. The market P/E ratio is below 10 times, which makes Sri Lankan stocks very attractive to foreigners compared to other frontier markets.”

Gains led by top mobile phone service provider Dialog Axiata , which rose 2.1 percent, were offset by losses led by top listed lender Commercial Bank of Ceylon Plc. Commercial Bank fell 0.9 percent.

Fitch Ratings said on Thursday that recent political developments in Sri Lanka have created some uncertainty over reform momentum and fiscal consolidation, and prolonged upheaval could undermine investor confidence ahead of large external debt maturities in 2019-22.

Turnover stood at 517.9 million rupees ($3.3 million), less than half of this year’s daily average of around 1.1 billion rupees.

Foreign investors bought a net 303.1 million rupees on Tuesday, but they have sold net 650.8 million rupees worth of equities so far this year.

Sri Lankan markets were open on Tuesday as the government, citing a Buddhist celebration on Sunday and Monday, decided to celebrate workers day on May 7. 

($1 = 157.5500 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Amrutha Gayathri)

EPF follows streamlined methodology in investing in CSE and Unit Trusts

By Bandula Sirimanna

The Employees Provident Fund (EPF) has been directed to follow a transparent and standardised methodology in making investments in Colombo Stock Exchange (CSE) and Unit Trusts following an evaluation made during a period of seven years from January 1 – 2010 to December 31 – 2016.

The criteria followed by the fund and operating procedures accepted by the fund when purchasing or selling unit trusts and which quotes were called from the public had been investigated during the evaluation, Labour Ministry sources revealed.

The establishment of accepted operating procedures for the sale or purchase of unit trusts for which bids are called by private limited companies and at the Colombo Stock Exchange has also been taken into consideration during this 7-year period, a senior official of the ministry told the Business Times.

The basic information pertaining to the buying and selling of shares of companies such as Ceylon Grain Elevators, Vallible One, Central Finance, Hotel Galadari, Hotel Lighthouse, Laughs Gas, Dimo, Browns, LOLC, Sri Lanka Capital Holdings and The Finance Co. had been vigorously scrutinised.

The aim was to find out as to whether the EPF had violated any law of the Colombo Stock Exchange or Securities and Exchange Commission when engaging in the transaction of shares, especially in the transactions related to buying and selling of shares of commercial banks, he said.

Capital losses or gains sustained as a result of those transactions and details of officers who issued orders for the purchase/sale of unit trusts and details of officers who carried out those transactions as well as the transaction values of the EPF during the seven period have been compiled.

These details are to be submitted to the Committee on Public Accounts for its consideration, he disclosed.

However with the introduction of new methodology all investments are now being made with the approval of an Investment Committee while the Monetary Board’s prior approvals were obtained for investments outside government securities.

The ministry’s Risk Management Department has been entrusted with the responsibility of overseeing the investment activities of EPF and formulates risk parameters for investments including revision of the investment and trading guideline, he added.

Some of the investments by the government’s two funds (EPF and ETF) during the former regime were made in companies that were not doing too well, raising questions from the then opposition.

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Union Bank: 37% growth in post-tax profit in 1Q18

Union Bank has reported a pre-tax profit and VAT of Rs 246 million in the first quarter 2018, up by 47 per cent from the same 2017 quarter, the bank said in results released to the market.

“A significant growth in core banking operations contributed to the robust performance of the bank during the period under review, while prudent cost and revenue management drove growth in profits over the corresponding period in 2017,” it said.

Fee and commission income which mainly comprises of deposit related fees, trade and remittances, loans, cards and other fees increased by 18 per cent to Rs. 224 million
“A strong performance by the Treasury function resulted in capital gains of Rs. 69 million against Rs. 11 million in the corresponding period last year. Total operating income rose to Rs. 271 million,” the statement said.

Post-tax profit was up by 37 per cent to Rs. 130 million.

The group, comprising the bank and its two subsidiaries, UB Finance Company Ltd and National Asset Management Ltd reported a post-tax of Rs. 154 million, up by 28 per cent year-on-year.

Commenting on the latest results, Union Bank’s Director/CEO Indrajit Wickramasinghe said, “strengthened by its three-year growth strategy, Union Bank is now ready to take on the next phase of its expansion and growth”.

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Sri Lanka's Chevron Lubricants revenue, profits slide continues to 2018

ECONOMYNEXT - Sri Lanka's Chevron Lubricants profits fell 15 percent to 697 million rupees in the March 2018 quarter from a year earlier, while revenues slid 4 percent on top of a 9 percent drop last year, interim accounts showed.

The firm reported earnings of 2.91 rupees per share. The stock closed at 91.30 rupees, down 1.40 on Friday.

Revenues fell 4 percent to 2.97 billion rupees in the quarter, while cost of sales were flat at 1.71 billion rupees, and gross profits fell 10 percent to 1.26 billion rupees.

Chevron Lubricants is the former monopoly lubricant unit of state-run Ceylon Petroleum Corporation which was privatized to Caltex which later merged with Chevron Corporation.

After an import monopoly ended, the firm also enjoyed a blending monopoly, at the expense of consumer sovereignty.

Now there are three blending plants in the island, leading to competition.

Chevron told shareholders in the annual report that volumes fell 10 percent last year, amid competition and weaker purchasing power after a drought and inflation ate away at income, especially in the retail segment.

Sri Lanka sells 5-year dollar bonds for 5.65-pct

ECONOMYNEXT - Sri Lanka has sold 20.2 million US dollars of 5-year securities styled Sri Lanka Development Bonds at a fixed rate of 5.6563 percent and 20 million 4-year bonds at 5.5575 percent, the state debt office said.

The tradable bonds are mostly targeted at domestic banks and investors qualified to hold dollar assets.

The debt office also sold 7.5 million dollars of 2-year fixed rate bonds at 5.2 percent. The settlement is on May 01.

The debt office called offers for 100 million dollars of bonds.

It got bids of 7.56 million dollars for 2 year fixed bonds. It also got 95.77 million dollar in bids for 2-year floating and, and 218 million dollars for 3 year floating, which were not accepted. There were no bids for 3 year fixed rates.

There were 30 million dollars of orders for the 4-year bonds and 30.02 million dollars for 5-year bonds.

Sri Lankan stocks edge up on buying in blue chips

Reuters: Sri Lankan shares ended slightly firmer on Friday with block deals in blue chips pushing up the day’s turnover to a more than three-week high, although political uncertainty dampened investor appetite for risk assets, stockbrokers said.

The market has been waiting for signs of political stability after President Maithripala Sirisena suspended parliament until May 8. A cabinet reshuffle was expected on Monday, but government sources said it had been delayed.

Fitch Ratings said on Thursday that recent political developments in Sri Lanka have created some uncertainty over reform momentum and fiscal consolidation, and prolonged upheaval could undermine investor confidence ahead of large external debt maturities in 2019-22.

The Colombo stock index ended 0.14 percent firmer at 6,531.06. The index lost 0.15 percent on week.

Shares of Distilleries Company of Sri Lanka Plc closed 4.3 percent higher, while Lanka ORIX Leasing Company Plc rose 1.6 percent.

Conglomerate John Keells Holding Plc, which accounted for 58.8 percent of the day’s turnover, ended down 0.1 percent.

“Today, we saw a large turnover after long time coming from some crossings (block trades) in some blue chips. Other than that there were no big trades as most of the investors are still on the sidelines,” said Atchuthan Srirangan, assistant manager - research at First Capital Holdings PLC.

“The investors are still on the sidelines waiting to see the direction of the prevailing political uncertainty and the rupee currency.”

Turnover stood at 971.9 million rupees ($6.17 million), the highest since April 4, but less than this year’s daily average of 1.1 billion rupees.

Foreign investors sold shares worth a net 53 million rupees on Friday, extending the year to date net foreign outflow to 938.6 million rupees worth of equities so far this year.

Stock, bond and foreign exchange markets are closed on Monday for a public holiday and markets will resume trading on Tuesday. 

($1 = 157.6000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)

Sri Lankan stocks slip as political uncertainty continues; banks weigh

Reuters: Sri Lankan shares edged down in dull trade on Thursday and settled near their lowest close in more than one week hit earlier in the week as continued political uncertainty dampened sentiment, stockbrokers said.

The market has been awaiting signs of political stability after President Maithripala Sirisena suspended parliament until May 8. A cabinet reshuffle was expected on Monday, but government sources said it had been delayed.

Fitch Rating agency on Thursday said that recent political developments in Sri Lanka have created some uncertainty over reform momentum and fiscal consolidation, and prolonged upheaval could undermine investor confidence ahead of large external debt maturities in 2019-22.

The Colombo stock index ended 0.18 percent weaker at 6,521.74. The index gained 0.88 percent last week.

“Market is down because of a fall in banking shares,” said Dimantha Mathew, head of research, First Capital Holdings.

“Most of the investors are still on the sideline due to the prevailing political uncertainty.”

Turnover stood at 390.2 million rupees ($2.47 million), around a third of this year’s daily average of 1.1 billion rupees.

Foreign investors bought shares worth a net 2.9 million rupees on Thursday, but they have been net sellers of 885.7 million rupees worth of equities so far this year.

Shares of Lanka ORIX Leasing Company Plc fell 3.1 percent while Chevron Lubricants Lanka Plc ended 4.6 percent weaker.

Biggest listed lender Commercial Bank of Ceylon closed 0.1 percent down and Carson Cumberbatch Plc lost 2.8 percent. 

($1 = 157.7000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)