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 can’t afford to go down that path. It won’t deliver the economy we want, or the security we want, but most of all, it contradicts everything that makes us the envy of the world.”

After nearly 10,000 air strikes, the United States has taken out centers of the ISIL, he said, adding the country remains the strongest in the world in terms of military capacity.

But rebuilding a nation cannot be the responsibility of one party and fall on the United States, Obama said.

In terms of political culture, Obama said rancor between political parties has increased during his term in office, which is one of his regrets, and there was a collective responsibility to fix the political system.

Obama also emphasized the need to reduce the influence of money in politics.

 

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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 up by gains John Keells Holdings with the stock closing at 168.00 rupees, up 1.70 rupees with one off the floor trade of 800,000 shares at 168.00 rupees.

Sri lanka Telecom closed at 44.40 rupees, up 0.80 rupees and Dialog Axaita closed at 10.20 rupees, up 0.20 rupees.

In banking Commercial Bank closed at 133.90 rupees, down 1.10 rupees with one off the floor trade of 670,000 shares at 134.00 rupees.

 

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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,” Karunanayake said.

“This is better than negative returns in Europe.”

This is part of an effort to increase foreign reserves and defend the rupee, which has hovered around record lows since the central bank floated it on Sept. 4.

 

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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 post correction may encourage investors to revisit emerging markets, CT CLSA said.

Some of these funds may also flow into frontier markets, as investors seek diversification opportunities, the securities firm said.

“Prospects for most Asian frontier economies, including Sri Lanka are brighter than its counterparts in the Middle East and Africa, as net commodity importers.”

CT CLSA sees a forward market valuation of 13x for 2016 in view of modest earnings growth of 6 percent year-on-year.

Although island’s market rates low in scale and liquidity, it offers relative stability and steady growth — the market is also relatively insulated, the report said.

The Colombo ASPI and S&P SL20 declined 6 percent and 11 percent respectively in 2015, compared with gains of 23 percent and 25 percent respectively in 2014 largely due to weak investor sentiment and uncertainty in economic and policy direction.

Foreigners were net sellers in 2015, for the first time since 2011, with a net outflow of 4.3 billion rupees compared with an inflow of 22.1 billion rupees in 2014.

Despite closing on a negative note, intra year gains were witnessed amid positive quarterly earnings (1Q2015: +3 percent YoY, 2Q2015: +14 percent YoY, 4Q2014: +12 percent YoY)

Interest rates

In terms of interest rates, if the authorities continue to keep policy interest rates stable in the near term, real rates would likely enter into the negative territory in 2Q2016E.

“Thus we expect the CBSL to increase policy interest rates by at least 50bps during 2016E to avoid negative real rates amid forecast higher inflationary pressures in 2016E.”

“We forecast 12 month Treasury yields to rise 150bps during 2016E and then remain broadly stable in 2017E.”

The Rupee, currently near its lowest recorded level against the dollar at 144, a drop of 10 percent in 2015, is expected to stabilize at 149 rupees by end 2016 and 153 by end 2017.

Sectors

In terms of sectors, the banking sector is expected to undergo another challenging year in 2016 with the authorities expected to tighten credit expansion, and due to increased effective tax rates which increased by 5.5 percent in the 2016 National Budget.

The manufacturing sector is expected to rebound in 2016, amid recommencement of large scale government led infrastructure projects, such as the Colombo port city project, andn the Central Expressway.

Demand for private healthcare has increased, while continued momentum of consumption spending will support the beverage, food and tobacco sector.

 

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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 Keells Holdings closing at 163.30 rupees.

“Market confidence is low as local and global economic concerns are effecting investor sentiment,” Lanka Securities said.

Losses were also seen in the banking sector Commercial Bank closing at 135.00, rupees, down 2.60 rupees and Hatton National Bank closed at 200.90 rupees, down 4.40 rupees.

DFCC closed at 153.50 rupees, down 2.50 rupees.

Peoples Insurance started trading on the CSE today and closed at 14.90 rupees, down 0.10 rupees with over 1.5 million shares traded.

 

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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. Sri Lanka may go to international markets to raise up to 1.5 billion dollars this year.

 

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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 Advisors employed by such Stockbroker,” SEC said in a statement.

An Agent or any person employed by such Agent cannot provide any investment advice.

The stockbroker has been further advised that it will be held responsible for any violations committed by its Agents of the Stockbroker Rules of the CSE and SEC.

The Securities and Exchange Commission in November 2015 renewed the license granted to TKS Securities to function in the capacity of a Stockbroker.

 

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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 follows

Fitch 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 may not only reflect cyclical factors, but also lower potential growth for countries most economically linked to China.

High leverage and risk of capital outflows constrain the use of monetary policy as a countercyclical tool in some EM Asia economies. Fiscal policy could be a substitute where monetary policy is inflexible. Lower government deficits and debt levels could increase fiscal space, but politics and policy rules could also prove to be a barrier in practice.

The January edition of “Asia-Pacific Sovereigns Chart of the Month” is available at www.fitchratings.com or by clicking on the link in this media release.

Link to Fitch Ratings’ Report: APAC Sovereigns Chart of the Month Jan 2016 – Leverage, Capital Outflows Constrain Policy Space in Emerging Asia

 

 

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