Sri Lankan stocks drop for 10th session

Reuters: Sri Lankan shares fell for a 10th consecutive session on Wednesday to their lowest close in more than 14 months, led by losses in lenders such as Commercial Bank of Ceylon Plc.

The Colombo stock index ended 0.76 percent weaker at 6,217.91, its lowest close since April 5, 2017.

“There were a few margin calls as the prices are coming down,” said Prashan Fernando, CEO at Acuity Stockbrokers.

Turnover stood at 341.5 million rupees ($2.1 million), well below this year’s daily average of 952.8 million rupees.

Foreign investors sold equities net worth 31.4 million rupees, extending the year-to-date net foreign outflows to 796.2 million rupees of shares so far this year.

Shares of Hatton National Bank Plc fell 2.1 percent, while Sampath Bank Plc ended 2.1 percent lower and National Development Bank Plc closed 6.2 percent down. The biggest listed lender Commercial Bank of Ceylon ended 1.1 percent weaker.

Finance Minister Mangala Samaraweera on Tuesday said the country’s economy is likely to grow around 4.5 percent this year, below the central bank estimate of 5 percent in a sign political uncertainty is curbing a more robust recovery after a weak 2017.

($1 = 159.9000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

Sri Lankan stocks extend losses to 9th session as weak rupee weighs

Reuters: Sri Lankan shares fell for a ninth consecutive session on Tuesday to their lowest close in more than a year, led by losses in heavyweight John Keells Holdings Plc.

The Colombo stock index ended 0.71 percent weaker at 6,265.73, its lowest close since April 6, 2017.

Depreciation of the rupee, which hit a record low last week, is one of the main concerns of equity investors, said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

Turnover stood at 638.6 million rupees ($4 million), less than this year’s daily average of 958.3 million rupees.

Foreign investors bought equities net worth 76.2 million rupees, but they have been net sellers of 796.2 million rupees of shares so far this year.

Shares of John Keells Holdings Plc fell 3.2 percent, while Ceylon Tobacco Co Plc ended 1.3 percent lower and Hatton National Bank Plc closed 2 percent down. The biggest listed lender Commercial Bank of Ceylon Plc ended 1.3 percent weaker.

Sri Lanka’s economy grew 3.2 percent year-on-year in the first quarter, slowing from 3.5 percent in the fourth quarter of 2017, the state-run Department of Census and Statistics said after the market closed.

A weaker rupee, political uncertainty and the recent fuel price hike has weighed on sentiment over the past few weeks, with local investors remaining on the sidelines as they gauge the impact of floods last month, brokers said. 

($1 = 159.8000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

Sri Lankan stocks extend losses, hit 14-month low

Reuters: Sri Lankan shares fell for an eighth consecutive session on Monday to their lowest close in more than a year, as foreign investors sold shares, with block deals boosting the day’s turnover.

The Colombo stock index ended 0.33 percent weaker at 6,310.51, its lowest close since April 11, 2017. The index dropped 0.4 percent last week, marking its fourth straight weekly fall.

Foreign investors sold equities net worth 98.8 million rupees ($618,000), extending the year-to-date net foreign outflows to 872.4 million rupees of shares.

Turnover stood at 1.3 billion rupees, more than this year’s daily average of 961.3 million rupees.

Shares of biggest listed lender Commercial Bank of Ceylon Plc fell 0.9 percent, while Hatton National Bank Plc ended 0.5 percent lower and conglomerate John Keells Holdings Plc ended 0.6 percent weaker.

Most investors have adopted a wait-and-watch approach, hoping for some positive news on the economic front, analysts said.

Sri Lanka’s economy grew 3.2 percent year-on-year in the first quarter, slowing from 3.5 percent in the fourth quarter of 2017, the state-run Department of Census and Statistics said after the market closed.

A weaker rupee, political uncertainty and the recent fuel price hike has weighed on sentiment over the past few weeks, with local investors remaining on the sidelines as they gauge the impact of floods last month, brokers said.

($1 = 159.8000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

United Motors invests Rs 100 mn on JCB facility in Peliyagoda

United Motors Lanka (UML) has invested Rs 100 million in the first phase of the state of the art machinery and service facility in a 1.5 acre land in Peliyagoda.

This is to promote the world famous brand JCB. At the launch UML Group CEO and Executive Director, Chanaka Yatawara said that construction is an exciting and growing industry in Sri Lanka and UML wanted to explore the opportunities and invested there by collaborating with the JCB, heavy equipment brand.

Yatawara said that almost 9 per cent of the GDP had come from the construction sector last year and Rs 200 billion has been added to the GDP by the construction sector in 2017. Some 700,000 persons were employed directly and otherwise in construction related employment which is about 8 percent of the working population in the country, he said.

Yatawara noted that over 1,200 machines used for constriction are imported every year and the market has grown 30 percent from 2016 to 2017. There could be a large market for material handling application and there is a big opportunity to be a player in the excavator space,” he pointed out.

Sale of JCB product range, mechanical repairs, painting, welding, servicing and maintenance will be done at the new facility in Peliyagoda. UML will also use ‘JCB Livelink’, a technology developed by JCB to monitor the performance of all its machinery. The technology will identify and alert JCB users of issues or a decrease in efficiency of the machine and will provide details for servicing and product support.

A highly skilled team of UML technicians to facilitate the JCB Livelink technology has been deployed by UML, he added.
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Ambeon Group launched to take on techno-centric business world of tomorrow

In a strategic move to reposition the entity to represent the Group’s business vision and take on the dynamic, technocentric business world of tomorrow, Taprobane Group announced the transformation of the Group including the name change to Ambeon.

As such, Taprobane Holdings PLC will be repositioned as Ambeon Capital PLC, while Lanka Century Investments PLC will be Ambeon Holdings PLC, with immediate effect.

The transformation of Ambeon Group, which includes restructuring of its diversified businesses to bring about collective focus, optimize investments and increase shareholder value, is now said to be well-poised to take the leap and transform the latent opportunities into lucrative ventures that deliver sustained value.

With over 3500 employees, Ambeon Group is reputed for its market dominance in the areas of financial services, manufacturing, real estate, technology and strategic investments.

Post-restructuring of the Group, Ambeon Capital PLC will be the holding company while all businesses have been repositioned and realigned legally under Ambeon Holdings PLC, transforming the Group to become a medium-sized, diversified conglomerate geared to take on the business opportunities available in global markets.

“Today’s announcement about the launch of Ambeon and the transformation of the Group is yet another milestone in our journey to build on our foundation of re-engineering success,” Ambeon Capital PLC Chairman Sanjeev Gardiner said.

“Ambeon Group is now ready and well-poised to compete amongst the elite conglomerates in the country. As a dynamic and diversified group of companies, Ambeon will continue to seek for lucrative business opportunities and transform entities to be the best within their respective industries in Sri Lanka and the world. This is just the beginning. True to our commitment, we will continue our journey to enhance the overall wealth and value creation of our shareholders and all other stakeholders beyond ambition,” Gardiner added.

Under the new Group structure, the subsidiaries of Ambeon Holdings PLC will include Taprobane Capital Plus (Pvt.) Ltd (a leading financial services provider with a wealth of experience in capital markets in Sri Lanka), South Asia Textiles Industries Lanka (Pvt.) Ltd (a leading manufacturer of exceptional quality weft knitted fabric specializing in knitting, dyeing, finishing, printing, brushing, sueding and anti-pin micro/polar fleece fabric for leading global brands such as Victoria Secret, Next, Marks & Spencer, Tesco, Calvin Klein, Decathlon and Adidas), Dankotuwa Porcelain PLC and Royal Fernwood Porcelain Ltd (manufacturers of porcelain tableware and gift items for global giants such as Oneida, Macy’s, Country Road, Lenox, John Lewis, Crate & Barrel, Megros, Jasanmal, Ralph Lauren, the Walt Disney Company and Dilmah), Ceylon Leather Products PLC (manufacturer of leather footwear and accessories, popularly known as DI), Millennium Information Technologies (Pvt.) Ltd (Sri Lanka’s leading information systems solutions providers delivering IT solutions for many industries, including banks and finance, telecommunications, apparel and leading conglomerates) and Colombo City Holdings PLC (real estate).

Commenting on the transformation, Ambeon Capital PLC and Ambeon Holdings Group Managing Director/Chief Executive Officer Murali Prakash PLC stated, “It is with a sense of pride that I announce the birth of Ambeon – a well-diversified group of companies, empowered and backed by the market dominance, infinite potential and financial strengths of Taprobane Holdings PLC and Lanka Century Investments PLC.

The Group has been restructured and realigned to be astute, driven, nimble and visionary – one with an expanded range of products, strong globalized local brands, premier technology and innovation platforms along with the required resources will pave the way for Ambeon to extend its footprint across new businesses, markets and regions.”

“Ambeon Group is built on a robust set of values which include identifying the latent opportunities and moving first with the utmost discipline, empowering our people and channelling teamwork across all disciplines, building a culture of actioning results across all our businesses and seeing beyond the horizon in search of the next frontier. Integrity, governance, risk and compliance are further built into our DNA.

This ensures that the Group maintains transparency across all processes, invariably benefitting our customers and creating sustainable long-term value for our shareholders and all other stakeholders. We are now future-ready to re-engineer success across all our businesses,” Prakash concluded.

Ambeon Group is powered and guided by the renowned corporate giants – the Galle Face Hotel group, Hirdaramani group and Navitas Holdings.

The Ambeon Capital PLC board of directors comprises of eminent personalities – Sanjeev Gardiner (Chairman/Non-Independent Non-Executive Director), Ajith Devasurendra (Deputy Chairman/Non-Independent, Non-Executive Director), Murali Prakash (Group Managing Director/Chief Executive Officer), Priyantha Fernando (Independent Non-Executive Director), Harsha Amarasekera P.C. (Non-Independent Non-Executive Director), Ranil Pathirana (Non-Independent Non-Executive Director), Sarinda Unamboowe (Independent Non-Executive Director), Deshamanya Deva Rodrigo (Independent Non-Executive Director), while the board of directors of Ambeon Holdings PLC include – A.G. Weerasinghe (Chairman/Non-Independent Non-Executive Director), Murali Prakash (Group Managing Director/Chief Executive Officer), Ruwan Sugathadasa (Non-Independent Non-Executive Director), Mangala Boyagoda (Independent Non-Executive Director) and Priyantha Maddumage (Non-Executive Director).
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Sri Lanka's Finance companies to face tougher capital requirements from July

• BASEL-like model to increase minimum capital every year up to 2021 
• Tier I and tier II ratios to increase to 8.5% and 12.5% from current 5%t and 10%
• Fitch says higher capital requirements will improve sector resilience 
• But says will add to capitalization pressures for small-scale finance firms

Accordingly, the tier I and tier II ratios of licensed finance companies will increase to 8.5 percent and 12.5 percent from the current 5 percent and 10 percent respectively, effective from next month.If there was any leniency enjoyed by the Sri Lanka’s finance companies on their capital and disclosure requirements thus far, such will end soon as the sector is set to come under a BASEL-like regulatory framework.

The new capital regulations on licensed finance companies, which will take the form of BASEL rules on banks, will require the finance companies to gradually increase their capital ratios from 2018 through 2021, said Fitch Ratings on a special note on the sector ahead of the new rules coming into effect from July 1. Further, the finance companies with assets over Rs.100 billion – termed as systematically-important licensed finance companies – will be required to build an additional capital surcharge of 150 basis points starting from July 1, 2019 to July 1, 2021. This effectively takes the total capital ratio up to 14 percent by 2021 for such larger finance companies. However, the most immediate hurdle for all finance companies will be to up their tier I ratio to 6.0 percent by next month. “New capital-adequacy regulations for Sri Lankan finance companies are likely to improve the resilience of the sector to economic shocks, but will add to capitalization pressures— particularly for the country’s numerous small-scale finance companies,” Fitch Rating said. Fitch noted the finance companies that they rate already stay on top of the capital thresholds coming into effect next month even after taking into account the potential risk-weighted asset changes based on the current asset mix. While most of them already comply with the 2021 thresholds with some requiring external capital to stay in line, the rating agency said the small finance companies are struggling to raise capital to comply with an earlier requirement, which asked them to hold a minimum core capital of Rs. 2.5 billion by January 1, 2021. “The new minimum capital ratios are likely to add to those difficulties”, Fitch said. Sri Lanka’s licensed finance company sector has long been subjected to less stringent checks and balances compared to the banks on their capital adequacy, measurement of risks and disclosure requirements. The lax regulatory framework on the sector resulted in many finance companies filing for bankruptcy due to mismanagement of funds with the taxpayers having to rescue the hapless depositors.Meanwhile, capital ratios of the finance companies will come under downward pressure due to substantial increase in risk weighted assets/loans in the sector stemming from additional risk weighting made on ‘operational risks’ and the changes in the computation of risks weighted assets for credit risk.Therefore Fitch said those finance companies exposed to uncollateralized lending such as micro-financing, “may see the sharpest increases in RWAs, as this lending will be risk-weighted at 125 percent instead of 100 percent as previously”. However, the sector does not consider the ‘market risk’ in their trading book when computing the risk weighted assets in a finance company’s balance sheet because the regulator still views such a risk is low in the sector. The staggered capital ratio increments for the licensed finance sector in Sri Lanka is coming into effect precisely one year after the country’s banking sector was made subjected to BASEL III regulations on capital requirements.www.dailymirror.lk

Sri Lanka to remove VAT from hospital bills

ECONOMYNEXT - Sri Lanka will remove value added tax from hospital bills from next week, Finance Minister Mangala Samaraweera said in the wake of calls by President Maithripala Sirisena also to lift the tax.

Sri Lanka slammed a 25 value added tax on hospital bills while threatening price controls on private hospital bills and also depreciating the rupee in a bid to boost exports by improving 'competitiveness' which involves the destruction of real wages of workers.

Every person who goes to a private hospital, will save resources from the state hospital system.

Sri Lanka provides education and healthcare free, and also uses both services as an excuse to justify the existence of the state and the taxation system.

Though President Sirisena had admitted placed stumbling blocks proposed reforms of the United National Party that will free the common man from vested domestic business oligarchs who are exploiting them though import duties, some analysts say he was right to oppose the VAT on healthcare.

Instead of healthcare some analysts say VAT should be built into areas like energy, where people can contribute small amounts tax over time to pay for hospital upkeep. Hospital bills on the other hand are large and sudden.

A VAT on energy will also help the exports become competitive without destructive measures like currency depreciation.