Sri Lanka Equity News: August 2016

Wednesday, August 31, 2016

Lanka needs targeting 30% savings rate by 2020

Sri Lanka needs to increase the current savings rate from 23% to 30% of GDP by 2020 and get close to India or Thailand, said Aswin De Silva, Chairman National Savings Bank.

“We as a responsible government owned institution will always look at ways and means of improving the financial and social inclusion of this country,” he opined speaking at the ‘NSB Reach’ launch event held in Colombo on Tuesday.

De Silva said Sri Lanka’s savings rate is at 23% of the GDP. In India and Thailand the rate is 31%. In Malaysia it stands as 33% and Singapore 53%. Sri Lanka was behind of all these neighboring countries. And when looking at the last five years it has been a minus growth. “We have been flat or come down marginally. Whereas countries like India, Japan and Singapore, the savings rate has increased. I think a reversal is required, “ he cautioned.

The Chairman acknowledged that they were responsible for this reversal as people responsible of managing the institution. “We need to make every effort to reverse it. We need to reverse it because all international global institutions including the World Bank and IMF has said that there is a correlation between a country’s development, growth and the rate of the savings. Higher the savings is greater ability for a country to sustain its growth. So we need to do that,” De Silva insisted.

The Chairman said the country needs to increase the current saving from 23% to 30% by 2020 and get close to India or Thailand. To achieve this the country should increase the savings rate roughly by 2% a year. An increase of 2% for four years will make up to about 30%. That will provide an additional saving close to about Rs 500 billion every year.

“Our GDP is about US$ 78 billion. Rs 500 billion additional savings every year is a tall order, a difficult task. But if we put all our efforts into it, that is not an impossibility. If we can reach that 30%, I am sure it would be a better place for all of us to live. We are responsible for that. We will make every endeavour to reverse this trend and get us to 30%. That is the reason we launch programmes of this nature,” the Chairman added.

http://www.dailynews.lk/?q=2016/09/01/business/91986

Sri Lanka freezes assets of Entrust Securities shareholders: CB Governor

ECONOMYNEXT - Authorities have frozen assets of shareholders of Entrust Securities, a primary dealer in gilts, that is alleged to have bilked billions of rupees of clients including the Central Bank itself amid a criminal probe, an official said.

Affairs of Entrust Securities are now administered by state-run National Savings Bank.

Central Bank Governor Indrajit Coomaraswamy told reporters in Colombo that there were discussion on bringing another bank to help overlook its operations.

Meanwhile, some assets of shareholders had been frozen, he said. A criminal investigation was also ongoing.

Entrust Securities is alleged to have sold government securities to clients twice and pulled the money out, and borrowed funds at higher rates than underlying securities to pay those who demanded funds back.

Among the top victims is the provident fund of state-run Ceylon Electricity Board (CEB), and the Central Bank's own pension and rural development department funds.

According to its annual report Rs1.4 billion of rural development funds were found to be "uncollateralised".

The Central Bank worker's Widows' and Orphans fund was hit for Rs283 million. Its Gratuity and Medical Benefits scheme was hit by Rs129 million.

The Central Bank has multiple pension and retirement funds for the benefit of workers, family members and retirees, which are mostly protected from inflation the agency itself generates.

http://www.economynext.com/Sri_Lanka_freezes_assets_of_Entrust_Securities_shareholders__CB_Governor-3-5996-3.html

Tire market in Sri Lanka expected to reach $ 488 m in 2016

Dublin: The tire market in Sri Lanka is expected to reach $ 488 million in 2016 on account of the consistent increase in sales of two wheelers and three wheelers, rising private sector investments in the country’s construction, agriculture and industrial sectors and the expanding fleet of commercial vehicles, a recently-released market research report says.

Research and Markets in its report ‘Sri Lanka Tire Market Forecast and Opportunities, 2021’, says the tire industry in Sri Lanka has been growing over the last five years due to rising automobile sales and fleet, on account of increasing income levels, a growing infrastructure sector and the easy availability of automobile loans at lower interest rates.

According to the report, during 2013-2015, the automobile market in Sri Lanka witnessed growth on the back of increasing new vehicle registrations, with motor car sales and motorcycle sales standing at 105,628 units and 370,889 units in 2015, respectively.

This in turn positively influenced demand for two wheeler tires in the country over the last couple of years.

“Moreover, the growing supply chain and logistics sector in the country is anticipated to drive the expansion of the commercial vehicle fleet over the next five years, which is expected to boost demand for commercial vehicle tires in the coming years,” the report says.

With a fleet size of 3.36 million units of two wheelers in 2015, the country’s tire market is dominated by the two wheeler tire segment in volume terms.

CEAT Kelani, Global Rubber Industries (GRI) and Faga are a few of the major domestic tire manufacturing companies, while MRF Tires, Apollo, Goodyear and Bridgestone are the major global tire companies operating in Sri Lanka.

The Sri Lanka Tire Market Forecast and Opportunities, 2021 report discusses, among other topics, the Tire Market Size, Share and Forecast, Segmental Analysis, Policy and Regulatory Landscape, Changing Market Trends and Emerging Opportunities, and Competitive Landscape and Strategic Recommendations.

http://www.ft.lk/article/565259/Tire-market-in-Sri-Lanka-expected-to-reach----488-m-in-2016

Sri Lanka Treasuries yields edge down

ECONOMYNEXT - Sri Lanka's 03-month and 01-year Treasuries yields edged down at Wednesday's auction, while 06-month yield was flat, data from the state debt office showed.

The yield on 03-month T-Bills fell 01 basis point to 9.03 percent, while that on 12-month bills fell 02bps to 10.73 percent.

The 06-month bill yield was flat at 9.94 percent.

The debt office got bids worth Rs73.6 billion and sold Rs26.9 billion of bills, mostly of one-year tenor.

http://www.economynext.com/Sri_Lanka_Treasuries_yields_edge_down-3-5998-3.html

Asian shares ease, taking cue from Wall Street, oil slips

TOKYO, Aug 31 (Reuters) – Asian shares eased on Wednesday following modest losses on Wall Street, but were still on track for a monthly rise as investors waited to see if upcoming job data could prod the Federal Reserve into raising interest rates as soon as September.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.1 percent as traders awaited Friday’s job report, but looked set for a near 2 percent gain in August.

Japan’s Nikkei stock index added 0.9 percent, poised to rise 1.8 percent for the month, as it got a boost from a weaker yen after upbeat U.S. data lifted the dollar overnight.

The dollar was steady at 102.93 yen after rising as high as 103.14 yen overnight, its strongest since July 29. It was up 0.9 percent for the month.

Data released earlier on Wednesday showed Japanese industrial output was flat in July from June, underscoring fragility in factory activity and falling short of economists’ median forecast for a 0.8 percent rise.

Along with weak household spending data on Tuesday, Japan’s latest gloomy data are reinforcing expectations the Bank of Japan will ease policy further in September even if many economists and businessmen think it won’t do much good.

“While the latest string of Japanese data has been decent with the jobless rate improving and retail sales rising strongly in July, Japanese officials are clearly still frustrated with the weak growth in the economy,” said Kathy Lien, managing director of FX strategy at BK Asset Management.

If the U.S. unit breaks 103.50 yen, its next stop would be 104, Lien wrote in a note.

The euro was steady at $1.1146, down 0.2 percent for August.

The dollar index, which tracks the greenback against a basket of six major counterparts, edged down slightly on the day to 96.010 but remained not far from its overnight high of 96.143, its highest since early August. It was on track to rise 0.5 percent for the month.

On Wall Street overnight, markets logged losses, dragged down by shares of Apple Inc after antitrust regulators ordered the company to pay about $14.5 billion in back taxes to the Irish government.

The S&P 500 fell for the fourth time in five sessions, but was still within 1 percent of its record closing high set earlier this month.

Friday’s jobs report is expected to show employers added 180,000 jobs in August, according to the median estimate of 89 economists polled by Reuters.

Fed Vice Chairman Stanley Fischer said in a television interview on Tuesday that the U.S. job market is nearly at full strength and the pace of the central bank’s interest rate increases will depend on how well the economy is doing.

Markets were pricing in a 27 percent chance of a U.S. rate hike next month as of Tuesday, according to CME Group’s FedWatch tool. That probability would rise if the jobless figures were stronger than expected, showing U.S. employers continued their strong pace of hiring seen in recent months.

U.S. consumer confidence rose to an 11-month high in August, with households more upbeat about the labour market, data showed overnight.

Crude oil futures continued to slip after ending down for a second straight day on worries of oversupply and a strong dollar.

Brent crude was down 0.1 percent at $48.31 per barrel after shedding 1.8 percent on Tuesday. U.S. crude was down 0.2 percent at $46.24 after losing 1.3 percent overnight.

Spot gold edged up 0.1 percent to $1,311.66 an ounce after tumbling as low as $1,308.65 on Tuesday, its lowest since late June, pressured by the stronger dollar and growing expectations of higher U.S. interest rates.

World Bank positive about Sri Lanka's progress, wants to increase aid: Ravi K

Aug 31, 2016 (LBO) – Sri Lanka’s Finance Minister says multilateral donor World Bank is keen to increase its aid following Sri Lanka rapidly achieving its development goals which were set at the time loans were granted to it.

“The World Bank is very happy with the progress made so far in the projects that are funded by the organization and the progress of the new government and the fiscal discipline that has been put into place,” Ravi Karunanayake, Finance minister said.

“This is why they have pledged further support. They want to speed up Sri Lanka’s journey towards higher growth and prosperity with more aid.”

He was speaking following a meeting with the World Bank’s South Asia Region Vice President, Anntte Dixon.

She is on a two day visit and has been visiting World Bank supported projects aimed at enhancing economic growth and development.

Minister Karunanayake added that the aim of the government was to further increase the pace of these development projects while he lauded the assistance extended by the World Bank.

The World Bank Group’s activities are guided by a Country Partnership Framework (CPF) which is agreed upon with the government of Sri Lanka. The CPF will guide the collaboration for the next 4 years until June 2020. The World Bank’s current portfolio consists of 1.8 billion US dollars in financing commitments.

Ceylinco Life's 6-month income up 14-pct to Rs 11 billion

(PRESS RELEASE) – Ceylinco Life has reported that total income grew 14 per cent to Rs 11.028 billion in the six months ending 30th June 2016, with robust growth in both gross written premium and income from investments enabling the life insurance leader to consolidate its position at the helm of the sector.

Gross premium income at the end of the first half of the year totalled Rs 7.173 billion, reflecting a growth of 12 per cent over the corresponding six months of 2015, the company said.

Investment income improved by a healthy 18.2 per cent to Rs 3.855 billion in the six months reviewed, taking Ceylinco Life’s investment portfolio to Rs 72.792 billion, representing an increase of Rs 11.568 billion over the preceding 12 months.

The company’s Life Fund stood at Rs 72.183 billion as at 30th June 2016, a growth of nearly Rs 7 billion since the end of the second quarter of last year.

“Conditions for selling life insurance remain tough, but our strong focus on fundamentals and the solid platform of market leadership we have built over the past 12 years enables the company to maintain its momentum,” Ceylinco Life Managing Director/CEO Mr R. Renganathan said. “Our market leadership represents the trust and confidence the company has built, principally through its financial strength, fulfilment of promises and its unwavering commitment to policyholders.”

Ceylinco Life paid Rs 3.284 billion in net benefits and claims to policyholders in the six months reviewed, an increase of 18 per cent over the corresponding period of last year.

Total assets of the company grew by 7.7 per cent over the six months to Rs 86.4 billion.

Ceylinco Life’s investment portfolio as at 30th June 2016 comprised of Government Securities (62 per cent); Licensed Private Banks (6 per cent); State Banks (2 per cent); Real Estate (7 per cent); Corporate Debt (22 per cent) and Others (1 per cent). These investments are made in conformity with the investment guidelines stipulated under the Regulation of the Insurance Industry Act No 43 of 2000 and are subject to regular monitoring by the Insurance Board of Sri Lanka (IBSL).

Adjudged Sri Lanka’s Best Life Insurer in 2016 for the third consecutive year by World Finance, Ceylinco Life commenced operations in January 1988 and has close to a million lives covered by active policies. The company is acknowledged as the benchmark for innovation in the local insurance industry for its work in product research and development, customer service, professional development and corporate social responsibility.

Sri Lanka's growth expectation 5.5-pct this year: CB Governor

Aug 31, 2016 (LBO) – Sri Lanka’s growth expectation for this year is about 5 to 5.5 percent as things stand, Central Bank Governor Dr. Indrajith Coomaraswamy told reporters.

Coomaraswamy said no additional foreign borrowings are expected for this year.

“We don’t anticipate any additional external borrowings for this year apart from T-bills and bonds,” Coomaraswamy said.

He said there is an uncertainty in terms of IMF loan disbursements because of VAT hike delay.

“There is a IMF review in September, as of June we are very much on track but as of now there is a bit of uncertainty because of VAT, but still good.”

Deputy Governor Nandalal Weerasinghe however said September targets basically don’t matter much as they are only indicative targets.

“Performance criteria only applies for end June and end December review,” Weerasinghe added.

He said the new diesel tax will be a new revenue stream for the government and the changes in tax collection by revenue department led to an increase in tax collection.

“Even without VAT, tax collection has increased by about 20 percent. If there is a deficit in revenue targets, the government will have to reduce recurrent expenditure.”

JICA pledges Rs14bn development loan to Sri Lanka

Aug 31, 2016 (LBO) – The Japan International Cooperation Agency (JICA) has agreed to provide a development policy loan of 14.4 billion rupees (JPY10,000mn) for Sri Lanka’s development agenda.

These funds will be utilized for private sector development, governance improvement and fiscal consolidation.

The loan is provided at a concessionary interest rate of 1.4 percent per annum with a repayment period of 25 years including 7 years of grace period.

In order to improve fiscal sustainability, the cabinet has approved setting up a debt management unit under Finance Ministry and to submit a proposal to Parliament to repeal the Strategic Development Projects Act 2008.

To enable private sector competitiveness, the cabinet has decided to draft a new Secured Transactions Bill that will included provisions to facilitate the use of movable assets as collateral for bank loans.

Sri Lanka market update Treasuries yields mixed

The yield on 03-month T-Bills fell one basis point to 9.03 percent, while that on 12-month bills rose 02 bps to 10.73 percent. The 06-month bill yield was flat at 9.94 percent. The debt office got bids worth Rs73.6 billion and sold 26.9 billion rupees of bills, mostly of one year tenor.

Sri Lankan rupee steady after cbank chief allays fears of upward pressure

COLOMBO, Aug 31 (Reuters) – The Sri Lankan rupee traded steady on Wednesday, a day after the country’s Central Bank Governor Indrajith Coomaraswamy said the currency was not under upward pressure as capital inflows had not been of sufficient magnitude to exert such pressure.

Dealers said the rupee could appreciate if the central bank does not buy the U.S. dollar from the market since capital inflows into government securities have started and also due to $1.5 billion sovereign bond inflows.

Coomaraswamy told reporters late on Tuesday that the central bank had absorbed a net $600 million from the market since the International Monetary Fund (IMF) approved a $1.5 billion, three-year loan in June.

“Exchange rate is fairly stable. I don’t think capital inflows have been of sufficient magnitude to exert too much (upward) pressure as yet,” he told reporters in Colombo.

The spot rupee was steady at 145.55/60 per dollar at 0709 GMT, while one-week rupee forwards were also largely unchanged at 145.75/80.

The central bank held its key policy interest rates steady after market hours on Tuesday, saying previous tightening measures are being gradually transmitted to the economy.

“There is hardly any importer dollar demand. We see some exporter conversions. Imports are curbed because of the tight monetary policies at the moment,” a currency dealer said asking not to be named.

Dealers said the central bank was not seen intervening in the market to defend the currency. Central bank officials were not available for comment.

The spot rupee is usually managed by the central bank and the market participants use the forward market levels for guidance on the currency.

The central bank has largely not intervened to defend the rupee ever since a dual-tenure sovereign bond issue raised $1.5 billion in July.

Net foreign inflows into government securities jumped 31.4 percent to 302.4 billion rupees ($2.08 billion) through Aug. 24, according to the latest central bank data, since the International Monetary Fund approved a three-year, $1.5 billion loan on June 4.

Meanwhile, Sri Lankan shares edged up, with the benchmark Colombo stock index climbing 0.15 percent to 6,551.80 as of 0716 GMT. Turnover was at 731.2 million rupees ($5.02 million).

LANKA ORIX LEASING COMPANY - CORPORATE DISCLOSURE

http://cse.lk/cmt/upload_cse_announcements/7871472620405_.pdf

BROWNS HYDRO POWER - CIRCULAR TO SHAREHOLDERS

http://cse.lk/cmt/upload_cse_announcements/9651472639461_.pdf

LAKE HOUSE PRINTERS AND PUBLISHERS - DIVIDEND ANNOUNCEMENT

LAKE HOUSE PRINTERS & PUBLISHERS PLC
Company ID: - LPRT
Date of Announcement: - 31.Aug.2016
Rate of Dividend: - Rs. 1.00 per share / First & Final Dividend
Financial Year: - 2015/2016
Shareholder Approval: - Required
AGM: - 27.Sep.2016
XD: - 28.Sep.2016
Payment: 06.Oct.2016
Share Transfer Book Open

BOGAWANTALAWA TEA ESTATES - CIRCULAR TO SHAREHOLDERS

http://cse.lk/cmt/upload_cse_announcements/8601472645645_.pdf

HATTON NATIONAL BANK - CORPORATE DISCLOSURE

http://cse.lk/cmt/upload_cse_announcements/8181472647940_.pdf

Tuesday, August 30, 2016

Asia stocks bounce, dollar dips on Fed hike doubts

SYDNEY, Aug 30 (Reuters) – Asian shares bounced on Tuesday as doubts the Federal Reserve really would hike rates as soon as September undermined the dollar, while investors continued to count on more policy stimulus elsewhere in the world.

MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.4 percent, recouping around half of Monday’s loss. Stocks in South Korea and Australia both rose around 0.6 percent.

Japan’s Nikkei dipped 0.1 percent as the yen turned around and starting nudging higher once more.

A raft of Japanese data, from unemployment to retail sales, mostly beat analysts forecasts but did nothing to change expectations the Bank of Japan would eventually have to ease further.

Fed Chair Janet Yellen on Friday said the case for a rate increase was strengthening, but provided little detail on when the Fed would next move. Vice Chair Stanley Fischer suggested a hike as soon as next month was possible.

Yet while the initial market reaction was to push up the probability of a September hike to 44 percent, investors quickly had second thoughts and early Tuesday the implied chance was back at 36 percent <0#FF:>.

On Wall Street, the Dow ended Monday up 0.58 percent, while the S&P 500 added 0.52 percent and the Nasdaq 0.26 percent.

Financials was the best performer on the S&P 500, with Wells Fargo up 2.2 percent.

The sector typically rises with talk of higher rates, on the expectation that banks’ income could rise as they charge more for loans. However, the correlation is not direct as it requires the yield curve to steepen and, so far, it is not obliging.

Indeed, longer-term yields fell further than the short end on Monday, in part because much of the market suspects any Fed tightening would lead to even lower inflation over the long run.

Figures out Monday showed the Fed preferred measure of core inflation stuck at 1.6 percent for a fifth straight month.

The San Francisco Fed underlined the subdued outlook for inflation and rates in a research note.

The “natural” rate of interest – the real rate consistent with full use of economic resources and steady inflation near the Fed’s target level – was near zero and would rise to only 1 percent over the next decade.

“If these projections are accurate, then a monetary policy designed to track the rise in r-star (natural rate) would imply a very gradual normalization of the federal funds rate,” the note said.

The retreat in Treasury yields undid some of the dollar’s gains and its index edged back to 95.575 from a two-week top of 95.834.

The dollar likewise ebbed to 101.82 yen from a peak of 102.39, while the euro steadied at $1.1184.

In commodity markets, oil steadied after falling by around 1 percent on Monday. Oversupply remained a major concern with U.S. crude stockpiles forecast to have risen by 1.3 million barrels last week, a Reuters poll showed.

Brent crude futures were up 6 cents at $49.32 a barrel, while U.S. crude added 9 cents to $47.0.

Sri Lankan rupee steady ahead of cenbank policy rate meeting

Aug 30, 2016 (Reuters) – The Sri Lankan rupee traded steady on Tuesday ahead of a central bank policy meeting later in the day, as exporter dollar sales offset mild importer demand for the greenback, dealers said.

The central bank is expected to keep its key interest rates steady at the monetary policy rate meeting, after raising them by 50 basis points last month, a Reuters poll showed, amid signs of easing inflation and slower private sector credit growth.

The spot rupee was steady at 145.60/65 per dollar at 0719 GMT, while one-week rupee forwards were at 145.70/75, compared with the previous close of 145.75/85.

“Though there is not much of importer demand. The little demand was met by exporter conversions,” a dealer said, asking not to be named.

“Foreign investors also were buying government securities.”

Another dealer said the market has priced in the central bank’s expected policy rate decision, which will be announced at 1230 GMT.

Dealers said the central bank was not seen intervening in the market. Officials from the central bank were not available to comment on whether it had stopped giving directions on the spot rate.

The spot rupee is usually managed by the central bank, and market participants use the forward market levels for guidance on the currency.

Dealers said importers are waiting for the rupee to settle amid upward pressure after Sri Lanka sealed its largest syndicated facility by increasing its three-year borrowing to $700 million from a targeted size of up to $500 million.

The central bank has largely not intervened to defend the rupee ever since a dual-tenure sovereign bond issue raised $1.5 billion in July.

Net foreign inflows into government securities jumped 31.4 percent to 302.4 billion rupees ($2.08 billion) through Aug. 24 since the International Monetary Fund approved a three-year, $1.5 billion loan on June 4, according to the latest central bank data.

Meanwhile, Sri Lankan shares edged up, with the benchmark Colombo stock index climbing 0.15 percent at 6,550.65 as of 0727 GMT. Turnover stood at 326.7 million rupees ($2.24 million).

Sri Lanka market update ASPI close flat, Turnover Rs. 727mn

The ASPI gained marginally due to price gains in stocks such as Lanka Orix Leasing, Overseas Reality,
The Lanka Hospital Corporation, Lanka IOC, and Access Engineering.The day’s turnover was recorded at moderate levels to which Ceylon Grain Elevators made the highest contribution assisted by three crossings.Two crossings were also recorded in John Keells Holdings (Voting). Foreign investors were net sellers during the day.The All Share Price Index gained 1.6 points to close at 6,541.8 (+0.0%), while the S&P SL20 Index lost 6.1 points to close at 3,579.6 (-0.2%).Total turnover for the day stood at LKR 727.3mn (USD 4,998.3k) vs. 12-months average daily turnover of LKR 937.7mn (USD 6,444.0k), whilst the volume traded for the day was 21,596k against the 12-month average daily volume of 36,938k.Top contributory counters towards the day’s turnover were Ceylon Grain Elevators LKR 275.3mn (USD 1,891.7k, +4.8%), John Keells Holdings (Voting) LKR 136.2mn (USD 936.0k, -0.3%), The
KingsburyLKR 39.8mn (USD 273.8k, +5.0%), Lanka IOCLKR 21.7mn (USD 149.5k, +2.7%), Access Engineering LKR17.9mn (USD 122.8k, +1.6%). NForeign purchases amounted to LKR 119.2mn (USD 818.9k), whilst foreign sales amounted to LKR 344.9mn (USD 2,370.5k). This resulted in a net foreign outflow of LKR 225.8mn being recorded at the end of the day’s trading.

The spot rupee ended at 145.60/65 per dollar, compared with Friday’s close of 145.75/85, while one-week rupee forwards closed at 145.75/85, compared with the previous close of 145.95/146.00. The Sri Lankan rupee ended firmer on Monday as exporter dollar sales surpassed importer demand for the greenback, dealers said.

Sri Lanka's Central Bank keeps policy rates steady

Aug 30, 2016 (LBO) – Sri Lanka’s Central Bank has decided to keep its key interest rates steady for a fourth straight month on Friday, despite rising inflation and high private sector credit growth.

The full text of the statement is reproduced below.

Monetary Policy Review – August 2016

Both headline and core inflation, measured on a year-on-year basis, edged down in July 2016. The normalisation observed in domestic supply conditions as well as the suspension of the revisions made to certain taxes moderated consumer price inflation.

However, the underlying upward trend in inflation, as reflected in annual average price changes, appears to have continued thus far during the year. On the external front, the deficit in the trade account is estimated to have expanded by 2.2 per cent during the first half of 2016, on a year-on-year basis, as external demand remained relatively weak.

Earnings from tourism were estimated to have increased by around 16.7 per cent during the period from January to July 2016, with a record number of tourist arrivals during the month of July. Workers’ remittances increased by 3.8 per cent during the first seven months of the year. These inflows, coupled with the renewed foreign interest in investments in government securities and the realisation of medium to long term financial flows to the government, eased the pressure on the balance of payments and the exchange rate.

Meanwhile, gross official reserves were estimated to have improved to US dollars 6.5 billion by end July 2016 from US dollars 5.3 billion in end June 2016. Monetary expansion remained high in the month of June 2016. Credit granted to the private sector by commercial banks continued to increase at a significantly high rate of 28.2 per cent in June 2016, on a year-on-year basis, in comparison to 28.0 per cent recorded in the previous month.

A high intake of credit to the Industry and Services sectors together with a substantial growth in personal loans and advances drove the credit expansion during the first half of the year. Reflecting these developments, the growth of broad money (M2b) accelerated to 17.0 per cent in the month of Economic Research Department 30-08-2016 12-12-2012 2 June 2016 from 16.5 per cent recorded in the previous month.

According to the available indicators, the high growth of private sector credit and broad money has continued in to the month of July 2016 as well. In the meantime, short term interest rates increased considerably in response to monetary tightening measures adopted by the Central Bank during the first seven months of the year, leading to a sharp upward adjustment in both lending and deposit rates in the financial sector.

The Monetary Board, at its meeting held on 30 August 2016, observed that the impact of the policy measures adopted during the first seven months of the year through increasing policy interest rates and the Statutory Reserve Ratio (SRR) is being transmitted to the economy gradually.

As such, the growth in monetary and credit aggregates is likely to decelerate during the remainder of the year to a level supportive of maintaining mid-single digit inflation in the medium term. Accordingly, the Monetary Board decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank unchanged at 7.00 per cent and 8.50 per cent, respectively.

Standing Deposit Facility Rate (SDFR) 7.00%
Standing Lending Facility Rate (SLFR) 8.50%
Statutory Reserve Ratio (SRR) 7.50%

MILLENNIUM HOUSING DEVELOPERS - DIVIDEND ANNOUNCEMENTS

MILLENNIUM HOUSING DEVELOPERS PLC
Company ID: - MHDL
Date of Announcement: - 30.Aug.2016
Rate of Dividend: - Rs. 0.275 per share / First & Final Dividend
Financial Year: - 2015/2016
Shareholder Approval: - Required
AGM: - 30.Sep.2016
XD: - 03.Oct.2016
Payment: 11.Oct.2016
Share Transfer Book Open

BROWN & COMPANY - DIVIDEND ANNOUNCEMENTS

BROWN & COMPANY PLC
Company ID: - BRWN
Date of Announcement: - 30.Aug.2016
Rate of Dividend: - Rs. 0.50 per share / Interim Dividend
Financial Year: - 2016/2017
XD: - 08.Sep.2016
Payment: 21.Sep.2016
Share Transfer Book Open

Monday, August 29, 2016

Most Asia stocks slide on Fed officials' rate comments, dollar firms

SINGAPORE, Aug 29 (Reuters) – Most Asian share markets slipped on Monday while the U.S. dollar held firm on Monday after U.S. Federal Reserve Chair Janet Yellen indicated an interest rate increase remains on the cards for this year.

MSCI’s broadest index of Asia-Pacific shares outside Japan slid 0.7 percent.

Japan’s Nikkei, bucked the trend and climbed 2.2 percent as the yen weakened against the resurgent dollar.

The case for a rate hike has strengthened in recent months, with a lot of new jobs being created, and economic growth is looking likely to continue at a moderate pace, Yellen said in a speech at the Fed’s annual monetary policy conference in Jackson Hole, Wyoming, on Friday.

While Yellen did not give guidance on what the central bank needs to see before raising rates, she said the Fed already thinks it is close to meeting its goals of maximum employment and stable prices. She described consumer spending as “solid” but noted that business investment was weak and exports hurt by a strong dollar.

Comments by the Fed’s No. 2 policymaker, Vice Chair Stanley Fischer, following Yellen’s speech also bolstered the case for a hike this year.

Asked on CNBC whether a rate hike in September and more than one policy tightening before year end should be expected, Fischer said Yellen’s comments were “consistent with answering yes” to both questions, albeit still data-dependent.

Traders remained cautious, however. The odds of a hike in September rose to 30 percent following the comments from 21 percent on Thursday, according to CME Group’s FedWatch tool. Traders were pricing in a 60.2 percent chance of a hike in December, up from 51.8 percent on Thursday.

“While the move towards another Fed rate hike will likely cause bouts of consternation in investment markets I don’t see the same degree of uncertainty that we saw around last year’s Fed rate hike,” Shane Oliver, head of investment strategy at AMP Capital in Sydney, wrote in a note.

“It’s clear from the Fed’s actions this year that it is aware of global risks, the impact of its own actions on those risks and any potential blow back to the U.S. economy and of the impact of a rising U.S. dollar in doing some of its work for it.”

The comments from Yellen and Fischer dragged Wall Street lower at the close.

But they proved a boon for the U.S. currency, with the dollar index, which tracks the greenback against six global peers, jumping 0.8 percent on Friday. It held steady at 95.561 in early trading on Monday.

The dollar surged 1.3 percent against the yen on Friday to a two-week high, its biggest one-day advance in almost seven weeks. It extended those gains by 0.1 percent to 101.99 yen early on Monday.

The euro was little changed at $1.1194 after tumbling 0.8 percent on Friday, its biggest one-day slide since July 15.

In commodities, the rally in the dollar drove crude lower. U.S. crude futures fell 0.9 percent to $47.22 in early Asian trade.

Investors will be looking to Japan household spending and retail sales on Tuesday, global factory activity readings on Thursday and the U.S. non-farm payrolls report on Friday.

Sri Lanka market update NSB PAT up 24-pct to Rs. 4.78bn, LB Fin declares dividend of Rs.7.50

LB Finance PLC declared a first and final dividend of Rs. 7.50 per share (par value of Rs 5.00) to the shareholders for the financial year 2015/16. This is an increase of 50% from the previous year, with a total dividend declaration exceeding Rs. 1 Billion. This is the highest dividend paid in the company’s history and stands as a testament to the company’s attitude towards providing the highest possible return to the shareholder.

(PRESS RELEASE) – The National Savings Bank’s (NSB) Profit After Tax (PAT) for the first half stood at Rs. 4.78 billion up from Rs. 3.86 billion during the same period last year. This 24% increase is most noteworthy considering several challenges the Bank had to face during this period under review. These challenges included a weak Equities market environment and mark to market losses on account of increases in interest rates on investments in Government securities. Total assets of the Bank reached Rs. 875 Billion fueled by a satisfactory growth in both retail and corporate lending. The total lending portfolio growth of 10.6% for the first half of 2016 was comparable with the previous year. In another positive development the Bank improved its asset quality considerably with a decrease in NPL ratio to 2% by June 2016 from 3.5% reported end last year. Lower impairment provisioning assisted in enhancing profitability during this first half of the year.Net interest margins declined marginally on account of changes to deposit mix, resulting in a higher cost of funds.The Bank’s Tier 1 capital adequacy ratio stood at 15.94% while the total capital adequacy for the reviewed quarter was 14.97%. These ratios however, remain well above the regulatory standards for well capitalized banks. Liquidity ratio of the Bank stood at 75.19% by the end of June 2016, which is well above the regulatory requirement of 20%. By the end of June 2016, the branch network of the Bank reached to 250 branches and the Bank has added 5 new branches during the period under review. AAA Rating of the Bank was reaffirmed for the 14th consecutive year by the Fitch Ratings Lanka. NSB is the only local bank to receive AAA rating from Fitch Ratings and maintain the same for 14 years.

World Bank looks at further collaboration in Sri Lanka: South Asia VP

Aug 29, 2016 (LBO) – The World Bank says it will further support Sri Lanka’s journey towards higher growth and prosperity and this will require progress across all provinces.

“I hope to continue discussions that I have previously had with government to further our collaboration. We look forward to continue supporting Sri Lanka’s ambitious development agenda,” Anntte Dixon, vice president, World Bank South Asia Region said.

She is on an official two day visit to Sri Lanka and will visit World Bank supported projects.

“I look forward to my first visit to the Northern Province of Sri Lanka and meeting with key officials as well as civil society representatives to receive a firsthand account of the development progress and how the Bank’s support can have maximum impact,” she said.

“Sri Lanka’s journey towards higher growth and prosperity will require progress across all provinces.”

Dixon will be visiting World Bank supported projects aimed at enhancing economic growth and development. The visit will cover projects supporting local government service delivery, Jaffna city development priorities and opportunities to modernize agriculture in the Northern Province – with a focus on creating livelihood opportunities and increasing productivity.

She will be meeting with senior officials including Ravi Karunanayake, Minister of Finance; Dr. Indrajit Coomaraswamy, Governor of the Central Bank of Sri Lanka; and C. V. Vigneswaran, Chief Minister Northern Province and other officials.

This is her third visit to Sri Lanka since taking office in December 2014.

The World Bank Group’s activities are guided by a Country Partnership Framework (CPF) which is agreed upon with the Government of Sri Lanka. The CPF will guide the collaboration for the next 4 years until June 2020. The World Bank’s current portfolio consists of 1.8 billion US dollars in financing commitments.

Sri Lanka's Volkswagen project temporarily halted: Minister

Aug 29, 2016 (LBO) – The proposed project to set up a Volkswagen car plant in Sri Lanka has temporarily been halted, Deputy Minister of Public Enterprise Development Eran Wickramaratne said.

“Due to the international issues they had to face, they have decided not to invest in this project in Sri Lanka for now,” Wickramaratne told a local TV station.

Sri Lanka’s Board of Investment in April said they helped to secure land for the setting up of the Volkswagen assembly plant with a total investment of 26.5 million dollars.

The project earlier planned to assemble vehicles in the 1000 cc to 2000 cc category which includes passenger cars, Sport Utility Vehicles, Multi Utility Vehicles and commercial vehicles.

In March this year, the US Federal Trade Commission sued Volkswagen for false advertising.

Volkswagen recently agreed to spend more than 1.2 billion US dollars to compensate its dealers for their losses from the automaker’s diesel emissions scandal.

SERENDIB LAND - DIVIDEND ANNOUNCEMENTS

SERENDIB LAND PLC
Company ID: - SLND
Date of Announcement: - 29.Aug.2016
Rate of Dividend: - Rs.25.00 per share / First & Final Dividend
Financial Year: - 2015/2016
Shareholder Approval: - Required
AGM: - 29.Sep.2016
XD: -30.Sep.2016
Payment: - 10.Oct.2016
Share Transfer Book Open

LEE HEDGES - DIVIDEND ANNOUNCEMENTS

LEE HEDGES PLC
Company ID: - SHAW
Date of Announcement: - 29.Aug.2016
Rate of Dividend: - Rs. 1.20 per share (would be subject to dividend tax of 10%) / First & Final Dividend
Financial Year: - 2015/2016
Shareholder Approval: - Required
AGM: - 27.Sep.2016
XD: - 28.Sep.2016
Payment: - 06.Oct.2016
Share Transfer Book Open

BUKIT DARAH - DIVIDEND ANNOUNCEMENTS

BUKIT DARAH PLC
Company ID: - BUKI
Date of Announcement: - 29.Aug.2016
Rate of Dividend: - Rs. 1.00 per share (would not be subject to a withholding tax of 10%) / First Interim Dividend
Financial Year: - 2016/2017
XD: - 07.Sep.2016
Payment: 19.Sep.2016
Share Transfer Book Open

Friday, August 26, 2016

Asia stocks tentative, dollar slips before Yellen's rates signal

SINGAPORE/TOKYO, Aug 26 (Reuters) – Asian stocks were steady on Friday with modest losses in some markets and gains in others reflecting nervousness before a keenly anticipated speech by U.S. Federal Reserve Chair Janet Yellen.

MSCI’s broadest index of Asia Pacific shares outside Japan was little changed as investors awaited some direction from Yellen on whether the Fed might raise interest rates this year at the annual gathering of central bankers in Jackson Hole, Wyoming.

The Asia-Pacific benchmark is on track for a 0.25 percent loss for the week.

Japan’s Nikkei extended losses to 0.7 percent, set for a weekly drop of 0.6 percent. South Korea’s Kospi dropped 0.3 percent, on track for a 0.9 percent slide for the week.

Chinese shares, however, were higher, with the CSI 300 index and the Shanghai Composite each rising 0.4 percent. They’re on track for declines of 1.2 percent and 0.8 percent respectively.

Hong Kong’s Hang Seng was also higher, up 0.6 percent and set to finish the week flat.

U.S. stocks were modestly lower on Thursday, weighed down by a drop in healthcare and consumer companies.

Risk markets are wary of Yellen hinting at a near-term interest rate hike, which could divert some of the massive liquidity that has underpinned global markets.

“After a week where most markets have barely moved from where they started, there are likely a number of traders who would relish a bit of volatility this evening,” Angus Nicholson, market analyst at IG in Melbourne, wrote in a note. “There certainly is a fear evident in markets that Janet Yellen is going to be surprisingly hawkish and talk up a September hike.”

Hawkish comments from a slew of other Fed officials have already raised markets expectations of a rate hike this year.

Overnight, several policymakers, including San Fransisco Fed President John Williams and Kansas City Fed President Esther George, defended the need to raise interest rates, albeit gradually, to keep the U.S. economy from overheating.

Those comments were roughly in line with the views expressed by Fed policymakers including Vice Chair Stanley Fischer earlier in the week, adding to expectations that Yellen’s comments would be in a similar vein.

But uncertaintly pulled the U.S. currency lower, with the dollar index, which tracks the greenback against six major peers, slipping 0.1 percent to 94.654. That shrank gains for the week to 0.15 percent.

The dollar was also 0.1 percent weaker versus the yen at 100.49 yen, having risen a modest 0.3 percent so far this week.

The euro was treading water at $1.12910, on track to dip about 0.3 percent on the week.

The Australian dollar nudged up 0.2 percent to $0.7630 .

Oil prices pulled back from overnight gains, after Saudi Arabia’s energy minister tempered expectations of strong market intervention by producers during talks next month, saying the market is already moving in the right direction.

Global benchmark Brent crude lost 0.2 percent to $49.55 a barrel, eroding some of the 1.3 percent gains posted overnight and poised for a loss of 2.6 percent for the week.

U.S. crude oil slipped 0.1 percent to $47.27 a barrel after rising 56 cents, or 1 percent, on Thursday. It’s set to end the week 2.6 percent lower.

Wariness ahead of Yellen’s speech gave gold a leg up. Spot gold inched up 0.2 percent to $1,323.74 an ounce, narrowing this week’s losses to 1.3 percent.

JKH reduces Keells Food Products stake for minimum float

Aug 26, 2016 (LBO) – Diversified John Keells Holdings says subsidiaries of the company have sold around 2 percent of shares in Keells Food Products to meet the SEC’s minimum public float rule.

413,408 shares were disposed at 160 rupees per share at August 25th amounting to 2 percent of the company’s ultimate shareholding in Keells Food Products, a statement to the Colombo Stock Exchange said.

Sri Lankan rupee stronger on foreign bank dollar sales

Aug 26, 2016 (Reuters) – The Sri Lankan rupee traded stronger on Friday as a foreign bank sold dollars while importers buying greenback slowed down as they awaited further appreciation, dealers said.

The rise also comes as the government is increasing its three-year loan to $700 million from an initial target size of up to $500 million, in the country’s largest syndicated facility.

At 0800 GMT, the spot rupee was at 145.65/75 per dollar, firmer from Thursday’s close of 145.80/90, while one-week rupee forwards were at 145.85/90 compared with the previous day’s close of 146.00/10 per dollar.

“The rupee rose because a foreign bank sold dollars that came from foreign investors to buy local bonds,” a dealer said asking not to be named. “We did not see any central bank intervention today as well.”

Central bank officials were not available to comment on whether it had stopped giving direction on the spot rate. On Thursday, dealers said the central bank had stopped giving a reference rate to the market.

The rupee has been steady for more than a week as dealers hesitated to trade the local currency below 145.50 per dollar in anticipation of central bank intervention to defend the rupee.

The spot rupee is usually managed by the central bank, and market participants use the forward market levels for guidance on the currency.

Sri Lanka’s central bank retired around $470 million worth of Sri Lanka Development Bonds last week, instead of re-issuing them, using the inflows the country got from a syndicated loan recently, a central bank official told Reuters on Tuesday.

The move may put pressure on the country’s reserves, dealers said.

The central bank has largely not intervened to defend the rupee ever since a dual-tenure sovereign bond issue raised $1.5 billion in July.

Net foreign inflows into government securities have jumped 28.5 percent to 295.7 billion rupees ($2.03 billion) through Aug. 17 since the International Monetary Fund approved a three-year, $1.5 billion loan on June 4, according to the latest central bank data.

Meanwhile, Sri Lankan shares fell, with the benchmark Colombo stock index slipping 0.38 percent to 6,564.99 as of 0810 GMT. Turnover stood at 556.7 million rupees ($3.82 million).

Excise duty on diesel increased to Rs13 a litre; LIOC down 9.7 pct

Aug 26, 2016 (LBO) – Sri Lanka’s government has raised excise duty on diesel by 10 rupees a litre to 13 rupees, the Finance Ministry said in a statement.

Although the excise duty on diesel was raised three days ago, no public announcement was made until Friday.

The share price of LIOC fell to 37.80 rupees, down 9.7 percent, on the Colombo Stock Exchange Friday with 215 million rupees of shares traded, raising questions whether the announcement had been made to the market before the shares were sold.

Bartleet Religare Securities said the hike will erode profit margins of the listed Lanka Indian Oil Corporation.

“LIOC will have to absorb the increased tax amount as a cost since there was no indication of a retail price hike,” Bartleet Religare Securities said.

“Our calculations indicate around a 400 basis points drop in gross profit margin and 750 million rupees bottom line hit per quarter.”

CEYLON TEA SERVICES - DIVIDEND ANNOUNCEMENTS

CEYLON TEA SERVICES PLC
Company ID:- CTEA
Date of Announcement:- 26.Aug.2016
Rate of Dividend:- Rs. 12.50 per share / Final Dividend
Financial Year:- 2015/2016
Shareholder Approval: - Required
AGM:- 28.Sep.2016
XD:- 29.Sep.2016
Payment:- 07.Oct.2016
Share Transfer Book Open

ON'ALLY HOLDINGS - DIVIDEND ANNOUNCEMENTS

ON'ALLY HOLDINGS PLC
Company ID:- ONAL
Date of Announcement:- 26.Aug.2016
Rate of Dividend:- Rs. 2.00 per share / Final Dividend
Financial Year:- 2015/2016
XD:- 06.Sep.2016
Payment:- 19.Sep.2016
Share Transfer Book Open

ELPITIYA PLANTATIONS - DIVIDEND ANNOUNCEMENTS

ELPITIYA PLANTATIONS PLC
Company ID:- ELPL
Date of Announcement:- 26.Aug.2016
Rate of Dividend:- Rs. 0.50 per share / First & Final Dividend
Financial Year:- 2015/2016
Shareholder Approval: - Required
AGM:- 22.Sep.2016
XD:- 23.Sep.2016
Payment:- 03.Oct.2016
Share Transfer Book Open

Thursday, August 25, 2016

Sri Lanka must plug into global production networks: Harsha de Silva

Aug 25, 2016 (LBO) – Sri Lanka needs to get into the game of global production networks and needs to treat trade agreements seriously, a government minister said.

Deputy Foreign Minister Harsha de Silva outlined Sri Lanka’s future path as a trading nation at a panel discussion organized by the Young Professionals Organization of UNP.

“Sri Lanka has always been a trading place with imports and exports both. Imports are actually the other side of the coin of exports,” de Silva said.

“For instance, In Hong Kong, exports to GDP is about 260 percent that is because imports are 220 percent and in Singapore, exports are 160 percent while imports are about 120 percent.”

De Silva said Sri Lanka should seek to tap into the new paradigm of global production networks since the island nation is not a natural supplier of large scale intermediate goods or raw materials.

Global Production Networks (GPN) goes beyond the concept of global supply chains and tries to capture both vertical and horizontal links across the sequence of a production process.

“Sri Lanka needs to get into that game. That’s why we need to look at these trade agreements very seriously,” de Silva said.

He said the government is trying to position Sri Lanka as the center of the Indian Ocean while opening investors the opportunity to bring a part of the global production networks here.

“The investors will then have the opportunity to use our duty free access to India, China, Singapore, and Turkey after we get these trade agreements done.”

“That is the unique selling point; that is the reason why people come here and invest here and it really doesn’t matter what you export.”

Unilateral Opening

The deputy minister said even though there are ongoing arguments on unilateral opening of trade barriers without bilateral agreements, they are not practical in Sri Lanka.

“If people are playing by the rule books, then academically you are right. But we are not living in a utopian world,” de Silva emphasized.

“We are living in a world where we want to be better by neighbor in the context of what is available to us; that is the real scenario.”

He said the Trans Pacific Partnership is all about opening up or liberalizing sectors within the economy and if a country is willing to open up that country will automatically become a part of the liberalized trade regime.

“Then you don’t need these bilateral agreements with India or China; but the reality is such that we have no other option,” he said.

“Take Government Medical Officers Association for an example, they don’t even let us open even MODE 1 saying it will be detrimental to Sri Lanka.”

De Silva who is an economist by profession said Sri Lanka’s openness is like it was in the 1970s.

“We are talking about so many things about how trade was liberalized by J R Jayawardhana and Premadasa era but we have actually gone back,” he said.

Actual customs duty has remained unchanged in the 10 or 12 years up to 2012, at around 10.8 percent, and all types of para-tariffs, non tariff barriers have been built on the customs duty, he said.

“If you have so much of non tariff barriers in imports that obviously leads to a slow down in exports. So you can’t argue we don’t need these agreements, because those agreements force us to liberalize.”

Sri Lanka clarifies reports on McKenzie consultancy

Aug 25, 2016 (LBO) – Sri Lanka’s National Policy and Economic Affairs Ministry has clarified certain newspaper reports saying they were aimed at sabotaging the economic development strategy of the government.

Releasing a statement the ministry said negative reports have appeared in the newspapers on the engagement of internationally reputed consultancy firms by the Government.

The statement says the Cabinet Committee on Economic Management decided to engage the services of Mr Yuvanjan Wijeyatilake, former Attorney General, to draft new laws and to revise existing laws relating to the proposed Financial City.

“The services of Baker and McKenzie have been retained to advise the Government in the regard to the legal implications of the different financial models like Ireland, UK, Channel Islands, Dubai and Hong Kong.”

“The firm is also advising the Government on the Indonesian tax laws and other similar laws. They have not been assigned any other work.”

The ministry has rejected media reports of the law firm having offices in Colombo and practicing in Sri Lanka.

“This task will be handled by Baker & McKenzie office in Hong Kong and they are not entitled to practice here under the Rules of the Supreme Court.”

The statement added that the government’s project with Management Consultancy firm McKinsey and Company is only to assist in setting up of the Central Programme Management Unit in Colombo and has no connection with Baker & McKenzie law firm.

Government is to establish a Central Programme Management Unit based on the PEMANDU (Performance and Management Delivery Unit) in the Malaysian Prime Minister’s Office.

The statement further stated that the government is having discussions with all legally recognized professional associations, business associations and trade unions with regard to the ETCA and no one has boycotted or left discussions.

“The news reports that Revenue proposals have been dropped from the National Development Plan is also false,”

“The Government is negotiating with India, China and Singapore to enter into economic and trade agreements.”

The statement said the government will also hold discussions on FTAs with Indonesia, Malaysia, Thailand next year and discuss an Economic Cooperation programme with Japan.

The Government’s policy is to make Sri Lanka the Hub of the Indian Ocean and seek to exploit the synergies of the Indian Act East Policy for the region and the Chinese One-Belt One-Road initiative, the statement further said.

http://www.lankabusinessonline.com/wp-content/uploads/2016/08/Press-Release-August-24th-_2016-English.pdf

Sri Lankan rupee down on importer dollar demand

Aug 25, 2016 (Reuters) – The Sri Lankan rupee traded weaker on Thursday led by importer dollar demand while the central bank appeared to have stopped giving a reference level for the spot currency, dealers said.

The rupee has been steady for more than a week as dealers hesitated to trade the local currency below 145.50 per dollar in anticipation of central bank intervention to defend the rupee.

At 0704 GMT, the spot rupee was at 145.75/85 per dollar, edging down from Wednesday’s close of 145.55/58, while one-week rupee forwards were at 145.95/146.05 compared to the previous day’s close of 145.76/82 per dollar.

“We do not see a reference rate from the central bank and it was determined by the market mechanism,” a dealer said asking not to be named. “The central bank seems to be allowing a little bit of depreciation.”

Central bank officials were not available to comment on whether it had stopped giving direction on the spot rate.

The spot rupee is usually managed by the central bank, and market participants use the forward market levels for guidance on the currency.

Sri Lanka’s central bank retired around $470 million worth of Sri Lanka Development Bonds last week, instead of re-issuing them, using the inflows the country got from a syndicated loan recently, a central bank official told Reuters on Tuesday.

The move may put pressure on the country’s reserves, dealers said.

The central bank has largely not intervened to defend the rupee ever since a dual-tenure sovereign bond issue raised $1.5 billion in July.

Net foreign inflows into government securities have jumped 28.5 percent to 295.7 billion rupees ($2.03 billion) through Aug. 17 since the International Monetary Fund approved a three-year, $1.5 billion loan on June 4, according to the latest central bank data.

Meanwhile, Sri Lankan shares edged down, with the benchmark Colombo stock index slipping 0.09 percent to 6,582.57 as of 0708 GMT. Turnover stood at 389.7 million rupees ($2.68 million).

PTL Watch: Sri Lanka bond yields lower, follows auction

http://www.lankabusinessonline.com/wp-content/uploads/2016/08/PTL-Daily-Market-Report-25th-August-2016.pdf

CEYLON HOTELS CORPORATION (CHOT) - CIRCULAR TO SHAREHOLDERS

http://www.cse.lk/cmt/upload_cse_announcements/121472122373_.pdf

Wednesday, August 24, 2016

Asia stocks cement gains after recent rally, oil slips

HONG KONG, Aug 24 (Reuters) – Asian stocks consolidated recent gains on Wednesday, helped by Wall Street’s rise overnight, even as oil prices slid after a surprise build in U.S. crude stocks.

MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.3 percent in early trade. It has risen more than 14 percent since late June to hit a 1-year high last week.

Japan’s Nikkei rose 0.4 percent.

Elsewhere in the region, Hong Kong slid as investors sold financials, while mainland China markets inched higher.

“China’s stock markets have benefited from Brexit-related capital flows but that impact is fading and we are cautious on the market outlook given increasing signs of economic weakness,” said Francis Cheung, head of China and Hong Kong strategy at brokerage CLSA.

While Hong Kong stocks have rallied 18 percent since late-June, on a price-to-earnings basis, it still remains around one standard deviation below a 20-year average, indicating investors are not fully convinced about the durability of the gains.

Compounding the anxiety, recent Chinese economic data has been anything but cheerful. Both exports and imports fell more than expected in July and government officials have repeatedly said the economy is facing downward pressure.

However, the pessimism around China has been balanced by growing optimism around emerging markets as some investors such as bond giant PIMCO are slowly turning more bullish, citing a rebound in growth and improving economic fundamentals.

On a year-to-date basis, MSCI’s emerging market index has outperformed its developed markets counterpart on a total returns basis, with most of the gains flowing through in the past two months, according to Thomson Reuters Datastream.

U.S. housing-related stocks jumped 2 percent after the Commerce Department reported new U.S. single-family home sales soared unexpectedly in July to near nine-year highs.

The Dow Jones industrial average rose 17.88 points, or 0.1 percent, to 18,547.3, the S&P 500 gained 4.26 points, or 0.2 percent, to 2,186.9 and the Nasdaq Composite added 15.48 points, or 0.3 percent, to 5,260.08.

The upbeat housing data added to market uncertainty over whether the Federal Reserve will raise U.S. interest rates this year.

Global central bankers gather in Jackson Hole, Wyoming, later this week with investors focused on a speech by Fed Chair Janet Yellen on Friday, hoping for more clues on policy.

In currency markets, the spike in new U.S. home sales pushed the dollar to 94.6 against a trade-weighted basket of currencies after a drop of more than 2 percent so far this month.

The Australian dollar looked set to add to recent gains as Australia’s relatively higher interest rates attracted overseas investors.

Oil prices tumbled, reversing early gains, after the American Petroleum Institute (API) reported on Tuesday that U.S. crude inventories rose by a surprising 4.5 million barrels last week.

“We are seeing a little reaction to the API data which has posted higher inventories,” said Ric Spooner, chief market analyst at CMC Markets.

Brent crude fell 0.7 percent to $49.61 a barrel, while U.S. West Texas Intermediate (WTI) crude slipped 0.9 percent to $47.65 in early deals.

Markets recover post Brexit, but political uncertainty remains

Aug 24, 2016 (LBO) – U.K. retail sales data have posted a positive outcome post-Brexit supporting markets even though some political uncertainty remains.

From the FTSE’s low of 5,806 points immediately after the Brexit vote, the index has rallied some 18.38 percent. Other European indexes and the STOXX 600 have also recovered, with the STOXX 600 up 8.7 percent since its lowest point on Friday, June 24, CNBC reported.

Two months on, analysts say markets have recovered with a focus back on economic momentum.

Sterling has not been as successful with the Bank of England’s decision to cut interest rates and launch more bond buying having a negative impact. Still, the pound hit a three-week high against the dollar early Tuesday, reaching $1.3203.

U.K. citizens now wonder when the newly appointed prime minister, Theresa May will invoke Article 50.

A government lawyer stated in July that Theresa May didn’t intend to trigger it before the end of 2016, according to Reuters. On top of that, trade agreements and political negotiations with EU members and Scotland have yet to be fully finalized.

The Scottish National Party is calling for the Conservatives to outline their ‘Brexit vision’, saying the party hasn’t done enough to clarify its negotiating stance, since the vote to leave in June.

The new U.K. government has been created in less than a month since the vote despite former leader David Cameron saying he expected a replacement by October.

Analysts say while Brexit’s uncertainty still remains a big factor in politics and for central banks, it seems investors are moving onto other market-moving topics like oil and when the Federal Reserve will choose to raise interest rates.

Sri Lankan rupee steady; importer dollar demand offsets exporter selling

COLOMBO, Aug 24 (Reuters) – The Sri Lankan rupee was steady for an eighth session on Wednesday as exporter dollar sales were offset by importer demand for the greenback, with dealers hesitating to trade the local currency below 145.50 per dollar in anticipation of central bank intervention to defend the rupee, dealers said.

The spot rupee was unchanged at 145.50/55 per dollar, while one-week rupee forwards were at 145.75/80 per dollar at 0815 GMT, compared with Tuesday’s close of 145.76/80.

“There are exporter (dollar) sales. The importer demand is met by the exporter selling,” a currency dealer said, asking not to be named.

He added that though there has been no intervention from the central bank, dealers do not want to trade the spot below 145.50 per dollar, fearing the central bank will suddenly act upon it.

Central bank officials were not available to comment on whether the spot rupee has been capped at 145.50 per dollar.

The spot rupee is usually managed by the central bank, and market participants use the forward market levels for guidance on the currency.

Sri Lanka’s central bank retired around $470 million worth of Sri Lanka Development Bonds last week, instead of re-issuing them, using the inflows the country got from a syndicated loan recently, a central bank official told Reuters on Tuesday.

The move may put pressure on the country’s reserves, two dealers said.

The central bank has largely not intervened to defend the rupee ever since a dual-tenure sovereign bond issue raised $1.5 billion in July.

Net foreign inflows into government securities have jumped 28.5 percent to 295.7 billion rupees ($2.03 billion) through Aug. 17 since the International Monetary Fund approved a three-year, $1.5 billion loan on June 4, according to the latest central bank data.

Meanwhile, Sri Lankan shares edged down, with the benchmark Colombo stock index slipping 0.02 percent to 6,602.76 as of 0746 GMT. Turnover stood at 1.06 billion rupees ($7.31 million).

($1 = 145.1000 Sri Lankan rupees)

Sri Lanka market update ASPI close down 0.2-pct, Turnover Rs. 1.3bn

The ASPI declined sharply mainly due to price dips in stocks such as John Keells Holdings, Ceylon Cold Stores and Asiri Hospital Holdings.The day’s turnover crossed LKR 1.3bn mark to which National Development Bank made the highest contribution (c.16% to total turnover). Crossings were recorded in Ceylon Tobacco Company and TokyoCement Company Lanka (Voting).The bourse saw net foreign selling during the day.The All Share Price Index lost 15.5 points to close at 6,588.3 (-0.2%), while the S&P SL20 Index lost 14.2 points to close at 3,613.8 (-0.4%).
Total turnover for the day stood at LKR 1,317.0mn (USD 9,064.8k) vs. 12-months average daily turnover of LKR 936.8mn (USD 6,448.1k), whilst the volume traded for the day was 31,009k against the 12-month average daily volume of 37,066k.Top contributory counters towards the day’s turnover were National Development Bank LKR 213.0mn(USD 1,465.9k, -0.1%), Ceylon Tobacco Company LKR 208.0mn (USD 1,431.8k, +0.0%), Tokyo Cement Company Lanka (Voting) LKR 140.4mn (USD 966.4k, -1.8%), Ceylon Grain Elevators LKR 89.1mn (USD 613.3k, -0.9%), Royal Ceramics Lanka LKR 78.2mn (USD 538.2k, +0.6%).Foreign purchases amounted to LKR 336.5mn (USD 2,316.4k), whilst foreign sales amounted to LKR 572.9mn (USD 3,942.9k). This resulted in a net foreign outflow of LKR 236.3mn being recorded at the end of the day’s trading.

SANASA DEVELOPMENT BANK - CLARIFICATION TO A NEWSPAPER ARTICLE

http://www.cse.lk/cmt/upload_cse_announcements/2711472014016_.pdf

THE COLOMBO FORT LAND & BUILDING - DIVIDEND ANNOUNCEMENT

THE COLOMBO FORT LAND AND BUILDING PLC
Company ID: - CFLB
Date of Announcement: - 24.Aug.2016
Rate of Dividend: - Rs. 0.30 per share / First & Final Dividend
Financial Year: - 2015/2016
Shareholder Approval: - Required
AGM: - 29.Sep.2016
XD: - 30.Sep.2016
Payment: - 10.Oct.2016
Share Transfer Book Open

Tuesday, August 23, 2016

The Guardian Acuity Asset Management weekly

http://www.lankabusinessonline.com/wp-content/uploads/2016/08/Weekly-Report-GAAM-20-08-16.pdf

Asia stocks edge up, dollar dips as markets await Fed clues

SYDNEY, Aug 23 (Reuters) – Asia shares inched ahead while the dollar slipped on Tuesday as a dearth of major data left markets with little to do but second guess whether the Federal Reserve will raise U.S. interest rates this year.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.2 percent, with South Korea and Australia adding similar amounts.

Japan’s Nikkei went the other way and eased 0.4 percent as the yen gained on the dollar.

The whole world seems to have hushed ahead of comments from Fed Chair Janet Yellen at the central bank’s annual meeting in Jackson Hole on Friday. Investors still doubt the stars will align for a hike anytime soon, so a hawkish tone from Yellen would challenge that equanimity.

“Ever so slowly, the market does seem to be reluctantly acknowledging the chorus of senior Fed speakers who have suggested recently that a 2016 rate hike is still quite probable and September is ‘live’,” wrote analysts at ANZ in a note.

“But in reality, the response has been very muted.”

Indeed, U.S. Treasuries actually rallied on Monday, with 10-year yields at 1.55 percent after falling 4 basis points overnight.

Fed fund futures <0#FF:> imply around a 24 percent chance of an easing in September, rising to around 50 percent by December.

A quarter-point hike is not fully priced in until September next year.

On Wall Street, the Dow ended Monday down 0.12 percent, while the S&P 500 lost 0.06 percent and the Nasdaq added 0.12 percent.

Biotech stocks received a boost from Pfizer’s $14 billion acquisition of cancer drug maker Medivation, which jumped nearly 20 percent.

Of the 479 companies in the S&P 500 that have reported earnings, 71 percent have topped expectations, according to Thomson Reuters data. Earnings are currently showing a decline of 2.3 percent for the quarter.

In forex markets, the dollar slipped a touch to 94.442 against a basket of currencies. The index fell about 1.3 percent last week on what traders perceived as mixed signals from Fed officials.

The dollar drifted down to 100.11 yen from 100.30 late in New York, while the euro nudged up to $1.1331.

The New Zealand dollar blipped higher after the country’s central bank forecast another 35 basis points in possible rate cuts, less than many investors had wagered on.

The kiwi dollar rose around a third of a cent to $0.7310 in reaction.

Oil remained under pressure after shedding 3 percent on Monday. Prices retreated from two-month highs on worries about burgeoning Chinese fuel exports, more Iraqi and Nigerian crude shipments and a rising U.S. oil rig count.

Brent crude was off 12 cents at $49.04 a barrel. It hit a two-month high of $51.22 on Friday. U.S. crude futures lost 18 cents to $47.23, after the September contract expired on Monday at $47.05.

Sri Lankan rupee trades steady; dollar selling by foreign investors eases pressure

Aug 23, 2016 (Reuters) –The Sri Lankan rupee held steady for a seventh straight session on Tuesday, with dealers hesitating to trade in the local currency below 145.50 per dollar anticipating central bank intervention to defend the currency, dealers said.

Foreign investors were seen selling the U.S. currency, which helped ease pressure on the rupee due to demand for dollars by importers, dealers said.

The spot rupee was at 145.50/55 per dollar at 0618 GMT, unchanged from Monday’s close.

One-week rupee forwards were at 145.74/75 per dollar, from Monday’s close of 145.75/80.

“Nobody wants to trade the spot below 145.50 fearing some central bank actions as in the past,” a currency dealer said, asking not to be named.

“There is no intervention from the central bank. But the market seems to be waiting for some inflows.”

Central bank officials were not available to comment on whether the spot rupee had been capped at 145.50 per dollar.

The spot rupee is usually managed by the central bank, and market participants use the forward market levels for guidance on the currency.

Sri Lanka’s central bank retired around $470 million worth Sri Lanka Development Bonds last week, instead of reissuing them, using inflows the country got from a syndicated loan recently, a central bank official told Reuters on Tuesday.

The move may put pressure on the country’s reserves, two dealers said.

The central bank has largely not intervened to defend the rupee ever since a dual-tenure sovereign bond issue raised $1.5 billion in July.

Net foreign inflows into government securities have jumped 28.5 percent to 295.7 billion rupees ($2.03 billion) through Aug. 17 since the International Monetary Fund approved a three-year, $1.5 billion loan on June 4, according to the latest central bank data.

Meanwhile, Sri Lankan shares edged up, with the benchmark Colombo stock index rising 0.08 percent to 6,600.09 as of 0644 GMT. Turnover stood at 772.2 million rupees ($5.31 million).

Sri Lanka market update ASPI close up 0.1-pct, 13wk high

The ASPI gained sharply to close above its 13-week high mainly due to the number of advances (88) outpacing the number of declines (59). Index gains were supported by price gains in stocks such as Asiri Hospital Holdings, Softlogic Holdings, Sampath Bank, Tokyo Cement and Overseas Reality.The day’s turnover crossed LKR 1.8bn mark to which Ceylon Grain Elevators made the highest contribution. Crossings were recorded in Chevron Lubricants Lanka, Commercial Bank (Voting),John Keells Holdings (Voting) and Sampath Bank.The bourse saw net foreign selling during the day. The All Share Price Index gained 9.2 points to close at 6,603.8 (+0.1%), while the S&P SL20 Index lost – 9.2 points to close at 3,628.0 (-0.3%).Total turnover for the day stood at LKR 1,805.8mn (USD 12,428.6k) vs. 12-months average daily turnoverof LKR 935.9mn (USD 6,441.5k), whilst the volume traded for the day was 52,209k against the 12-month average daily volume of 37,081k. Top contributory counters towards the day’s turnover were Ceylon Grain Elevators LKR 319.7mn (USD 2,200.6k, +11.9%), National Development Bank LKR 294.9mn (USD 2,029.8k, -3.4%), Commercial Bank (Voting) LKR 212.6mn (USD 1,463.1k, +0.2%), Sampath Bank LKR 174.8mn (USD 1,202.9k, +1.6%), Chevron Lubricants Lanka LKR 91.7mn (USD 631.3k, -0.6%) Foreign purchases amounted to LKR 507.1mn (USD 3,490.2k), whilst foreign sales amounted to LKR 909.5mn (USD 6259.8k). This resulted in a net foreign outflow of LKR 402.4mn being recorded at the end of the day’s trading.

Chinese bank to set up South Asian branch in Sri Lanka: PM

Aug 23, 2016 (LBO) – Sri Lanka’s Prime Minister Ranil Wickremesinghe told Parliament today that a Chinese bank has agreed to set up their South Asian branch here in Sri Lanka.

“China agreed to set up the branch here in Colombo at the proposed financial city,” Wickremesinghe said.

Prime Minister said the concept paper and proposal for the financial city is being discussed and it could be revealed before the end of this year.

“We expect to have discussions about the proposal with China.”

Megapolis Ministry on behalf of the government together with the UDA and the CHEC Port City Colombo recently signed a tripartite agreement for the development of the new Colombo International Financial City replacing the agreement signed by the former Government.

BROWNS BEACH HOTELS (BBH) - RIGHTS ISSUE 5 for 12 @ Rs. 25.85

http://www.cse.lk/cmt/upload_cse_announcements/6251471924140_.pdf

Monday, August 22, 2016

Secondary market bond yields increase following auction announcements

Secondary market bond yields increased yesterday on the back of moderate volumes, following the announcement of three Treasury bond auctions to the tune of Rs. 45 billion.

Yields on the 01.08.24, 01.08.25 and 01.08.26 maturities were seen increasing to intraday highs of 12.30%, 12.55% and 12.60%

respectively against its opening lows of 12.23%, 12.50% and 12.53%. In addition, 2018 maturities were seen changing hands within the range of 11.00%-11.19%.

Meanwhile, in money markets, the overnight call money and repo rates remained mostly unchanged to average 8.40% and 8.50% as the Open Market Operations (OMO) department of the Central Bank injected Rs. 15.00 billion at a weighted average of 8.39% by way of an overnight reverse repo auction.

The liquidity in the system stood at a net deficit of Rs. 17.33 with a further amount of Rs. 16.91 billion being accessed from the Standard Lending Facility Rate of 8.50% (SLFR) against a deposit amount of Rs. 14.58 billion at its Standing Deposit Facility Rate (SDFR) of 7.00%.

Rupee remains steady

The USD/LKR rate on spot, spot next and one-week forward contracts remained steady for a sixth consecutive day to close at Rs. 145.50/55, Rs. 145.54/58 and Rs. 145.72/78 respectively.

The total USD/LKR traded volume for 19 August 2016 was $ 46.00 million.

Some of the forward USD/LKR rates that prevailed in the market were one month - 146.42/45; three months - 148.05/15 and six months - 150.05/25.

http://www.ft.lk/article/563111/Secondary-market-bond-yields-increase-following-auction-announcements

Sri Lanka scores as South African tourists begin avoiding terror attack countries

Travel to Belgium‚ France‚ Tunisia and Turkey declined in the first six months of the year following terror attacks in these countries‚ according to statistics from Flight Centre Travel Group.

Flight Centre ticket sales indicate that travel to Belgium – the target of three co-ordinated terror attacks in March in which 32 people were killed – between January and July this year is down 16% compared to the same period last year.

Travel to France is down 29%‚ for the first six months of the year. France has been hit by a wave of terror attacks‚ with the latest taking place on 14 July 2016 when 84 people were massacred in Nice on Bastille Day. Travel to Paris‚ the scene of a deadly attack in November last year in which 130 people were killed‚ is also down 26%‚

Travel to Tunisia – where a lone gunman opened fire on a beach resort last June‚ killing 38 people is down 28% while Turkey‚ the target of several attacks this year‚ has been hardest-hit‚ with visits to the country down by half.

“South Africans are incredibly resilient travellers‚ but they are showing signs of being deterred by the terror attacks we have witnessed in Europe and North Africa over the last year‚” says Flight Centre’s Air Leader‚ Karin Smit.

She says travellers appeared to be resorting to safe havens like Sri Lanka which has recorded growth of 93%.

Travel to South African staples‚ Thailand and Mauritius‚ is also steady.

Smit says that while the economic slowdown and the weak rand have contributed to the decline in travel to destinations that had been the target of terror attacks‚ the assaults have no doubt had an impact.

“The attacks appear to unfortunately be reinforcing negative perceptions among South Africans. The weak rand and South Africa’s poorly performing economy are not helping‚ but the cherry on top for many travellers appears to be the terror attacks‚ especially those which have targeted tourists‚ such as the attacks on Istanbul Airport in Turkey‚ Brussels Airport in Belgium and the assault on Sousse beach in Tunisia.

“South Africans are travelling to these countries in fewer numbers. We will have to wait to see the long-term impact of these attacks on travel by South Africans‚” says Smit.

“However‚ one’s loss is always another’s gain.

“Sri Lanka is experiencing considerable growth‚ other Asian destinations such as Bali and Vietnam are also recording increases‚ as is Zanzibar‚ while there is always interest in Thailand and Mauritius.

“Local tourism is recording favourable growth with many South Africans choosing to stay closer to home‚” adds Smit.

Flight Centre Travel Group is South Africa’s largest travel company with more than R5-billion in sales recorded last year.

http://bizenglish.adaderana.lk/sri-lanka-scores-as-south-african-tourists-begin-avoiding-terror-attack-countries/

Insurance industry grows by 15% in 1Q

The insurance industry has recorded a growth of 14.59%, in terms of Gross Written Premium (GWP), during the first quarter of year 2016 when compared to the same period in the year 2015.

The Insurance Board of Sri Lanka said GWP for Long Term Insurance and General Insurance Businesses for the first quarter ending 31 March 2016 was Rs. 33,293 million compared to the first quarter of 2015 amounting to Rs. 29,054 million.

The GWP of Long Term Insurance Business amounted to Rs. 14,729 million (Q1, 2015: Rs. 11,976 million) while the GWP of General Insurance Business amounted to Rs. 18,564 million (Q1, 2015: Rs. 17,077 million) during the first quarter of 2016.

Thus, Long Term Insurance Business and General Insurance Business witnessed a GWP growth of 22.98% and 8.71% respectively when compared to the corresponding period of year 2015.

Total assets of insurance companies have increased to Rs. 457,695 million as at 31 March 2016, when compared to Rs. 432,593 million recorded as at 31 March 2015, reflecting a growth of 5.80%.

The assets of Long Term Insurance Business amounted to Rs. 307,578 million (Q1, 2015: Rs. 267,719 million) indicating a growth rate of 14.89% year-on-year. The assets of General Insurance Business amounted to Rs. 150,117 million (Q1, 2015: Rs. 164,874 million) depicting a decline in growth rate of -8.95%, at the end of first three months of 2016.

At the end of first quarter of 2016, investment in government debt securities amounted to Rs. 128,971 million representing 41.93% (Q1, 2015: Rs. 121,936; 45.55%) of the total assets of Long Term Insurance Business, while such investment of the total assets of General Insurance Business amounted to Rs. 29,034 million representing 19.34% (Q1, 2015: Rs. 27,038; 16.40%).

Accordingly, the total investment of both Long Term Insurance Business and General Insurance Business in government debt securities amounted to Rs. 158,005 million (Q1, 2015: Rs. 148,974 million) as at 31st March 2016. The investment in government debt securities for both Long Term Insurance Business and General Insurance Business has increased by 5.77% and 7.38% respectively.

The profit (before tax) of insurance companies in both Long Term Insurance Business and General Insurance Business has increased to Rs. 2,713 million (Q1, 2015: Rs. 2,491 million) showing a growth in profits by 8.93%.

The profit (before tax) of Long Term Insurance Business amounted to Rs. 2,067 million (Q1, 2015: Rs. 1,957 million) while the profit (before tax) of General Insurance Business amounted to Rs. 646 million (Q1, 2015: Rs. 534 million) during the first quarter of 2016. Thus, profit (before tax) of Long Term Insurance Business and General Insurance Business witnessed a growth of 5.66% and 20.90% respectively, when compared to the corresponding period of year 2015.

Out of 28 insurance companies (insurers) in operation as at 31 March 2016, 12 are engaged in Long Term (Life) Insurance Business, 13 companies are carrying out only General Insurance Business and three are composite companies (dealing in both Long Term and General Insurance Businesses).

Fifty-seven insurance brokering companies registered with the Board as at 31 March 2016, mainly concentrate in General Insurance Business. Total Assets of insurance brokering companies have increased to Rs. 3,670 million as at the end of first quarter of 2016 when compared to Rs. 3,488 million recorded as at 31 March 2015, reflecting a growth of 5.23% year-on-year.

http://www.ft.lk/article/563177/Insurance-industry-grows-by-15--in-1Q

Govt. begins preliminary work on 2017 Budget preparation

The Government has begun preliminary work on formulating the budget proposals for 2017, according to the Finance Ministry officials. This will be the second budget of the Unity Government.

The relevant circular with guidelines to prepare budget estimates has already been sent to the Secretaries to the Ministries, Heads of the Departments and to other relevant officials, the Ministry officials said. Meanwhile, Minister of Finance Ravi Karunanayake has said that the 2017 Budget proposals will be presented to the Parliament on 10 November allocating a month for debate.

In an earlier occasion the Minister said on the guidance of President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe, steps have been taken to compile public proposals for Budget 2017 on the sidelines of a series of meetings with the communities in rural areas.

Budget 2017 aims to achieve the targets of creating million occupations, increase of income, rural economic development, affirmation of land ownership, which are declared as the midterm targets of the Government.

The Cabinet of Ministers last month granted approval to the Finance Minister to prepare the budget 2017 to achieve an economic growth of 6% and maintain a budget deficit of 4.7% of the GDP.

http://www.ft.lk/article/563162/Govt--begins-preliminary-work-on-2017-Budget-preparation

Inflation up 5.8% in July

The rate of inflation, as measured by the National Consumer Price Index (NCPI), rose 5.8% in July from a year earlier, slowing for the first time in six months, the Department of Census and Statistics said on Monday.

Point-to-point inflation hit its highest since July last year, the period from which Government data is available. It rose five straight months to hit 6.4% in June, according to the NCPI index, which was introduced in October last year with 2013 as the base year.

The NCPI in July fell 0.8% on a month-on-month basis, compared with a rise of 2.1% in June.

The Central Bank in a statement said inflation, as measured by the change in the National Consumer Price Index (NCPI) (2013=100), which is compiled by the Department, decreased to 5.8% in July 2016 from 6.4% in June 2016, on year-on-year basis. Both the Food and Non-food categories contributed towards year-on-year inflation in July 2016.

The change in the NCPI measured on an annual average basis increased to 3.4% in July 2016 from 3.1% in June 2016.

When the monthly change in the NCPI is considered, the NCPI decreased by 0.8% from 116.1 index points in June 2016 to 115.2 index points in July 2016. This monthly decrease was mainly due to the decrease in prices of the items in the Food category. The prices of vegetables, coconut, fresh fish, sugar, limes and sprats decreased during the month. Within the Non-food category prices in the Health, Communication and Recreation and Culture sub-categories decreased during July 2016. The Furnishing, Household Equipment and Routine Household Maintenance, Transport, Restaurants and Hotels and Miscellaneous Goods and Services subcategories increased during July 2016.

Meanwhile, prices in Alcoholic Beverages and Tobacco increased during July 2016. Nevertheless, prices in the Clothing and Footwear, Housing, Water, Electricity, Gas and Other Fuels and Education subcategories remained unchanged during the month.

The NCPI Core inflation, which reflects underlying inflation in the economy, decreased to 6.8% in July 2016 from 7.5% in June 2016, on a year-on-year basis. Annual average NCPI Core inflation increased to 5.5% in July 2016 from 5.3% in June 2016.

http://www.ft.lk/article/563172/Inflation-up-5-8--in-July

World Bank to improve transparency with new procurement system in Sri Lanka

Aug 22, 2016 (LBO) – The World Bank in keeping pace with global trends has introduced a new procurement framework in South Asia including Sri Lanka to improve development impact and transparency.

The new system helps its partner countries that procure goods and services under Bank-financed projects make the best use of their public spending, strengthen their national procurement policies, and improve their development objectives.

Unveiling the new framework in Colombo, World Bank Director for governance global practice Robert Hunja said the framework will allow the World Bank to better respond to the needs of its client countries.

“We are committing to put our resources and energy to help our clients and development partners to focus on outcomes rather than rules and procedures,” Hunja said.

The new framework enables the Bank to work more closely with country partners in improving their own procurement systems.

Under this framework, clients can use the procurement arrangements of other multilateral development partners or of national agencies in some circumstances.

It will include an online tracking and monitoring tool Systematic Tracking of Exchanges in Procurement to speed up procurement processes, while promoting transparency and accountability and facilitate procurement-related complaints.

World Bank South Asia Manager for procurement Felipe Goya detailed the 6 core principals governing the framework: value for money, fit-for-purpose, economy, efficiency, integrity, transparency and fairness.

“Procurement in Investment Project Financing supports the clients to achieve value for money with integrity in delivering sustainable development.” Felipe Goya said.

The World Bank’s Board of Executive Directors initially approved this new policy framework in July 2016.

It governs procurement in Bank-financed projects in 172 countries worth about USD 56 billion.

This new Framework is a result of an extensive review and three-year consultation process involving more than 5,000 people in 100 countries including partner countries, CSOs, and private sector.

Projects planned in Sri Lanka will soon be benefiting from the policies of the new framework.

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