http://www.cse.lk/cmt/upload_cse_announcements/8581466418309_.pdf
Monday, June 20, 2016
ADAM INVESTMENTS (AINV) - SUB-DIVISION OF SHARES 1 for 2
Friday, June 17, 2016
Asian shares face weekly losses, sterling rebounds in Brexit turmoil
TOKYO, June 17 (Reuters) – Asian shares rose on Friday, but remained on track for weekly losses in a week dominated by fears that British voters will opt to leave the European Union in next week’s referendum.
Campaigning for the upcoming vote, which overshadowed this week’s central bank meetings, was temporarily halted after a British member of parliament was shot and fatally wounded on Thursday.
The recently volatile pound rose 0.5 percent in early Asian trade at $1.4273 with analysts noting the pro-membership MP’s death could sway public opinion toward the “Remain” camp.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.5 percent, but was down nearly 3 percent for the week.
Wall Street marked gains overnight, with the benchmark S&P 500 index erasing sharp losses to snap a five-day losing streak.
Japan’s Nikkei stock index gained 1.7 percent, taking back some of its steep losses. But Japanese shares were still poised to shed more than 5 percent for a week in which the perceived safe-haven yen soared after the Bank of Japan opted to stay the course on policy instead of mustering additional stimulus in the face of risks from waning inflation and weak global growth.
“In our view, these downside risks are already materialising, as evidenced by the decline in corporate inflation expectations and the recent slide in the BOJ’s core inflation measures,” HSBC economist Izumi Devalier said in a note.
“Continued inaction by the BOJ in the face of these risks only reinforces the market’s suspicions that the central bank is running out of policy options, feeding back into a stronger yen,” she said.
Japanese Finance Minister Taro Aso said on Friday that he was deeply concerned about “one-sided, rapid and speculative moves” seen in the currency market and that he would respond if necessary to ensure stability in currencies.
The dollar clawed back some lost ground on Friday, rising 0.5 percent to 104.75 yen, but it was still down more than 2 percent for a week in which it dropped as low as 103.555. That was its deepest nadir since August 2014.
The euro added 0.7 percent to 117.87 yen, but was still down more than 2 percent for the week. On Thursday, it plumbed a three-year low of 115.51.
The Federal Reserve also stood pat on policy on Wednesday, though it signalled it still planned to raise rates twice in 2016. But it also downgraded its economic view, and said slower growth would stem the pace of future monetary policy tightening.
Crude oil prices stabilised after they skidded about 4 percent to hit one-month lows overnight, on fears of that a possible Brexit could tip the global economy into turmoil.
Brent crude added 0.5 percent to $47.41 per barrel, while U.S. crude futures rose 0.3 percent to $46.35.
Meeting IMF criteria key to improve ratings: Fitch Ratings
June 17, 2016 (LBO) – Sri Lanka still needs to refinance close to 3 billion US dollars for the rest of 2016 and remains vulnerable to shifts in investor sentiment, Fitch Ratings said.
Delivering a presentation at a forum, Associate Director of Fitch APAC Sovereigns Sagarika Chandra emphasized that progress on IMF program criteria will be the key rating driver for the sovereign ratings improvement.
“From a rating stand point key drivers of ratings are really progress on the IMF program and certain degree of predictability with policies,” Chandra said.
“The real challenge is meeting the IMF criterion and that is something we are still waiting to see.”
Chandra said higher levels of non-debt creating capital flows and further deterioration in external finances are also factors that affect ratings.
Sri Lanka officially secured a 3-year extended fund facility of 1.5 billion US dollars from the IMF recently which could support investor confidence.
Fitch downgraded Sri Lanka’s Long-Term IDR in February 2016 following deterioration of its external and public finances.
Chandra said Sri Lanka’s weak status in public finances and external finances have led to a negative trend in sovereign ratings.
Fiscal deficit for 2015 came in at close to 7.4 percent, above original target of 4.4 percent.
The ratings agency added that additional contingent liabilities that are already disclosed could possibly spillover onto sovereign’s balance sheet.
Chandra further said high foreign currency debt could hurt debt ratios in case of exchange rate depreciation.
Government debt increased to over 75 percent of GDP by the end of 2015 and reserves declined to around 6.5 billion US dollars.
Sri Lankan rupee 1-wk forwards trade steady amid cbank moral suasion
June 17 (Reuters) – Sri Lankan rupee one-week forwards traded steady on Friday, but dealers said the local currency was under pressure due to lack of exporter dollar conversions and moral suasion by the central bank, which is holding the currency at current levels. One-week dollar/rupee forwards, which have been acting as a proxy for the spot rupee in the absence of trade in three-day forwards on Friday, traded at 145.40/60 per dollar at 0555 GMT, little changed from Thursday’s close of 145.35/60.
The market is confused with the central bank intervention in both spot rupee and forwards, dealers said. “You never know where the central bank wants the rupee. Exporters are not converting the dollars aggressively any more while there is demand for dollars from importers,” a currency dealer said asking not to be named.
“When there was downward pressure, the central bank on Thursday brought down the spot rate by 25 cents to signal appreciation.
There is no reason for rupee appreciation because we do not see large inflows coming in. ” Foreign exchange reserves were falling as the central bank is selling dollars to defend the currency amid some debt repayments, the dealer said. Central Bank officials were not available for comment.
The central bank reduced the spot rupee’s peg to 144.50 per dollar on Friday, from 144.75 in the previous session. The spot rupee was not traded for a fourth straight session on Friday, dealers said. On Monday, the spot closed at 144.85/95 per dollar.
The spot rupee has been pegged down from 145.75 levels in early June after the local currency rose following increased dollar conversions by exporters and overseas funds. For a second stratight day, there was no active trading in three-day dollar/rupee forwards, known as spot next, dealers said.
The forwards closed at 144.85/90 per dollar on Wednesday.
Spot next, which has acted as proxy for the spot currency since January, indicates the exchange rate for the day following conventional spot settlement. For Friday’s trade, the spot next settlement takes place five days ahead due to the intervening weekend. Foreign investors net bought 8.47 billion rupees ($58.53 million) worth of government bonds in the week ended June 8, central bank data showed. A lack of large inflows from exporters, and borrowings were weighing on the currency, dealers said.
Sri Lanka's Central Bank to sell USD250mn development bonds
June 17, 2016 (LBO) – The Central Bank will issue 250 million US dollars development bonds with a tenor of 1 year and 7 months, 2 years and 7 months and 4 years to local and foreign investors.
The Debt Department said the subscription will be at a floating rate of 6 month LIBOR for USD plus a margin through competitive bidding or at a fixed rate to be determined through competitive bidding.
Minimum investment is 10,000 US dollars with additional investments in multiples of 10,000 US dollars.
The issue will be open for subscription from 21 to 27 June and has a date of settlement of 30 June 2016.
The recent development bonds issue amounting to 200 million US dollars oversubscribed with over 516 million US dollars of bids received from investors.
The central bank accepted 250.04 million US dollars in one year bond at a floating rate of six month LIBOR (94 bp) plus 438.01 basis points.
Development bonds are to be issued by the Public Debt Department of Central Bank and exempted from income tax paid in Sri Lanka.
Foreigners, non resident or dual citizen Sri Lankans, NRFC/RFC account holders, authorized dealers in foreign exchange, primary dealers in government securities, BOI specified companies and specified insurance companies are among eligible investors.
Sri Lanka CDS to introduce electronic voting and IPO facility this year
June 17, 2016 (LBO) – Sri Lanka’s Central Depository Systems is looking forward to introduce a fully-fledged electronic IPO and voting system during this year.
During an interview, Head of CDS, Nalin Fonseka said the E-IPO system will facilitate inward and outward payments from investors efficiently and will offer other benefits such as facilitation of allotments for different categories of investors.
“The overall IPO handling process would be short cycled with the implementation of the E-IPO system,” Fonseka said.
E-Voting is another new project which is underway and has been planned to be implemented during this year.
“This system will address the problems faced by investors who are unable to attend and vote in more than one meeting held by listed companies on the same day.”
CDS is currently working on a project to upgrade the investor account opening process and the initiative will decentralize the account opening process and enable broker firms to open client accounts from their offices without sending the documents to the CDS.
The breakthrough for CDS was made in 1991 when it was established by the CSE and. 2016 marks a corporate milestone for the CDS, as it is the 25th year of operation since inception.
Full text of the interview is reproduced below.
Could you speak on the role and significance of the CDS over the years?
When first launched in 1991, CDS was the first depository in South Asia and among the first few depositories globally. We are to date the only depository for the shares of companies listed in the CSE and are licensed as a market intermediary and clearing house by the Securities and Exchange Commission of Sri Lanka (SEC).
It is a known fact that an efficient and dynamic depository contributes to a proficiently functioning capital market. In that regard, we have played a crucial role in the Sri Lankan capital market by minimizing risk, reducing costs, ensuring safety of investor assets and by providing value added services to investors. Over the years, we have evolved to meet the changing dynamics of the Sri Lankan capital market where we have embraced technology, built on our foreign relations and maintained focus on our stakeholders. We will continue this crucial role as the Sri Lankan capital market grows.
Can you comment on how the CDS has embraced technology to offer value to your stakeholders?
Expanding on value offered to our stakeholders by embracing innovation has continued to be a key objective of the CDS over the years.
In 2015, we launched the Settlement Schedule Digitization Solution DS3, which was an innovation entirely driven by CDS. This solution provides a mechanism to digitally sign settlement schedules using digital signatures embedded in a USB Crypto token which can be downloaded by the settlement banks through a web portal. Currently we are performing live operations through DS3 with three settlement banks.
In the perspective of our account holders, we recently launched SMS alerts and eStatements, adding a new dimension to information dissemination. The SMS alert service offers investors the ability to verify their account activities on a daily basis and this service will enhance the transparency in the order execution process of the stockbrokers. The CDS eStatement on the other hand, offers account holders the ability to access their statements at the click of a button. These endeavors encourage investors to take an active role in the management of their investment portfolios and illustrate the value technology offers in the business that we are in.
We will continue to use technology to offer value and efficiency to the various stakeholders of the CDS, including brokering firms, CDS account holders, company secretaries, registrars of listed companies and various other parties that engage with us.
Elaborate on the importance of bridging the gap between investors and the CDS using eConnect
I believe that ease of connectivity always matters when offering value to customers. Bridging the gap between investors and the CDS has long been an objective of ours, and the CDS eConnect facility will play an important role in that regard.
eConnect will take accessing of CDS account transaction details to a new level because of the accessibility through personal computers, Tablet PCs or Mobile devices. We will be able to enhance client security, offer convenience and create immediate awareness on changes to the CDS account details through this service. Especially from the perspective of the foreign investors, this would provide a platform for them to verify both their account information and portfolio information, which simplifies the process to a large extent.
You mentioned that the CDS was the first depository of South Asia. Speak about your partnerships and presence at a regional level.
Our history and credentials built over the years offers us the leverage to actively contribute in the international stage. Being an active member of the Asia-Pacific Central Securities Depository Group (ACG), which is an association of securities depositories and clearing organizations in the Asia-Pacific region is one such key partnership. On the other hand, the MOU signed with National Securities Depository (Pvt) Ltd of India (NSDL) in May 2015 is another linkage through which we hope to achieve operational benefits.
Hosting the 17th ACG Cross Training Seminar in Sri Lanka in 2015 and being recognized for our innovative approach to depositary operations at the 18th ACG Cross Training Seminar held in Ho Cho Minh City Vietnam this year, I could say, were a couple of highlights for the CDS in recent times.
One of the initiatives presented by our Head of Operations who participated at 18th ACG Conference was the e-Dividend concept which is an initiative of the e-Payment arm of the CDS. This was highly commended by the member depositories of the ACG for being an innovative product aimed at serving both foreign and local investors. Some member depositories were even so keen to study the concept further because of its potential to fast-track the current dividend payment process, making life easy for foreign investors, fund managers, and custodians.
Interaction and collaboration fostered through regional affiliations help us in ensuring that our current operational model corresponds to internationally accepted practices followed by other Asia-Pacific counterparts, which is an important part of the CSE’s bid to develop into a truly world-class exchange.
What other process improvements are you looking at?
Upon the successful implementation of the state-of-the-art depository system, CDS is currently working on a project to upgrade the investor account opening process. This initiative will decentralize the account opening process and enable broker firms to open client accounts from their offices without sending the documents to the CDS. With this de-centralization, both investors and brokering firms can enjoy more flexibility. This will also bring the CDS to be in-par with other depositories in the region.
We have also taken steps to expedite the process of opening accounts for Foreign Funds, as the CSE makes a conscious effort to increase foreign investor participation in the Sri Lankan capital market. We have worked under the guidance of the Securities and Exchange Commission of Sri Lanka (SEC) when implementing this improvement. Foreign applicants (Funds) can now open CDS accounts within a period of two market days upon the submission of the relevant documents.
Are you looking at expanding the services offered through the CDS going forward?
As I mentioned earlier, the improvements we make in future will be strictly stakeholder focused and will be in-line with the vision of the CSE. We are looking at introducing a fully-fledged E-IPO system. This system will facilitate inward and outward payments from investors efficiently and will offer other benefits such as facilitation of allotments for different categories of investors. The overall IPO handling process would be short cycled with the implementation of the E-IPO system.
E-Voting is another new project which is underway and has been planned to be implemented during this year. This system will address the problems faced by investors who are unable to attend and vote in more than one meeting held by listed companies on the same day.
All-in-all, I believe that we are well placed to provide a full range of post trade services to meet the evolving needs of our stakeholders while maintaining a strong focus on operational efficiency. Our intention is to drive continued growth in the Sri Lankan capital market through the provision of world-class custody and settlement services.
Thursday, June 16, 2016
Global treasuries plunge on Brexit, safe haven demand
June 16, 2016 (LBO) – The prospect of Britain leaving the European Union is boosting demand for safe haven assets, with bond yields falling to new lows, as the Fed suggests that low yields could be a more longer term phenomenon.
Benchmark 10-year yields are plunging across the globe. Japan fell to minus 0.21 percent. Australia fell below 2 percent, and Germany below zero. Switzerland’s 30-year security offers the nation’s only positive yield at 0.027 percent, Bloomberg reported.
Federal Reserve Chair Janet Yellen fueled moves saying slow productivity growth and aging societies may keep interest rates at depressed levels.
U.S. 10-year yields fell two basis points to 1.55 percent as of 11:23 a.m. in Tokyo. The yield is within 20 basis points of the record low, and is more than 100 basis points lower than the average forecast from analysts on Dec. 31 for it to stand at 2.60 percent by June 30.
South Korea’s bonds rose, sending 10-year yields down three basis points to an unprecedented 1.59 percent.
Federal Reserve Chair Janet Yellen seems to be coming around to what her one-time rival, Lawrence Summers, has been arguing for a while: Some of the forces holding down interest rates may be long-lasting and secular.
On Wednesday, she pointed to more permanent forces that could depress rates for longer, namely, slow productivity growth and aging societies, in the U.S. and throughout much of the world.
In a press conference after the Fed held policy steady, Yellen spoke of a sense that rates may be depressed by ”factors that are not going to be rapidly disappearing, but will be part of the new normal.”
Summers, who was in the running to get the Fed job before losing out to Yellen in 2013, has been contending for several years that the U.S. and other industrial countries are mired in “secular stagnation” of scant economic growth.
A key component of his argument: An excess supply of savings and a paucity of demand is depressing equilibrium interest rates in the advanced world, making it difficult for central banks to ease credit enough to lift growth and inflation.
In a blog posting Tuesday, former Treasury Secretary Summers likened the Fed’s actions in recent month to “Groundhog Day.” It keeps poking its head up hoping to raise interest rates only to back away in the end.
Sri Lanka Women's business chamber calls for awards applications
June 16, 2016 (LBO) – Sri Lanka’s Women’s Chamber of Industry & Commerce (WCIC) has called for applications for the ‘Woman Entrepreneur of the Year Awards.’
In its 9th year, the awards will recognize high flyers in micro, small, medium and large industry categories, as well as new categories: Woman Exporter of the Year, Most Promising Young Entrepreneur, and the Best Female Start-Up Enterprise.
Business owners with a minimum of three years experience and start-up founders, who have been in business for a year, are eligible to apply. The closing date for applications is June 20th.
“Our previous winners have gone on to become successful business leaders. And we believe that the visibility they gained on this stage played a role in their respective success stories. We urge enterprising women to apply for this year’s Entrepreneur Awards and gain the recognition that they well-deserve for their hard work and unbridled spirit,” Rifa Musthapaha, chairperson WCIC, said.
The award ceremony will take place on 5th August this year with President Maithripala Sirisena as the chief guest at the event.
“Women make up 52 percent of Sri Lanka’s population and it is imperative that as a country we encourage women to become business leaders in their own right and become an integral part of the business landscape and foster sustainable economic growth,” Musthapha added.
During the past few years, WCIC has taken an active role in shaping the Sri Lankan business landscape to be more inclusive of women.
One such attempt was successful as the budget proposal of 2015-16 introduced a step to direct banks to lend 5 percent of their total loan portfolio to women Micro, Small and Medium Enterprises.
Musthapha notes that 80 percent of Sri Lanka’s economy is supported by SME’s, of which only 10 percent are women SME’s. “There is potential for growth here. Especially as we’ve found out, women are better paymasters when compared to their male counterparts.”
Some of the past winners include Yolanda Aluwihare, owner and head designer of internationally acclaimed ‘Yoland Collection’, Janaki Davi Kathriarachchi, proprietor of Three Star Organic Farms and Orency Siriwardhene, founder of Sugar Frill Cakes.
The Women’s Chamber of Industry and Commerce (WCIC) was started in 1985, essentially to bring women entrepreneurs into the mainstream of business activity in the Country, the Chamber notes.
WCIC has been the platform and catalyst for women in business, facilitating participation at international trade events, developing policies that are favourable and playing an active role in raising the profile of its membership for exposure and recognition.
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