Asia stocks weak with Dec rate hike still on cards

HONG KONG, Oct 13 (Reuters) – Asian stocks held near three-week lows and the greenback consolidated recent gains on Thursday after minutes of the last U.S. Federal Reserve policy meeting indicated a December rate increase was still on the cards.

Risk appetite waned, with MSCI’s broadest index of Asia-Pacific shares outside Japan easing 0.2 percent, its lowest since Sept. 21. Early stock markets were mixed with Australia down 0.5 percent while New Zealand stocks up 0.4 percent.

“In our view, if you came into these minutes with a December hike pencilled in, there is no reason to change your stance,” Omair Sharif, an economist at Societe Generale, wrote in a note.

Wall Street struggled to find fresh momentum after breaking conclusively below a 100-day moving average this week.

The Dow Jones industrial average closed up 0.09 percent, to 18,144.2. The S&P 500 gained 0.11 percent, to 2,139.17 and the Nasdaq Composite .IXIC slipped 0.15 percent, to 5,239.02 with corporate earnings firmly in focus. Volumes were light.

Chinese stocks and the Australian dollar will be firmly in focus with trade data due shortly. Economists will be watching the trade breakdowns carefully to see whether the yuan’s recent weakness has had a beneficial impact.

The CBOE Volatility Index, the “fear gauge” of near-term investor anxiety held below 16, indicating broader market uncertainty.

Elsewhere, sterling treaded water after British Prime Minister Theresa May’s offer to give UK lawmakers a say in plans to leave the European Union and the U.S. dollar basked in the glow of a likely widening interest rate differential in its favour relative to other currencies.

Within Asia, the Thai baht will be in focus after falling to a eight-month low in the previous session on concerns about the health of 88-year-old King Bhumibol Adulyadej.

Oil prices struggled after falling 1 percent overnight after the Organization of Petroleum Exporting Countries reported its output hit an eight-year high in September, offsetting optimism over the group’s pledge to restrict output.

U.S. West Texas Intermediate crude slipped 0.62 percent to trade at $49.87 a barrel. Gold stabilised around the $1,250 per ounce level after falling sharply last week.

 

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Algeria's Rebrab to build euro 150 mln sugar refinery in Sri Lanka

Oct 13, 2016 (LBO) – The ninth wealthiest businessman in Africa, and the founder of Cevital, Issad Rebrab, will invest in Sri Lanka in a sugar refinery and a vegetable oil plant in the Southern Province, the Daily News reported.

Fortune 500 ranked Rebrab said Cevital will invest 150 million Euros to build the sugar refinery and also a power plant.

“I have already found a local partner, and he has identified a 100 acre land for the project,” Rebrab told the Daily News. “In addition a further 45 million Euro will be invested to manufacture vegetable oil.”

Sri Lanka consumes nearly a million tonnes of sugar but produces only 80,000 tonnes, while importing the rest.

Rebrab built the world’s largest sugar refinery in Algeria, which has no natural resources for sugar, and is expected to utilize Hambantota port facilities for the project.

 

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Sri Lanka wants to move up 40 steps in ease of doing business

Oct 13, 2016 (LBO) – Sri Lanka is expected to reach 60th or a higher place in the world ease of doing business index in two years, a minister said.

State Minister of International Trade Sujeewa Senasinghe told the World Export Development Forum that the government wants to create a conducive environment for local businesses.

“We want to move up around 40 places in the ease of doing business index,” Senasinghe said. Sri Lanka currently ranks at the 107th place in the index out of 189 economies.

A high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm.

“We also expect to grab World Economic Forum to Sri Lanka next year or as soon as possible.”

The government is also to complete the ongoing integration project of state agencies such as Sri Lanka Customs, Inland Revenue Department and Labor Department by the end of this year.

 

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Sri Lankan rupee steady; exporter dollar sales offset bank buying

Oct 13, 2016 (Reuters) – The Sri Lankan rupee traded steady on Thursday as two state banks bought dollars sold by exporters, in the absence of any intervention by the central bank, dealers said.

The spot rupee, which was active on Thursday, was steady at 146.90/95 per dollar at 0733 GMT.

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

Rupee forwards were not as active as they were in the past four days, with the spot-next at 146.95/147.00, compared with the last close of 147.00/05.

Dealers expect downward pressure on the currency due to pick up in seasonal imports through mid-December.

The rupee has been under pressure due to importer dollar demand, posting a 0.4 percent fall last week, following a 0.65 percent loss in the preceding week, Thomson Reuters data showed.

The central bank has been buying dollars from the market to accumulate reserves to meet targets set by the International Monetary Fund under a $1.5-billion loan deal, dealers said.

Officials at the central bank were not available for comment.

Sri Lankan shares were down, with the benchmark Colombo stock index 0.15 percent lower at 6,500.14 as of 0722 GMT. Turnover stood at 234.4 million rupees ($1.60 million).

 

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CHEVRON LUBRICANTS LANKA - DIVIDEND ANNOUNCEMENT

CHEVRON LUBRICANTS LANKA PLC
Company ID:- LLUB
Date of Announcement:- 13.Oct.2016
Rate of Dividend:- Rs. 3.50 per share / Fourth Interim Dividend
Financial Year:- 2016
XD:- 24.Oct.2016
Payment:- 02.Nov.2016
Share Transfer Book Open

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USD 10 million investment for drug production in Sri Lanka

Sri Lanka recently signed agreements worth USD 10 million with two companies to produce drugs in Sri Lanka.

Chairman of State Pharmaceuticals Corporation Dr. Sayuru Samarasundara signed the agreements with a Russian and an Indian Company.

28 drug producing companies under the instructions of Health Minister Rajitha Senarathne have agreed to be involved in drug production in Sri Lanka. The process will commence within 12 months.

 

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SL needs to grow at 5% till 2021 says economist

A top economist has called for fresh impetus to be injected into sustainable development, noting that it was crucial for Sri Lanka to survive in a highly volatile external sector and a growth projection of 5% in the next five years.

Speaking at the technical sessions of the Organisation of Professional Associations of Sri Lanka (OPA), former Central Bank Deputy Governor W.A. Wijewardena said Sri Lanka could sustain its projected growth rate only if the Government implements conscious policy action in the immediate future. 

He outlined structural issues, non-competitiveness in business, lack of inventions and innovations, a low science and technology base and irrelevant human capital development as key issues for sustainable economic growth, adding that these had to be addressed on a priority basis by the Government in the immediate future.

Noting that the country’s external sector was already facing a major crisis, he stated that the International Monetary Fund (IMF) had to bail out Sri Lanka in July but Sri Lanka could face challenges in maintaining the fiscal consolidation process as the second tranche would not be delivered unless the Government planned to introduce the necessary reforms in the financial sector.

Sri Lanka slipped three positions to languish at number 71 in the latest rankings of global competitiveness by the World Economic Forum (WEF). 

He said the WEF Executive Opinion Survey 2016 listed policy instability as the biggest concern followed by access to financing and inefficient Government bureaucracy and tax rates. 

“No one wants to set up business in Sri Lanka because it is not feasible to start a business. Countries were assessed on 12 pillars and we are not even among the South Asian country level. The Government will have to take immediate action in order to improve all these 12 pillars,” he emphasised.

Highlighting that there was “no coordination” between the bureaucrats and businesses, he urged the Government to put the two sectors into a lab, much like the Malaysian model, and allow them to focus for six months, during which time they could make decisions on a priority basis and at the end of the six-month period they could come up with a document to implement over the next five years. (CD)

Wijewardena suggests Rs. 1 m salary scheme for Ministers

Senior economist W.A. Wijewardena said Parliamentarians should be given a “decent salary” of Rs. 1 million, pointing out that the present perk system of giving a host of allowances cost the public much more, possibly up to Rs. 6 million per minister.

“At present the salary of a Minister is at Rs. 75,000 and they portray that they are doing an honorary service to the citizens of this country. 

However, unknown to us, there are all kinds of hidden benefits which Ministers are enjoying. We are in serious trouble; we have to cut down these perks of the Ministers,” the former Central Bank Deputy Governor added.

He said that paying Rs. 1 million per month was always better than spending Rs. 6 million per month.

According to Wijewardena’s calculations, the monthly cost of a Minister to the Sri Lankan taxpayers was around Rs. 6 million, which comes to around Rs. 72 million per annum. “If there are 100 ministers the amount will come to Rs. 720 million. The larger the Cabinet, the larger the money the citizens will have to pay. It is a crucial issue.”

Referring to the late Singaporean Prime Minister Lee Kuan Yew’s famous saying ‘If you pay peanuts, you get monkeys,’ he suggested that President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe should announce this decision on national television before presenting Budget 2017.

 

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Asia shares slip as US earnings disappoint, dollar gains

TOKYO, Oct 12 (Reuters) – Asian shares flirted with three-week lows on Wednesday after a dour start to Wall Street’s corporate earnings season knocked U.S. stocks, while the dollar and Treasury yields rose on growing expectations of a U.S. rate hike in December.

The British pound jumped back from lows in a volatile trading session though concerns about a “hard Brexit” are likely to keep the currency under pressure.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.4 percent while Japan’s Nikkei futures slipped 0.7 percent.

On Wall Street, U.S. S&P 500 Index fell 1.2 percent to near one-month low, and dipped below its 100-day moving average – seen as a major support – for the first time since June.

Shares of aluminum producer Alcoa tumbled 11.4 percent and diagnostics test maker Illumina plummeted 24.8 percent following their disappointing earnings, casting a pall over the market.

Market participants are also increasingly eyeing politics as the Nov. 8 U.S. elections draw near. The turmoil enveloping Republicans and the party’s presidential candidate Donald Trump is prompting some speculation that a victory by Democrat Hillary Clinton could be accompanied by big gains for her party in Congress, investors said.

At the same time, investors are bracing for the U.S. Federal Reserve to raise interest rates by the end of the year, most likely in December.

“The markets had relied on expectations of monetary stimulus for a long time but that is changing with bond yields rising around the world. You have rising interest rates and falling EPS. That’s obviously bad for stocks,” said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

The 10-year U.S. Treasuries yield rose to 1.781 percent, its highest level since early June.

U.S. interest rate futures <0#FF:> are pricing in about 75 percent chance of a rate hike by December, little changed over the past couple of days.

The spectre of rising U.S. interest rates helped to lift the dollar’s index against a basket of six major currencies to its highest level in seven months.

The index stood at 97.511, after having risen to as high as 97.758 on Tuesday, climbing above its July peak of 97.569.

The euro hit a two-month low of $1.1049 and last stood at $1.1061 while the offshore Chinese yuan traded at 6.7290 yuan to the dollar, near its lowest since January.

The yen was little changed at 103.42 to the dollar.

The British pound jumped 1.3 percent in thin early Asian trade to $1.2275, after having fallen nearly five percent in the previous four sessions.

Some market players suspected sterling benefited from a report by Bloomberg that British Prime Minister Theresa May has accepted that Parliament should be allowed to vote on her plan for taking Britain out of the European Union.

“The pound is being bought back after its big falls. But given that Brexit will remain a major theme for the markets, its likely to be capped,” said Shinichiro Kadota, chief currency strategist at Barclays Securities Japan.

Oil prices retreated from one-year highs, after OPEC said it was trying to reach a global agreement to cap production for at least six months amid doubts about how much that would reduce a crude glut.

Brent crude futures traded at $52.49 per barrel, off Monday’s high of $53.73.

 

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