Sri Lanka Equity News: January 2016

Friday, January 29, 2016

Fitch Affirms SriLankan Airlines' Government Guaranteed Bonds at 'BB-'

Fitch Ratings has affirmed the rating on SriLankan Airlines Limited’s (SLA) US dollar-denominated government guaranteed bonds at ‘BB-. KEY RATING DRIVERS The national carrier’s bonds are rated at the same level as SLA’s parent, the state of Sri Lanka, due to the unconditional and irrevocable guarantee of principal and interest of the notes provided by government. The state held 99.5% of SLA through direct and indirect holdings at end-2015....

Colombo inflation drops below 1-pct in January

Jan 29, 2016 (LBO) – Consumer prices in Sri Lanka's capital Colombo has dropped to 0.9 percent in January 2016 from a year earlier, down from 2.8 percent in December 2015 with the inflation index dropping 0.2 percent in the month, the state statistics office said. The CCPI for all items for the month of January 2016 was 184.9 recording a decrease of 0.16 percent compared to the previous month for which the index was 185.2 Year on year...

Sri Lanka deepening trade agreements, exploring China FTA: Malik

Jan 29, 2016 (LBO) – Sri Lanka is deepening its free trade agreements with India and Pakistan, and negotiating an FTA with China, Malik Samarawickrama, minister of development strategies and international trade, said. “PM Modi’s ‘Make in India’ strategy will create opportunities for linking into new and expanding value chains in domestic as well as multinational companies operating in India,” Samarawickrama said. He was speaking at the Invest in East 2016 International Investment Promotion Forum. “In order to take advantage...

John Keells Holdings 9-month net up 6-pct, 3Q net down

Jan 29, 2016 (LBO) – Sri Lanka’s diversified John Keells Holdings said group net profit grew six percent in the nine months to December despite a weaker performance in transportation, leisure, information technology and plantation sectors in the third quarter. Net profit grew six percent to 10.6 billion rupees in the nine months to December, but net profit was down six percent to 4.4 billion rupees in the third quarter. The Transportation sector profit before tax (PBT) of 464 million rupees in the third quarter is a decrease...

Thursday, January 28, 2016

Government should engage with public on FTAs: Deshal De Mel

Jan 28, 2016 (LBO) – Sri Lanka’s government needs to engage with the public when negotiating Free Trade Agreements with other countries, economist Deshal De Mel said. De Mel on his blog stated that local manufacturing and services enterprises may have disruptive impacts through the Free Trade Agreement with China. “It is curious that there is almost no public debate about the FTA that is being negotiated with China, which has an infinitely higher probability of having disruptive impacts on local manufacturing and services enterprises,”...

Chances of March Fed rate hike drop after FOMC statement

Jan 28, 2016 (LBO) – The chances of a U.S. Fed rate hike in March dimmed after a FOMC policy statement on Wednesday acknowledged global economic risks, as analysts interpreted the carefully worded statement. The FOMC decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent after a two-day policy meeting. “The Committee is closely monitoring global economic and financial developments and is assessing their implications for the labor market and inflation, and for the balance of risks to the outlook,”...

Sri Lanka foreign reserves estimated at USD7.3bln end Dec: CB

Jan 28, 2016 (LBO) – Sri Lanka’s gross official reserves were estimated at 7.3 billion US dollars by end December 2015, the Central Bank said. The figure remained unchanged from end November equivalent to 4.6 months of imports, while total foreign assets amounted to 9.1 billion US dollars, equivalent to 5.7 months of imports.During the year to November, the overall BOP is estimated to have recorded a deficit of 1,274.2 million US dollars, compared to a surplus of 1,628.3 million US dollars during the corresponding period of...

Sri Lanka trade deficit widens 1 pct in 11 months to Nov

Jan 28, 2016 (LBO) Sri Lanka’s trade deficit for the first eleven months of 2015 marginally increased by one percent to 7.6 billion dollars, the central bank said.Worker remittances declined 7.2 percent to 574.5 million dollars in November 2015, year-on-year, although cumulative inflow from remittances was up marginal 0.8 per cent to 6.4 billion during the first eleven months of 2015. “The comparatively low growth in workers’ remittances during this period could be attributed to the drop in income in oil exporting Middle Eastern...

Wednesday, January 27, 2016

China will avoid hard landing, won't cause recession: BofA

Jan 27, 2016 (LBO) – Whatever does cause the next global recession, it probably won’t be China, according to Bank of America Merrill Lynch.Their analysts believe the world’s second-largest economy will avoid a hard landing and risks from financial market turbulence can be contained by the Chinese government, according to a Bloomberg report. “We don’t view the slowing in Chinese growth as having sizable spillovers into developed markets generally, but certain economies will be harder hit than others,” Michael Hanson, senior global...

OPA worried about professional services agreement with India

Jan 27, 2015 (LBO) – The Organisation of Professional Associations (OPA) in a statement yesterday said it was deeply concerned about Sri Lanka’s intended bilateral agreement with India named “Economic Technology Cooperation Agreement (ETCA).”“OPA with 46 Associations of professionals of the country, having substantial professional resources in the country in any discipline, is of firm opinion that it is absolutely unnecessary for foreign professional services to be allowed liberally in the country by such a bilateral agreement...

Tuesday, January 26, 2016

Orient Finance IPO raises Rs987 mln on opening day

Jan 26, 2016 (LBO) – Orient Finance PLC’s initial public offering had received applications for shares worth 986.9 million rupees on Monday, the company said in a statement to the Colombo Stock Exchange. The company is offering 71.5 million voting shares at 15 rupees a share to raise 1,072.5 million rupees. The IPO received 262 applications for shares worth 136 million rupees, and one application for 850.9 million rupees, the company said. &nb...

Ceylon Chamber launches National Agenda Committees

Jan 26, 2016 (LBO) – The Ceylon Chamber of Commerce is launching a set of thought-leadership groups called National Agenda Committees (NACs) to put forward innovative solutions for key national economic challenges.The NACs will be multi-stakeholder groups functioning under the chamber, a statement said.“The Sri Lankan economy is at an important inflection point and the private sector has an important role to play in influencing the future trajectory,” Chairman Samantha Ranatunga said.“Some key challenges and bottlenecks need...

Sri Lanka remittances contract in 2015: Frontier Research

Jan 26, 2016 (LBO) – Sri Lanka has experienced a contraction in inward remittances after several years amidst falling oil prices and slower hiring in the Gulf nations, a top research firm said.2015 remittance inflows have contracted 0.5 percent against the previous year, Frontier Research said.In 2014 remittances grew around 9.5 percent, which followed 7 percent growth in 2013. In 2011 inward remittances grew 25 percent.“But remittances...

New ministry to restructure rather than run public enterprises: Kabir Hashim

Jan 26, 2016 (LBO) – The mandate of Sri Lanka’s new Public Enterprise Development ministry is restructuring rather than running the country’s large portfolio of state-owned enterprises, Kabir Hashim, Sri Lanka’s minister of Public Enterprise Development, told the publishing and consultancy firm Oxford Business Group. “The main objective is to reduce the burden SOEs place on the treasury as fast as possible,” he said. “We have a large number that are major liabilities and cause a drain on the budget every year. We feel that most...

Opinion: Rite of passage, boom and bust cycle of the economy

By Ashini SamarasingheWhere economic performance is concerned, Sri Lanka tends to emphasize on the importance of economic growth or GDP growth over other economic indicators. This has led to expectations of consistently higher growth rates over time. However, we have not as yet been able to maintain high growth rates over a long period of time as the economy tends to experience a slowdown (what is called “economic adjustments”) from time...

Sri Lanka's Rebirth, blog by Joseph E Stiglitz

By Joseph E. StiglitzCOLOMBO – Sri Lanka has been deservedly praised for the progress it has made since the end of the war against the separatist Tamil Tigers in 2009. The economy has grown at an average annual rate of 6.7%, and education and health statistics are impressive.All developing countries face myriad challenges, but this is especially the case for a country that has suffered an intense 30-year civil war. The government will need to set priorities; but success will require a comprehensive approach.Underlying wars such...

Monday, January 25, 2016

Interview: Listing of Sri Lanka non-strategic investments may take a year, says Eran

Jan 25, 2016 (LBO) – Sri Lanka’s government is putting in place processes to list some of its non-strategic investments on the Colombo Stock Exchange, although this may not take place immediately, Eran Wickramaratne, deputy minister of Public Enterprise Development, told Lanka Business Online. “Within a year that’s possible. But whatever we are doing, we want to do it properly and transparently and we are putting the processes in place,” he said. In budget plans for 2016, the government said it wants to streamline its portfolio...

PM holds meetings with Branson, other investors

Jan 24, 2015 (LBO) – Sri Lanka’s Prime Minister Ranil Wickremesinghe and government officials met several business leaders and heads of state on the sidelines of the World Economic Forum.Richard Branson of the Virgin group, Cyrus Mistry, chairman of the Tata Group, Kevin Sneader of McKinsey and Company and Jean-Philippe Courtois, President of Microsoft International were some of the investors who expressed interest in investing in the island. Courtois said a delegation will visit Sri Lanka to discuss a technology agreement in...

Friday, January 22, 2016

Jan 22, 2016 (LBO) - Central Bankers in the modern era should have a dual mandate which concentrate on employment targeting in addition to conventional inflation targeting, lead author of the 2015 Global Human Development Report said.

Jan 22, 2016 (LBO) – Sri Lanka’s economic policy is governed by political pressures which is evident in the perverse link between the trade deficit and the budget deficit, a top economist observed.Nishan de Mel of Verité Research says the inconsistency in government policies is the key underlying problem contributing to this issue.Trade taxes are reduced to increase revenue, especially from motor vehicles, widening the trade deficit and...

Central Bankers should have dual mandate, says author of HDR 2015

Jan 22, 2016 (LBO) – Central Bankers in the modern era should have a dual mandate which concentrate on employment targeting in addition to conventional inflation targeting, lead author of the 2015 Global Human Development Report said.Making the South Asian regional release yesterday in Colombo Selim Jahan stated that enhancing human development through work requires holistic policy interventions.“In most countries, the Central Bank has...

Korea EXIM Bank opens representative office in Sri Lanka

Jan 22, 2015 (LBO) – The Export-Import Bank of Korea, an official export credit agency of the Republic of Korea, announced Friday the opening of their representative office in Colombo.This new presence comes in response to increased bilateral ties between the governments of Korea and Sri Lanka, in trade, foreign direct investment, development assistance, cultural affairs, and personnel exchanges. The opening of the representative office also coincides with the Bank’s 40th anniversary, a statement said.The State Minister for...

Thursday, January 21, 2016

Asia Securities estimates 5-6 percent GDP growth and 3-pct inflation in 2016

Jan 21, 2016 (LBO) – Sri Lanka will grow at a speed of 5 to 6 percent this year while having 3 percent annual inflation, brokerage firm Asia Securities said.“We also estimate that the exchange rate to be around 150 rupees per US dollar at the end of the year,” Kanishka Perera, Head of Research at Asia Securities told a seminar.The firm stated that interest rates will move up by 100 to 125 basis points in 2016 while seeing a fiscal deficit of 7 percent for this year.&nb...

Sri Lanka should look at IMF package seriously: Kelegama

Jan 21, 2016 (LBO) – Sri Lanka should look at the IMF package very seriously as the temporary measures would not fix the fundamental issues of the economy, an economist said.Saman Kelegama, Executive Director of the Institute of Policy Studies told a forum that the country needs to bring down the over heated economy through austerity measures.“Belgium funds or swap arrangements with India are temporary measures. They don’t fix the economic fundamental problem of the country,” Kelegama said.“You can use that to get some breathing...

China eyes more investment opportunities in Sri Lanka: PM (VIDEO)

Jan 21, 2016 (LBO) – Prime Minister Ranil Wickremesinghe said in Switzerland that Sri Lanka is expecting more investments from the China apart from the ongoing infrastructure projects. “Infrastructure alone is not sufficient and we are discussing bringing more Chinese investments,” Wickremesinghe said at a press conference held during the World Economic Forum in progress in Davos, Switzerland. “I think the Chinese government has also decided that some of its manufacturing industries should move out and Sri Lanka is one...

Central Bank negotiating with IMF for SBA: Amunugama-Updated

Jan 21, 2015 (LBO) – The Central Bank is negotiating with the IMF for a one billion dollar stand-by arrangement, Special Assignments Minister Sarath Amunugama said at an SLFP media briefing, according to a media report.Amunugama said discussions were ongoing and the first tranche of the SBA could come in by late February or early March.However when asked, Minister Amunugama told LBO that the arrangement has not been finalized yet.“An IMF team is coming here in March not only to have discussions about a stand-by arrangement but...

Sri Lanka inflation NCPI at 4.2-pct in December 2015

Jan 21, 2016 (LBO) – Sri Lanka’s consumer prices rose 4.2 percent in the 12-months to December 2015 from a year earlier, data from the state statistics office showed.In November 2015, the index which is termed as National Consumer Price Index reported 4.8 percent inflation.Year on year inflation of Food Group has been decreased from 4.6 percent in November to 2.6 percent in December while Non-food Group increased by 4.9 percent to 5.6 percent...

Wednesday, January 20, 2016

Probability of US March rate hike drops, eyes on Davos

Jan 20, 2016 (LBO) – The probability of a rate hike by the U.S. Fed by March fell to 40 percent with equity markets off to a bad start this year, as focus turns to the World Economic Forum in Davos.JPMorgan expects the next US interest rate hike in June, and some analysts predict just two interest rate hikes by the US Fed this year. The European Central Bank could cut its depost rate, while Bank of Canada may ease monetary policy this week.According to CME fed fund futures, the probability of a US rate hike in March is 40 percent,...

Interview: Attractive returns on Sri Lanka bonds due to volatility

Jan 20, 2016 (LBO) – Out of emerging markets, Sri Lanka bonds offer well above average returns through trading opportunities due to strong volatility, a market participant said.Data shows rupee treasury bonds posting more than 25 turning points last year, a clear sign of volatility in the secondary market. Swings of between 25 to 100 basis points during such turns is possible.In October, 10-year bonds offered yields of 10.25 percent, which...

Growth in developing economies forecast at 4.3-pct for 2016: IMF

Jan 20, 2016 (LBO) – Growth in emerging market are projected to increase from four percent in 2015 to 4.3 and 4.7 percent in 2016 and 2017, respectively, the latest International Monetary Fund’s global forecast says.“Growth in China is expected to slow to 6.3 percent in 2016 and 6.0 percent in 2017, primarily reflecting weaker investment growth as the economy continues to rebalance,” the IMF said.“India and the rest of emerging Asia are generally projected to continue growing at a robust pace, although with some countries facing...

Tuesday, January 19, 2016

Interview: Controlled tea liberalization possible, says Tea Board Chief

Jan 18, 2016 (LBO) – Better marketing and branding of Sri Lankan teas overseas, together with the potential for liberalising the industry, were just some of the issues discussed with Rohan Pethiyagoda, the newly inducted Chairman of the Sri Lankan Tea Board, in an interview with the Oxford Business Group.Tea export volumes out of Sri Lanka showed a distinct decline in the year to November 2015 in comparison to the previous year, while global prices remained low.Pethiyagoda believes the price component is at least in part owing...

Prime Minister to attend World Economic Forum

Jan 18, 2016 (LBO) – Prime Minister Ranil Wickremesinghe is due to leave Sri Lanka on 19th January 2016 for the World Economic Forum that will be held in Davos-klosters, Switzerland from 20th to the 23rd January 2016.This is the first time Sri Lanka has been invited to participate in the World Economic Forum. During his visit, the Prime Minister will engage with international investor community on possible investments in Sri Lanka.Over 40 heads of state will be in attendance at the Forum, which will focus this year on new trends...

Monday, January 18, 2016

Tony Weerasinghe launches online retail brokerage Ustocktrade

Jan 18, 2015 (LBO) – Tony Weerasinghe a founder of software company MilleniumIT has launched a low-cost U.S. online retail brokerage, Ustocktrade. Ustocktrade, which generates revenue from a one-dollar-a-month membership fee and a one-dollar-per-trade fee, aims to “bring Wall Street to Main Street” Weerasinghe said. Part of the firm’s goal is to encourage non-traditional investors, such as university students and low-income earners, to take part in the stock market, according to a Reuters report. Ustocktrade is a private stock...

Sri Lanka targets USD5 bn FDI in next three years: Malik

Jan 18, 2016 (LBO) – Sri Lanka is targeting five billion US dollars worth of foreign direct investments (FDI) in the next three years, Minister of Development Strategies and International Trade said.“We are targeting 5-6 billion US dollars in FDI the next three and I am quite optimistic that we will get there,”Malik Samarawickrama, Minister of Development Strategies and International Trade told reporters in Colombo, Monday.“It will no doubt be a challenge with the prevailing global climate but we are very positive because now...

Thursday, January 14, 2016

CCP by first quarter 2017: CSE Chairman

Jan 14, 2016 (LBO) – Sri Lanka’s Colombo Stock Exchange aims to establish the Central Counter Party (CCP) system, a new risk management system, by early 2017, a senior official said.“We have to properly draft the laws. This is a difficult task but we are doing that with the help of some consultants,” Vajira Kulathilake, chairman Colombo Stock Exchange said.“I expect by 2017 first quarter it will come and through this we can bring in new products to attract foreign investor too.”The CCP will allow delivery upon settlement...

Sri Lanka's reconciliation process key to its economic success: UK Minister

Jan 14, 2016 (LBO) – Sri Lanka commitment to reconciliation will be a driver of its future economic development, a visiting Minister said.“It is reconciliation that will, I believe, be the bedrock on which Sri Lanka’s future economic success will be built,” Hugo Swire, Minister of State at the Foreign and Commonwealth Office in the United Kingdom, said.“I also look forward to meeting resettled families, members of civil society and religious leaders to hear directly from them about the progress in reconciliation and economic...

Wednesday, January 13, 2016

Obama gives last state of the union address

Jan 13, 2016 (LBO) – U.S. President Barack Obama gave his final state of the union address on Tuesday attempting to bridge an optimistic assessment of the nation’s progress with public anxiety over terrorism abroad.In a wide-ranging speech Obama painted a hopeful portrait of the nation after seven years in office.“As frustration grows, there will be voices urging us to fall back into tribes, to scapegoat fellow citizens who don’t look like us, or pray like us, or vote like we do, or share the same background,” Obama said.“We...

Sri Lanka stocks up after 7 days of losses

Jan 13, 2016 (LBO) – Sri Lankan stocks were up 0.31 percent after seven consecutive days of losses with gains in John Keels Holdings and Telecom stocks, brokers said.The Colombo benchmark All Share Price Index closed lower 20.02 points at 6,554.37 down 0.31 percent. S&P SL20 closed 12.53 points down at 3,405.57 down 0.37 percent.Turnover was at 926 million rupees, with only 114 stocks closing positive against 40 negative.“We saw bargain hunters entering the market, today,” Lanka Securities said.The main index was pushed...

Tuesday, January 12, 2016

An investor to park USD1 bln in dollar deposits, says Finance Minister

Jan 12, 2016 (LBO) – An investor has promised to park 1 billion dollars in dollar deposits in Sri Lanka to help the island nation defend its currency, according to a media report quoting the finance minister. The investor was Belgian and was working with a Sri Lankan partner, Finance Minister Ravi Karunanayake told Reuters. The investor has promised to transfer the money in two equal tranches from banks in Brussels and Luxembourg, he said. “Instead of going for bonds and other borrowing, we are permitting it to take place,”...

Medium term growth prospects for Sri Lanka market: CT CLSA

Jan 12, 2016 (LBO) – The Sri Lankan economy is forecast to grow 6 percent 2016 with fiscal proposals to stimulate manufacturing, export and construction offering growth prospects in the medium term, CT CLSA Securities said in its Sri Lanka Outlook 2016 report.“The 2016E fiscal proposals to stimulate manufacturing, export and construction sectors are expected to be key catalysts for sustainable economic growth in the medium term,” the report said.Signs pointing to a recovery in emerging markets together with improved valuations...

Sri Lanka stocks close with highest intra-day loss in 5 months

Jan 12, 2016 (LBO) – Sri Lankan stocks closed down at 1.74 percent for a seventh consecutive day with losses across the board as regional markets also dropped, brokers said.The Colombo benchmark All Share Price Index shed 115.97 points to end at 6,534.35 down 1.74 percent. S&P SL20 closed 71.00 points down at 3,392.04 down 2.05 percent.Turnover was at 998 million rupees, with only 18 stocks closing positive against 156 negative.The main index showed losses in Lion Brewery closing at 551.40 rupees, down 58.60 rupees and John...

Monday, January 11, 2016

Sri Lanka foreign reserves at USD7.3 bln end Dec

Jan 11, 2016 (LBO) – Sri Lanka’s official foreign reserves was slightly higher at 7.29 billion dollars at the end of December, up from 7.28 billion dollars at the end of November, figures released by the Central Bank shows.This figure is down from 8.21 billion dollars in foreign reserves at the end of 2014. The Dec 2015 reserves included 6,455 million dollars in foreign reserves and 760 million dollars in gold.Foreign reserves improved after Sri Lanka raised 1.5 billion dollars in a 10-year sovereign bond issue in late October....

SEC advises TKS Securities over possible violation of rules

Jan 11, 2016 (LBO) – Sri Lanka’s securities watchdog has advised TKS Securities, a registered stockbroker, that their agent has made representations to the public as an investment advisor.The Securities and Exchange Commission said they are aware that an Agent of TKS Securities is carrying on business under a name of ‘Investor Eye’ or ‘Ayojana Guru’ and offering investment advice to the public independently of TKS Securities.“A Stockbroker may offer investment advice to clients; it may do so only through certified Investment...

Friday, January 8, 2016

Emerging Asia leverage, capital outflows constrain policy space: Fitch

Jan 08, 2015 (LBO) – Emerging Asia’s private consumption has remained resilient in the face of weaker external demand but investment has slowed down more substantially, particularly in the private sector, Fitch ratings said.The full statement followsFitch Ratings-Hong Kong-07 January 2016: Fitch Ratings says Emerging Asia’s (EM Asia) private consumption has remained resilient in the face of weaker external demand. However investment has slowed down more substantially, particularly in the private sector. The slowdown...

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