Sunday, September 30, 2012

Sri Lanka: Rubber plantations in the North-east

 
New rubber plantations would be established in Sri Lanka’s north-east region aimed at meeting growing world market demand for the product.

The next budget would propose new lands for cultivation in Ampara, Vavuniya, Mullaitivu, and Kilinochchi as it has been found that the climate conditions were favourable for rubber production, said Minister of Plantation Industries Mahinda Samarasinghe at a recent forum.

The demand for rubber is expected to go upto 200, 000 MT by 2016. Sri Lanka is unable to meet the current demand of 175,000 MT and produces only 150, 000 MT.

He described Sri Lanka’s rubber cultivation methods as being far behind its higher producing counterparts in Thailand, Indonesia and Malaysia. (SD)

source - rubbermarketnews.net

Malaysia: Rubber market to be on an upswing next week

 
The Malaysian rubber market is expected to be on an upswing next week on a more positive global economic outlook and amid quiet trading, dealers said.

A dealer said demand would receive a boost from strong foreign buying interest with China, the world’s biggest rubber consumer, expected to announce a large stimulus package to boost the flagging economy after its National Day on Oct 1.

“This will spur sentiment among the global market players,” the dealer added.

The positive developments in Spain’s debt crisis, the fourth largest economy in Europe, will also have an impact on the local market next week.

Physical rubber prices are also likely to be influenced by the Tokyo Commodity Exchange and Shanghai Futures Exchange, where the commodity is expected to trend higher.

On a Friday-to-Friday basis, the Malaysian Rubber Board’s sellers official physical price for tyre-grade SMR 20 fell 2.5 sen to 872 sen per kg, while latex-in-bulk rose 11 sen to 623.5 sen per kg.

The unofficial sellers’ closing price for tyre-grade SMR 20 added 5.5 sen to 880 sen per kg and latex-in-bulk increased 11.5 sen to 626.5 sen per kg.– BERNAMA

source - rubbermarketnews.net

Weekly Market Focus

Colombo Stocks started the week with the news of the change of ownership in Aviva NDB Insurance (CTCE) being in its final stages. On Thursday, CTCE officially announced the proposed change in the shareholding structure of Aviva NDB Holdings Lanka (Private) Limited.  Throughout the week NDB gained 10.7% after reaching the high of Rs.155.00, NDB Capital (CDIC) gained 9.1% after reaching the high of Rs.510.00 and CTCE gained 1.4% after reaching the high of Rs.448.90.

 ASI advanced by 61.92 points (+1.0%WoW) during the week to end at 5,971.99 while liquid MPI increased by 111.64 points (+2.0%WoW) to close at 5,645.95. S&P SL 20 Index closed at 3,240.98, up by 62.82 index points (+2.0%WoW). Average daily market turnover was Rs.2.0bn (-+39.5%WoW). Foreign participation for the week calculated at 17.5% of the total market activity and at the end of the week, foreign investors were the net buyers with a net foreign inflow of Rs.1.4bn.

News of the planned acquisition of National Development Bank’s stake in Aiva NDB Insurance by a foreign party propelled activity in today’s trading. Share prices of National Development Bank, NDB Capital and AvivaNDB Insurance quickly gained ground and helped the faltering indices to mitigate the losses. Apart from this, shares traded with mixed sentiments on a lower than usual turnover. John Keells Holdings closed higher on this day but continuing profit taking dragged activity levels to a recent low of Rs. 749.1Mn. Foreign participation was low on this day but foreigners remained net buyers.

On Tuesday, NDB Capital related counters continued to help activity levels and help sustain the momentum. Renewed interest was seen on selected blue-chips and many of them closed at their 52 week high. All indices closed positively and turnover improved to Rs. 1,070.8Mn. However, retail activity seemed somewhat subdued.

Wednesday saw a large parcel of Aitken Spence shares being transferred to Melstacorp by its parent which helped to post a staggering turnover of Rs. 4,260.4Mn. NDB Capital related counters gained ground once more and selected blue-chips continue to gain ground and improve their 52 week high price. Foreign participation remained lower but still infused net inflows of Rs.278.1Mn.

Profit taking was seen on NDB Capital and related counters but gains on John Keells Holdings and Sampath Bank helped the indices close higher on Thursday. Plantation sector counters saw a mild rally on this with Maskeliya and Madulsima Plantations gaining ground. Net foreign buying was significantly higher as a foreign party snatched up parcels in Asiri Hospital Holdings.

Market opened on Friday with mixed sentiments as NDB Capital related counters losing steam but gains in premier blue-chip John Keells Holdings helping to prop up the indices. Retail activity was seen develop on selected counters. Bourse closed in positive territory as ASI gained 22.57 points (+0.38%) to close at 5,97199 while MPI gained 71.03 points (+1.27%) to close at 5,645.95. S&P SL 20 Index gained 18.67 points (0.58%) to close at 3,240.98.

Daily market turnover reached Rs.2.1bn supported by the Rs.1.1bn worth of off-the-floor deals. Commercial Bank topped the turnover list with an amount of Rs.741.6mn followed by John Keells Holdings with Rs.272.6mn and Dunamis Capital with Rs.107.3mn. Touchwood Investments, Access Engineering and Nation Lanka Finance were the mostly traded stocks for the day. Foreign participation for the day was 29.7%. At the end of the day foreign investors were net sellers with net outflow of Rs.247.7mn.

source - www.nation.lk

Passes Rs. 100 Bn

 
Sri Lanka’s tea exports in July grew by Rs. 0.8 billion year on year (YoY) to Rs. 14.9 billion, Forbes & Walker in a report said.

 However tea production during this period declined by 2.7 million kilos to 26.5 million kg. YoY.
 Total tea exports in the first seven months of the year in value terms grew by Rs. 7.4 billion YoY to Rs. 100.05 billion.

 Meanwhile in volume terms, total exports in the review period grew by 2.5 million kg. to 182.07 million kg. Packeted tea category has shown a growth in volume whilst tea in bulk and tea in bags have had shown a decrease.

 CIS has retained the number one position as the largest importer of Sri Lankan tea followed by Iran and Syria. Other noteworthy importers were Iraq, Turkey and Libya.

 In other developments, Central Bank of Sri Lanka (CBSL) data showed that in US dollar ($) terms tea prices at the Colombo Auctions in July declined by 3.6% YoY to to $ 2.98 per kg.,  however its rupee value during this period increased by 17% YoY to Rs. 396.55 a kg.

*Meanwhile tea production in the first seven months of the year declined by 4.4% YoY to 187.3 million kg., CBSL said.

 *This may be due to the steep decline in the value of the rupee since. The exchange rate which was being quoted at around Rs. 109.40 to the US dollar in July of last year, had  had depreciated by 21.5% to Rs. 132.90 as at July of this year.

source - www.thesundayleader.lk

Quality certification for Walkers

 
The Management system of Walker Sons & Co Engineers (Pvt) Ltd, a subsidiary of MTD Walkers PLC has been certified to ISO 9001: 2008 quality Management System. The company is also graded as an EM-I contractor by the Institute for Construction Training and Development (ICTAD), and is a pioneer engineering company in Sri Lanka supporting the Plantation Industry. The Company’s activities have been profoundly embedded in the design, manufacture and supply of machinery for the Island’s Tea and Rubber industry.

The production of tea machinery is carried out in a well‐equipped Central Workshop situated at Siyambalape Biyagama. The Central workshop is equipped with an Assembly Bay a Fabrication and Plate workshop which also undertakes the construction of pressure vessels and general fabrication work in addition to the manufacture of machine components and radial gates for hydro projects.

The company is also actively involved in civil engineering projects which include the constructions of roads, bridges, restoration of reservoirs and dams, towers, and on the mechanical engineering side of the business, the company has undertaken challenging mechanical engineering projects in the field of Petroleum, Cement and Steel, Water and Sanitation Management. The Air Conditioning Division provides engineering solutions inclusive of System Design, installation and commissioning.

The Vice Chairman of MTD Walkers PLC,  Jehan Amaratunga and Director /Head of operations AVM Lal Perera are confident that through the concept of quality the company will achieve continuously for improvement in its product quality and to work towards  customer
satisfaction.

source - www.nation.lk

Sunday Business News Articles

Sunday Island


The Nation


The Sunday Observer


The Sunday Leader


The Sunday Times


Lakbima News

Friday, September 28, 2012

NDB enjoys $ 59 m net receipts; poised for investment and growth

 
Confirming that sound investment strategies could pay off handsomely NDB Group yesterday announced it will receive $ 59 million (around Rs. 7.7 billion at current exchange rate) from its deal with AIA.

“The net receipts of US$ 59 m, arising out of these transactions, give an opportunity for the NDB Group to further strengthen the strategic alliances within the financial services sector whilst enhancing and releasing core capital; a prerequisite to boost organic and inorganic growth of the NDB Group,” the bank said in a statement. “This is very timely to take on the opportunities to become a significant national and regional player in the financial sector and contribute further to the growth of Sri Lanka,” it added.

 NDB also said it will continue to invest in the aggressive growth of its core banking activities of project and infrastructure financing, corporate banking, retail banking, and SME financing; while strengthening the strategic investments in its Investment Banking Cluster for the growth of its Investment Banking operations in Sri Lanka & Bangladesh, wealth management and stock brokering businesses under the recently-formed NDB Capital Holdings Plc

 NDB said in keeping with its strategic rearrangement of investments within the Group pursuant to Aviva’s decision to exit Aviva NDB Insurance (ANI), NDB Group has entered into a Share Sale and Purchase Agreement with American International Assurance Company Limited (AIA) of Hong Kong, one of the largest insurance companies in the world with an exclusive focus on the Asia-Pacific region, whereby NDB Group has agreed to sell its shareholding in the Aviva NDB Holdings Lanka Ltd., (Aviva NDB Holdings) to AIA.

 The finality of the intended sale process is expected to be reached by end 2012, subject to having in place the necessary regulatory and legal arrangements. With the objective of continuing to provide all financial services under one roof, NDB will also enter into an exclusive bancassurance agreement with AIA as the new controlling shareholder of ANI for a period of 20 years and continue to provide its customers a wider and stronger range of insurance products.

 Pursuant to this transaction NDB Group as part of its plans to realign resources from the sales proceeds for growth, will purchase the balance shareholding of NDB Aviva Wealth Management PLC subject to having in place the necessary regulatory and legal arrangements, thereby consolidating its position as the market leader in Wealth Management in Sri Lanka. This will result in NDB Capital Holdings Plc owning 100% of this company. A fund management agreement will also be in place to manage the ANI’s insurance funds exclusively for a period of 20 years.

 Commenting on this transaction, NDB Group CEO Russell De Mel said: “We are indeed pleased to have been part of the growth of Aviva NDB Insurance Plc and the entry of the insurance giant AIA will further strengthen this. Insurance, the third pillar of the NDB Group, will continue to exist through an even stronger alliance in bancassurance with AIA.

 Recently, NDB Group marked a new era in the financial services industry in Sri Lanka with the re-launch of Capital Development and Investment Company PLC (CDIC) under a new corporate identity named NDB Capital Holdings PLC. NDB Capital Holdings PLC continues to offer a unique portfolio of services comprising of investment banking, wealth management, stock brokering and private equity which will enable NDB Group to cater to the growing needs of the corporate sector and the capital market in a developing Sri Lanka.

 NDB is one of the fastest growing financial conglomerates in Sri Lanka, with regional operations spanning to Bangladesh and Maldives. Its unique financial positioning of the universal banking proposition is firmly backed by the bank’s strong financial profile in terms of its capital base, profitability and asset quality. Maintaining the highest standards of competence and probity, NDB Group is firmly positioned to take on the economic growth taking place in Sri Lanka.

source - www.ft.lk

AIA enters Lanka via US$ 109mn acquisition

Aviva, NDB exit insurance

* Right time to enter Lanka, says Asian insurance giant after having explored 45 options to gain a foot hold in the post-conflict economy

* Will not purchase any more Aviva NDB shares; no mandatory offer

* Ready to take on highly competitive insurance industry

 
By Mario Andree
 

Asian insurance giant, Hong Kong listed American International Assurance Company Ltd (AIA) is entering Sri Lanka after a US$ 109 million acquisition and plans to invest more to make a mark in the highly competitive industry which is yet to realise its potential with only 10 percent of the population with insurance cover.
 

The AIA Group yesterday announced that it has agreed to acquire a 92.3% stake in Sri Lankan insurer, Aviva NDB Insurance, through Aviva NDB Holdings Lanka (Pvt.) Limited from British insurer Aviva and Sri Lanka’s National Development Bank (NDB).
 

In addition, Aviva NDB will enter into a 20 year bancassurance agreement with NDB, one of Sri Lanka’s largest financial conglomerates with a nationwide bank branch network.
 

AIA has also agreed to sell to NDB the 83.9 per cent stake in NDB Aviva Wealth Management Limited (NAWM) which will be acquired by NDB Group as part of the proposed transaction.
 

The remaining 7.7 per cent of Aviva NDB Insurance not acquired represents the shares publicly held and traded on the Colombo Stock Exchange of Sri Lanka (CSE) and no offer will be made for the remaining shares.
 

Total net consideration payable by AIA with respect to the transaction including the exclusive bancassurance agreement with NDB and the sale of the NAWM stake is US$109 million.
 

The conclusion of the transaction and the subsequent rebranding and renaming of AVIVA NDB as AIA is subject to necessary legal, statutory and regulatory approvals," AIA said in a statement.
 

Officials declined to comment on the purchase price of Aviva NDB Insurance.
 

AIA Group Limited Regional Chief Executive Huynh Thanh Phong yesterday told journalists that the company was bullish on Sri Lanka and was ready to invest further.
 

He said the tough completion in the industry was welcome and AIA’s presence would expand the share, and highlighted that only 10 percent of the local population was under any means of protection pointing out to the untapped potential for insurance industry here.
 

According to him it was the right time to enter the Sri Lankan market with its economic growth promising, and said the company was here for the long run.
 

He said AIA had evaluated more than 45 options during the last two years to enter the Sri Lankan market.
 

"The acquisition reflects the quality of the Sri Lanka business, operations and management, and its position of strength in the Sri Lankan market."
 

Mark Tucker, AIA’s Group Chief Executive and President, said, "We are delighted to be entering Sri Lanka, a country with a compelling combination of strong economic growth prospects and low existing levels of insurance penetration. This acquisition will immediately establish AIA as the second largest life insurance company in Sri Lanka.
 

"Aviva NDB Insurance, with its experienced management team, high quality employees and agents and an attractive long-term bancassurance relationship, represents an excellent platform from which to participate and grow in the highly attractive Sri Lankan market. We look forward to playing a leading role in the development of Sri Lanka’s insurance sector as we meet the long-term savings and protection needs of increasing numbers of Sri Lankan individuals and families."
 

Simon Machell, Chief Executive of Higher Growth Markets, Aviva Group commented, "The sale price reflect$ the relative success and growth of the AVIVA NDB business. We take great pride in having developed a robust market leading insurer that will continue to play an important role in the emerging Sri Lankan economy".
 

CEO of NDB Group, Russell De Mel stated, "We are very pleased to have been part of the growth of AVIVA NDB Insurance and the entry of the insurance giant AIA will further strengthen the Company. Insurance, the third pillar of the NDB Group, will continue to exist through an even stronger alliance in bancassurance that we will have with AIA. This transaction also gives an opportunity for the NDB Group to further strengthen its strategic alliances within the financial services sector whilst enhancing and releasing core capital; a prerequisite to boost organic and inorganic growth of the NDB Group. It is a timely opportunity to become a significant national and regional player in the financial sector and contribute further to the growth of Sri Lanka."

source - www.island.lk

Ayubowan AIA

■ In biggest-ever industry deal, Asian insurance giant AIA enters Sri Lanka with $ 109 m investment to buy 92.3% stake in Aviva NDB Insurance

 ■ Says timing is perfect as post-war rebounding Sri Lanka offers high growth opportunity; AIA’s first acquisition in two years after rigorous assessment

 ■  Enters into 20-year bancassurance deal with NDB

Marking the biggest industry transaction in Sri Lanka, Asian giant AIA Group yesterday sealed a deal to invest $ 109 million to acquire a 92.3% stake in Aviva NDB Insurance,  giving both the company and the country a mega boost.

It was the first acquisition for AIA since its record breaking $ 17.8 billion IPO in October 2010, through which global giant AIG sold a 58% stake. Market leader in Life business in six of the 15 markets it operates in Asia, AIA said Sri Lanka was chosen given its huge potential after considering between 30-40 opportunities in Asia including mergers and acquisitions.

 AIA listed the post-war rebound in the country as well as the low penetration of insurance as key considerations.

 The stake in Aviva NDB Insurance was acquired via Aviva NDB Holdings Lanka Ltd., the joint venture between British insurer Aviva and NDB.

 Once the regulatory approvals are obtained, Aviva NDB will be rebranded as AIA Sri Lanka, whilst it will enter into a 20-year bancassurance deal with NDB.

 AIA is confident it will get the bancassurance model right in Sri Lanka and use it as a growth driver, given its success in select Asian markets where bancassurance accounts for as high as 60% of its overall business.

 As part of the deal, AIA has also agreed to sell to NDB the 83.9% stake in NDB Aviva Wealth Management Ltd. (NAWM), which will be acquired by NDB Group.

 The remaining 7.7% of Aviva NDB Insurance not acquired represents the shares publicly-held and traded on the Colombo Stock Exchange of Sri Lanka (CSE) and no offer will be made for the remaining shares.

“Total net consideration payable by AIA with respect to the transaction including the exclusive bancassurance agreement with NDB and the sale of the NAWM stake is US$ 109 million,” a statement by the insurance company said.

 It said the acquisition reflects the quality of the Sri Lanka business, operations, and management, and its position of strength in the Sri Lankan market. Customers will benefit from the strength, security and certainty associated from being part of the AIA Group, which is the fifth largest insurance company in the world by market capitalisation.

 AIA’s Group Chief Executive and President Mark Tucker in a statement said: “We are delighted to be entering Sri Lanka, a country with a compelling combination of strong economic growth prospects and low existing levels of insurance penetration. This acquisition will immediately establish AIA as the second largest Life insurance company in Sri Lanka. Aviva NDB Insurance, with its experienced management team, high quality employees and agents and an attractive long-term bancassurance relationship, represents an excellent platform from which to participate and grow in the highly attractive Sri Lankan market. We look forward to playing a leading role in the development of Sri Lanka’s insurance sector as we meet the long-term savings and protection needs of increasing numbers of Sri Lankan individuals and families.”

AVIVA NDB Insurance Managing Director Shah Rouf said: “Our company has progressively been getting stronger, to the point where we are now the second largest life insurer in Sri Lanka. Becoming part of AIA is a fulfilment of our own vision to be the premier insurance company in Sri Lanka.”
Aviva Group Chief Executive of Higher Growth Markets Simon Machell commented: “The sale price reflects the relative success and growth of the AVIVA NDB business. We take great pride in having developed a robust market leading insurer that will continue to play an important role in the emerging Sri Lankan economy.”

NDB Group CEO Russell De Mel stated: “We are very pleased to have been part of the growth of AVIVA NDB Insurance and the entry of the insurance giant AIA will further strengthen the Company. Insurance, the third pillar of the NDB Group, will continue to exist through an even stronger alliance in bancassurance that we will have with AIA. This transaction also gives an opportunity for the NDB Group to further strengthen its strategic alliances within the financial services sector whilst enhancing and releasing core capital; a prerequisite to boost organic and inorganic growth of the NDB Group.  It is a timely opportunity to become a significant national and regional player in the financial sector and contribute further to the growth of Sri Lanka.”

Established in 1987, Aviva NDB Insurance has a composite insurance license and is Sri Lanka’s second largest Life insurer with 800 employees and a high-quality tied agency force of 3,100 agents. In the year ended 31 December 2011, Aviva NDB Insurance recorded gross written premiums of US$ 81 million with Life premiums accounting for approximately 75 per cent and Non-Life premiums 25 per cent of the total premiums.

 Aviva NDB Insurance is listed on the CSE under the stock code ‘CTCE: N0000’.

AIA Group Limited and its subsidiaries (collectively ‘AIA’ or ‘the Group’) comprise the largest independent publicly listed pan-Asian Life insurance group. It has wholly-owned main operating subsidiaries or branches in 14 markets in Asia Pacific – Hong Kong, Thailand, Singapore, Malaysia, China, Korea, the Philippines, Australia, Indonesia, Taiwan, Vietnam, New Zealand, Macau and Brunei and a 26 per cent joint venture shareholding in India.

 The business that is now AIA was first established in Shanghai over 90 years ago. It is a market leader in the Asia Pacific region (ex-Japan) based on Life insurance premiums and holds leading positions across the majority of its markets. It had total assets of US$ 119,494 million as of 31 May 2012.

 AIA Group Limited is listed on the Main Board of the Stock Exchange of Hong Kong Limited under the stock code ‘1299’ with American Depositary Receipts (Level 1) traded on the over-the-counter market

source - www.ft.lk

NDB and Aviva lose steam as mega deal details emerge

 
Turnover tops billion, indices up

Both NDB and Aviva NDB Insurance which had gained sharply on news that the insurance company was being acquired by an Asian giant dropped yesterday following the long awaited announcement of the deal.

While Aviva NDB Insurance closed Rs.43.40 down at Rs.396.10, trading between Rs.353 and Rs.445 with 36,956 shares traded, NDB was down Rs.7.30 to Rs.144.90 on slightly over 0.5 million shares trading between Rs.141 and Rs.150 contributing Rs.76 million to turnover.

The market continued its upward trend on a turnover of Rs.1.87 billion, down from the previous day’s Rs.4.26 billion, with all three indices up – the All Share marginally by 5.66 points (0.10%), the Milanka by 21.39 points (0.39%) and S&P by 2.04 points (0.06%) with 110 gainers behind 120 losers while 36 counters closed flat.

Crossings of nearly 69.6 million Asiri at Rs.11.40 valued at Rs.793.5 million, 500,000 JKH crossed at Rs.225 in a deal worth Rs.112.3 million, HNB (non-voting) where over 0.5 million shares were crossed at Rs.15 accounting for Rs.59.1 million and 200,000 Sampath crossed at Rs.214 valued at Rs.42.8 million contributed over a billion rupees to yesterday’s turnover.

"The indices ended higher for the sixth consecutive day mainly due to gains on large caps. Activity levels were led by a crossing on ASIR which accounted for over 40% of turnover," John Keells Stock Brokers said in a market report.

Foreigners were strongly on the buying side with purchases of Rs. 1.16 bn. with sales of just Rs. 53.3 mn. and an inflow of Rs. 1.1 bn.

"This market is headed where JKH is headed and the counter closed Rs.2.40 up at Rs.225.40 on over 0.4 million shares done between Rs.223 and Rs.225.50 contributing the day’s top turnover of Rs.100.9 million," a broker said.

However, he noted that the All Share Price Index was still 50 points away from the 6,000 point barrier saying "if it reaches that level strongly, then we are looking at an index of around 6,300 points."

He said that with a windfall in its books there was every possibility that NDB would do well in the long run and Aviva NDB Insurance, to be re-named AIA after its new parent, would also do well given AIA’s strong track record in the region and its stature as the fifth largest global insurer.

Although NDB closed at Rs.144.90 yesterday it averaged Rs.148.29 during the day, brokers said.

Apart from NDB there was interest in banking stock like Seylan, both voting and non-voting, Commercial Bank, Sampath and HNB yesterday.

Seylan non-voting closed Rs.1.40 up at Rs.35.50 on 1.6 million shares traded while the voting stock closed Rs.2.70 up at Rs.67.50 on 25,742 shares.

Commercial Bank was Rs.1.20 up at Rs.115.20 on nearly 0.3 million shares, Sampath up Rs.3 to close at Rs.215 on nearly 0.1 million shares.

Asiri Hospitals closed 10 cents up at Rs.11.50 on nearly 8.2 million shares done between Rs.11.40 and Rs.11.80 contributing the day’s second highest turnover of Rs.94.4 million.

Interest in Lanka Hospitals persisted with over 0.5 million shares traded and the counter closed Rs.1.50 down at Rs.50 trading between Rs.50 and Rs.52.50.

source - www.island.lk

Sri Sri Lanka rupee gains on bank, exporter dollar sales

COLOMBO, Sept 27 | Thu Sep 27, 2012 4:56pm IST

(Reuters) - The Sri Lankan rupee strengthened on Thursday as banks sold dollars on stock related inflows, dealers said.

The rupee closed 1.1 percent firmer at 129.40/70 to the dollar compared with Wednesday's close of 130.90/131.00.

"The rupee stretched on heavy equity market inflows and we have seen exporters selling following the banks selling," said a currency dealer asking not to be identified.

The rupee has strengthened 2.10 percent so far this month but it has depreciated 14 percent since allowing a flexible exchange rate in November.

The Colombo Stock Exchange's main index ended 0.1 percent, or 5.66 points, higher at 5,949.42.
Shares in Aviva NDB Insurance fell 9.28 percent to 398.70 rupees and National Development Bank fell 4.86 percent to 144.80 rupees a share.

AIA Group Ltd has agreed to buy British insurer Aviva's 92.3 percent stake in Aviva NDB Insurance .

The exchange has been overbought since Aug. 28, Thomson Reuters data shows. The 14-day Relative Strength Index on Thursday was at 82.913, well above the upper neutral range of 70.

Turnover on Thursday was 1.87 billion rupees ($14.27 million), more than this year's daily average of 947 million rupees.

source - in.reuters.com

Thursday, September 27, 2012

Market snapshot - 27 09 2012

 



source - CAL Research

Sri Sri Lanka rupee gains on bank, exporter dollar sales

(Reuters) - The Sri Lankan rupee strengthened on Thursday as banks sold dollars on stock related inflows, dealers said.

The rupee closed 1.1 percent firmer at 129.40/70 to the dollar compared with Wednesday's close of 130.90/131.00.

"The rupee stretched on heavy equity market inflows and we have seen exporters selling following the banks selling," said a currency dealer asking not to be identified.

The rupee has strengthened 2.10 percent so far this month but it has depreciated 14 percent since allowing a flexible exchange rate in November.

The Colombo Stock Exchange's main index ended 0.1 percent, or 5.66 points, higher at 5,949.42.
Shares in Aviva NDB Insurance fell 9.28 percent to 398.70 rupees and National Development Bank fell 4.86 percent to 144.80 rupees a share.

AIA Group Ltd has agreed to buy British insurer Aviva's 92.3 percent stake in Aviva NDB Insurance .

The exchange has been overbought since Aug. 28, Thomson Reuters data shows. The 14-day Relative Strength Index on Thursday was at 82.913, well above the upper neutral range of 70.

Turnover on Thursday was 1.87 billion rupees ($14.27 million), more than this year's daily average of 947 million rupees.

source - in.reuters.com

Aviva-AIA deal signed, announcement today

The sale of global giant Aviva’s Sri Lankan operations to Asian giant AIA had been signed yesterday in Colombo whilst a formal announcement is expected today as reported by the Daily FT on Tuesday.

AIA is a market leader in the Asia Pacific region (ex-Japan) based on life insurance premiums, and holds number one positions in six of its geographical markets. It had total assets of US$119,494 million as of 31 May 2012.

Control (87% stake) of Aviva NDB Insurance is held by Aviva NDN Holdings Lanka Ltd., a joint venture between Aviva Hong Holdings Kong and NDB Capital (formerly CDIC).

 Largely on sentiments, Aviva NDB Insurance share price has been on the rise to record levels since last week. Yesterday it gained by Rs. 26.20 to close at Rs. 439.50 whilst it hit an intra-day high of Rs. 445. A direct beneficiary, NDB Capital too has also enjoyed massive gains, though it dipped by Rs. 10.50 to Rs. 489.10 after touching a high of Rs. 506. Parent NDB gained by Rs. 8.90 to Rs. 152.20 whilst its intra-day high was Rs. 155.

source - www.ft.lk

After sellout, SLIC nominees quit eChannelling Board

Two nominees of Sri Lanka Insurance Corporation have resigned from the Board of eChannelling Plc. following the sellout of an original 25% stake in the company.

The nominees were P. Kudabalage who was Chairman and Mohan De Alwis have resigned with effect from 28 September.

SLIC as at 31 March 2012 held 25% stake in eChanneling Plc. Kudabalage serves as an Executive Director at SLIC whilst Alwis is the CEO.

 Since then SLIC had been shedding its stake, part of which were acquired by Capital Trust Holdings (10%) and J.B. Cocoshell which owns nearly 10% up from 1.8% as at March 2012. The single largest shareholder of eChannelling Plc is British American Technologies Ltd., holding 28%.

source - www.ft.lk

Bourse gains sharply; turnover at 8-month high

 
Reuters: Sri Lankan stocks ended slightly firmer on Wednesday as investors picked up banking and diversified shares while block deals pushed turnovers to an eight-month high, dealers said, while the rupee firmed as banks sold dollars.

The Colombo Stock Exchange’s main index, or all share price index (ASPI), ended 0.29%, or 17.47 points, higher at 5,943.76.

 Conglomerate Aitken Spence PLC accounted for 72% of the day’s turnover on a block deal and closed 0.39% firmer at 130 rupees a share.

“In terms of market trajectory, we expect the bourse to test the 6000 key resistance level next week although intermittent bouts of profit taking could result in temporary dislocations,” DNH Financial in Colombo said in a note to investors.

The index rose 19% in 15 sessions through to 17 September on hopes that a new Securities and Exchange Commission head would come up with ideas to revive the market, which is down 2.15% this year.

 The bourse has been overbought since 28 August, Thomson Reuters data shows. The 14-day Relative Strength Index on Wednesday was at 83.073, well above the upper neutral range of 70.

 Turnover on Wednesday was Rs. 4.26 billion ($32.51 million), the highest since 26 January and more than four times this year’s daily average of Rs. 942 million.

 The bourse saw a net foreign inflow of Rs. 278 million, extending the net foreign inflow this year to Rs. 30.63 billion.

 The rupee closed firmer at 130.90/131.00 to the dollar compared with Tuesday’s close of 131.00/05 as banks bought rupees, dealers said.

source - www.ft.lk

Big Spence crossing help sustain upward run

 Deal worth nearly Rs. 3 billion

The Colombo bourse sustained its upward run yesterday on a turnover of Rs.4.26 billion, up from the previous day’s Rs.1.07 billion, with all three indices up – the All Share by 17.47 points (0.29%), the Milanka by 18.88 points (0.34%) and S&P by 19.17 points (0.60%) with 127 gainers ahead of 112 losers while 69 counters closed flat.

Crossings of 300,000 Aitken Spence at Rs.130 and 24 million at Rs.123.10 in deals worth nearly Rs.3 billion accounted for most of yesterday’s turnover.

There were also crossings of 400,000 JKH at Rs.223 worth Rs.88.9 billion and 100,000 Nestle at Rs.1,200 accounting for Rs.120 million done during the day.

On the trading floor the big turnover generators were Ceylinco Insurance, NDB, JKH, Aitken Spence, Lanka Hospitals and Commercial Bank.

``The indices continued their upward trend due to sustained buying interest large caps such as NDB, JKH, SPEN and COMB. Activity levels were led by a crossing on SPEN, which accounted for over 70% of turnover," John Keells Stock Brokers said in a market report.

Foreigners remained net buyers with purchases worth Rs. 412.11 mn. and sales of Rs. 134.06 mn. leaving an inflow of Rs. 278.05 mn.

Ceylinco saw over 0.4 million shares done between Rs.800.10 and Rs.850 contributing Rs.179.4 million to turnover while NDB continued its upward momentum generating the day’s second highest turnover of Rs.100.1 million on over 0.7 million shares done between Rs.147 and Rs.155 contributing Rs.108.1 million to turnover.

Brokers and analysts said that this counter as well as Aviva NDB Insurance, which closed Rs.26.70 up at Rs.440 on 50,524 shares done between Rs.430 and Rs.435 were moving up sharply on expectation of the purchase of the insurance company by a Hong Kong based giant.

However, no formal announcement of any deal has yet been made.

Retail interest was evident in NDB, Lanka Hospitals and Aviva NDB Insurance, brokers said.

JKH closed Rs.1.80 up at Rs.223.30 on over 0.4 million shares traded on the floor between Rs.158.20 and Rs.223.90 generating a turnover of Rs.91.7 million while Aitken Spence was 50 cents up on the trading floor to close at Rs.130 on nearly 0.4 million shares done between Rs.125.10 and Rs.132 generating a turnover of Rs.50.7 million.

Lanka Hospitals closed Rs.1.80 up at Rs.51 on nearly 0.9 million shares while Commercial Bank was up 50 cents to close at Rs.114.40 on nearly 0.4 million shares.

NTB was another banking stock up Rs.1.60 to close at Rs.63 on over 0.3 million shares while Chevron edged down 30 cents to Rs.190.10 on slightly over 0.1 million shares.

Asiri closed flat at Rs.11.40 on 2 million shares.

Dividends were announced by Sanasa Development Bank paying an interim Rs.5 per share for 2012 XD from Oct. 5 and payment on Oct 16; a 50 cents final dividend for 2011/12 from Orient Garments XD from Oct. 5 and with payment on Oct. 16 and Rs.0.15 first interim from e-Channelling for 2012/13 XD from Oct. 5 and payment on Oct. 16.

source - www.island.lk

Benchmark interest rates drop, rupee closes flat

 
Benchmark interest rates fell for the second consecutive week while the rupee closed flat on light trading on Wednesday (26).

Treasury bill yields fell across all maturities at yesterday’s primary market auction where the Central Bank offered maturing bills amounting to Rs. 10 billion. Bids amounted to Rs. 36.3 billion of which Rs. 11.2 billion was accepted.

The three-month bill saw its yield ease to 11.30 percent from 11.41 percent a week earlier, down 11 basis points while the six-month yield dropped 34 basis points from last week to 12.57 percent. The 12-month bill saw its yield slip 28 basis points to 13.02 percent.

Meanwhile, the rupee closed flat against the US dollar after appreciating in previous sessions.

"The rupee closed flat against the greenback at Rs. 130.95-00 unchanged from its opening level of Rs. 130.95-05 in light trading. The highest trade for the day was at Rs. 131.05 and lowest was at Rs. 130.95," the Sri Lanka Forex Association said.

source - www.island.lk

Melstacorp completes Spence acquisition

Melstacorp Ltd. yesterday completed the acquisition of control of Aitken Spence by buying the remaining 6% stake held by Distilleries.

Spence saw 24.7 million of its shares traded for Rs. 3.04 billion, accounting for 71.4% of the day’s turnover. The counter closed at Rs. 130, up by 50 cents after hitting a peak of Rs. 132.

source - www.ft.lk

Capital Alliance to raise Rs. 73 m via Rights

Capital Alliance Finance (CALF) yesterday announced plans to raise Rs. 73 million via a one for seven Rights Issue at Rs. 15.00 per share to issue 4.8 million shares.

Funds raised via the move, which is subject to shareholder approval, will be utilised to abide by the Central Bank Minimum Core Capital requirement.

source - www.ft.lk

Wednesday, September 26, 2012

Market snapshot -26 09 2012

 



source - CAL Research


Sri Lankan stocks up on banks, turnover at 8-month high

(Reuters) - Sri Lankan stocks ended slightly firmer on Wednesday as investors picked up banking and diversified shares while block deals pushed turnovers to an eight-month high, dealers said, while the rupee firmed as banks sold dollars.

The Colombo Stock Exchange's main index, or all share price index (ASPI), ended 0.29 percent, or 17.47 points, higher at 5,943.76.

Conglomerate Aitken Spence PLC accounted for 72 percent of the day's turnover on a block deal and closed 0.39 percent firmer at 130 rupees a share.

"In terms of market trajectory, we expect the bourse to test the 6000 key resistance level next week although intermittent bouts of profit taking could result in temporary dislocations," DNH Financial in Colombo said in a note to investors.

The index rose 19 percent in 15 sessions through to Sept. 17 on hopes that a new Securities and Exchange Commission head would come up with ideas to revive the market, which is down 2.15 percent this year.

The bourse has been overbought since Aug. 28, Thomson Reuters data shows. The 14-day Relative Strength Index on Wednesday was at 83.073, well above the upper neutral range of 70.

Turnover on Wednesday was 4.26 billion rupees ($32.51 million), the highest since Jan. 26 and more than four times this year's daily average of 942 million rupees.

The bourse saw a net foreign inflow of 278 million rupees, extending the net foreign inflow this year to 30.63 billion rupees.

The rupee closed firmer at 130.90/131.00 to the dollar compared with Tuesday's close of 131.00/05 as banks bought rupees, dealers said. ($1 = 131.0250 Sri Lanka rupees) (Reporting by Ranga Sirilal; Editing by Frank Jack Daniel and Robert Birsel)

source - www.in.reuters.com

Aviva dips, NDB stocks’ rise persist

 
Investor interest continued on NDB Group stocks, pushing their prices further, whilst Aviva NDB Insurance ended its mini-rally yesterday.

 Aviva NDB Insurance saw around 35,000 of its shares traded hitting a peak of Rs. 435 before closing at Rs. 413.30, down by Rs. 23.30.


Some analysts linked it to Daily FT’s article yesterday, which said eventually the sale of Aviva from Sri Lanka to AIA will not trigger a mandatory offer, whilst others pinned it to profit taking. On Monday, Aviva NDB rose by 18%.

 On the other hand, NDB Capital (formerly CDIC), which is tipped to sell out of Aviva NDB’s holding company joint venture and thereby enjoy a hefty capital gain, yesterday peaked to Rs. 505 and closed at Rs. 499.60, up by Rs. 15.30 on a volume of 11,000 shares. This gain was on top of a 9% rise on Monday.

 Related party NDB saw around 650,000 of its shares trade hitting a high of Rs. 144 before closing at Rs. 143.30, up by Rs. 4.90.

source - www.ft.lk

Browns Group FY12 revenue tops Rs. 14 b

 
Browns Group has grown from strength to strength recording a 19% growth in revenue to Rs. 14.4 billion while profitability was also up by 6% for the year ended April 2012.

 Group Managing Director and CEO Murali Prakash stated, “The best performing sectors were agriculture, general trading, consumer, retail, plantation support services and power systems, all of which grew by 40% year on year. The company continued to dominate the market in several business segments holding either first or second place by market share.


These include batteries at 72% market share, power tools at 37%, generators at 30%, franking machines at 90%, four-wheel tractors at 60%, two-wheel tractors at 33%, radiators at 42%, marine engines at 32%, pet food at 29%, veterinary pharmaceuticals at 30%, plantation machinery at 50%, grinding wheels at 54% and office automation at 24%. The company also harnessed the benefits of continued investment over the past five years in maintaining market leadership position in several of its products.”

The company adopted a three-pronged strategy of consolidation, restructuring and strategic investment in emerging business areas or sunshine industries during the year. The company strengthened its brand portfolio, its distribution channels and invested in new markets such as the North and East of Sri Lanka in order to consolidate its market share and leadership position in several business segments. Browns also implemented the first phase of an enterprise Resource Planning (ERP) solution, which will integrate the different functions of the group.

  “Marketing is a hybrid function at Browns. Brand teams from both the corporate division of Browns and the strategic business units work together to align the different divisional brands with the parent brand. The company undertakes constant research to stay relevant to customers and meet their changing needs both through product expansion and by aligning existing products and services accordingly.”

 “All manufacturing operations are being relocated to a central hub in Pannala called Browns Industrial Park which allows the company to achieve greater synergies in terms of resource use and logistics, between the various manufacturing and assembly operations at Browns.” said Prakash.

 The company laid the groundwork for its foray into the healthcare sector with the acquisition of land in Kandy for secondary care general hospital. Several other key investments were made during the year through Browns Investments PLC, including the acquisition of Excel Global Holdings Ltd. and Ajax Engineering Ltd. and the construction of several new hotel projects.

 Speaking on the future of the company Prakash stated, “Browns will focus on expanding its presence in healthcare, leisure and real estate. With Sri Lankas’ rapidly aging population and increased incidence of non-communicable deceases brought about by affluence and lifestyle changes, the demand for private healthcare is expected to rise therefore Browns will further explore opportunities in the healthcare sector. The Browns Group has also invested in several hotel properties that will become operational in the medium term. Real Estate is another important growth area and the company will leverage on its existing assets as it has a relatively large bank of prime locations in the city and the suburbs. Development plans are being considered for these locations ranging from entertainment complexes to mixed development and housing projects.”

Browns is a diversified conglomerate with market leadership in seven key industry sectors and has over 200 service touch points Island-wide. Using their deep understanding of Sri Lankan consumer needs derived from over 135 years in business, Browns have grown quietly yet exponentially into the active and valuable company they are today – simply and unobtrusively by greatly expanding their portfolio and delivering excellence in products, services and value to Sri Lankans everywhere. – Browns A Heritage of Trust.

 The Brown & Company Board consist of Chairperson/Non-Executive Director R. L. Nanayakkara, Deputy Chairman/Non-Executive Director A. L. Devasurendra, Group Managing Director/CEO N. M. Prakash, Independent Non-Executive Director H. P. J. de Silva, Non-Executive Director I. C. Nanayakkara, Non-Executive Director S. V. Somasunderam, Non-Executive Director W. D. K. Jayawardena and Non-Executive Director K. U. Amarasinghe.

source - www.ft.lk

Institutional investors rush to Asiri Hospitals

Institutional investors were mostly rushing to pick up quantities of Asiri Hospital which dominated market’s turnover with a Rs. 186.5 million contribution yesterday.

Slightly over 16 million shares of Asiri Hospital Holdings Plc changed hands yesterday via 411 trades. The share closed up 30 cents to Rs. 11.40 after hitting a high of Rs. 12.

 The biggest buyer was National Equity Fund of NAMAL, estimated to have collected around 10 million shares for Rs. 115 million, whilst HNB Pension Fund bought five million shares for Rs. 23 million.

source - www.ft.lk

Bourse ticks up; rupee firmer

 
Reuters: Stocks ended slightly firmer on Tuesday as investors picked up banking shares, with foreign interest centred on blue chips, dealers said, while the rupee firmed on dollar sales by banks.

The Colombo Stock Exchange’s main index, or All Share Price Index (ASPI), ended 0.18%, or 10.39 points, higher at 5,926.29.

“The market is holding on, even though there is some retail selling, thanks to blue chips and foreign buying,” said a stockbroker who declined to be identified.

 The index rose 19% in 15 sessions through to 17 September on hopes that a new Securities and Exchange Commission Head would come up with ideas to revive the market, which is down 2.44% this year.

 The Bourse has been overbought since 28 August, Thomson Reuters data shows. The 14-day Relative Strength Index on Tuesday was at 82.488, well above the upper neutral range of 70.

 Turnover on Tuesday was Rs. 1.1 billion ($ 8.39 million) compared with this year’s daily average of Rs. 923 million.

 The Bourse saw a net foreign inflow of Rs. 190 million, extending the net foreign inflow this year to Rs. 30.35 billion.

 The rupee closed firmer at 131.00/05 to the dollar compared with Monday’s close of 131.03/08 as banks bought rupees, dealers said.

source - www.ft.lk

Economy to grow 6.8% in 2012, budget deficit off target – SCB research


* CB policies gain traction with BOP expected to improve, but global downturn poses risks

* Inflationary pressure dissipating, but likely to reach double digits

* Rupee to stabilise at Rs.130 against the dollar

* Less room for monetary easing



Standard Chartered Bank (SCB) says Sri Lanka’s economy would grow 6.8 percent this year but recover to 7.5 percent in 2013 while the budget deficit is expected to reach 7 percent of GDP this year, missing the 6.2 percent target set by the government. It also says there is limited scope for the Central Bank to ease its monetary policy stance this year while the rupee is expected to stabilise at around Rs. 130 against the dollar.

The economy is in fair shape, and policy measures appear to be gaining traction. Despite the external headwinds of slowing global demand and rising food prices, the economy is poised to achieve 6.8% growth in 2012, and we forecast that growth will pick up to 7.5% in 2013. We expect domestic activity to compensate for lower export growth in 2013.

Issuing a research report on Monday (24) titled ‘Standard Chartered Asia Focus: The resurgence’ the bank said: "We have revised our full-year 2012 growth forecast to 6.8% from 7.1%, with risks to the downside, to reflect the following factors: (1) The euro area, which accounts for c.30 of Sri Lanka’s exports, remains vulnerable to event risk and is expected to stay weak. (2) With reduced hydropower supply due to a drought, Sri Lanka has had to shift to higher-cost thermal power generation. (3) The drought has had a significant impact on agricultural output, destroying close to 50,000 hectares of rice, according to the Finance Ministry. This has resulted in increased subsidies, with LKR c.10bn allocated to drought relief for farmers. (4) We do not expect the 18% credit ceiling on banks’ lending, which has considerably slowed domestic consumption, to be lifted in the near term, as the central bank’s tight monetary policy stance is likely to prevail until inflation moderates."

Inflation…

SCB has revised up its average inflation forecast for 2012 to 7.7% from 7.2%, as its earlier forecast did not reflect the spike in June inflation to 9.3% (from 7.0% in May) resulting from drought-related supply-side constraints. Inflationary pressure seems to be dissipating, with the rate of food inflation declining due to improved supply from the north. However, the bank expects headline inflation to hover around double digits approaching the year-end, limiting the central bank’s scope for monetary easing to stimulate growth (unlike its regional counterparts). "However, we think a rate cut is likely in Q1-2013 as inflation moderates. We expect a cumulative 50bps of rate cuts next year, taking the repo rate to 7.25% by end-2013," SCB said.

BoP…

The balance of payments (BoP) is improving. The monthly trade deficit has been narrowing since December 2011 and is at its lowest level since February 2011 thanks to slower import growth. The Sri Lankan rupee (LKR) is stable at 132.0 versus the US dollar, and credit growth – at 31.6% y/y in June – is showing early signs of moderating. Credit flows to the manufacturing and agricultural sectors recorded significant declines in June. "These are clear signs that the central bank’s policy measures are gaining traction," SCB said.

"Export earnings contracted by 2.2% in H1-2012 to USD 4.9bn (compared with 35.1% y/y growth in H1-2011), and continue to fall due to faltering economic activity in the euro area. Lower apparel export earnings (c.40% of total export earnings) have been the main driver of this contraction, falling 1.6% y/y in H1-2012. We are also concerned about the contraction in imports of investment goods, as it likely signals a moderation in domestic investment and production – two key growth drivers.

"The authorities have allowed greater exchange rate flexibility, largely ceasing FX intervention. This has helped the foreign reserves to stabilise at USD 7.1bn (4.2 months of import cover) and curtail the trade deficit. Robust remittance inflows and tourism receipts are likely to continue and should help to narrow the current account deficit to 4.0% of GDP in 2013 from 6.1% in 2012. However, should the slowdown in global growth persist, this might pose further downside risk to exports. Steady capital inflows, government bond issuance, and further IMF support in the form of an Extended Fund Facility (still under negotiation) should help to finance the current account deficit and push the BoP further into surplus ;in 2013 (from an expected USD 0.9bn surplus in 2012)."
 
Fiscal consolidation

According to the Finance Ministry, policy adjustments implemented in H1-2012 (including an increase in import duties to curb demand for imported consumer goods and a reduction in fuel subsidies) and the re-prioritisation of development activities will allow the government to achieve its fiscal deficit target of 6.2% of GDP in 2012.

"However, we expect the authorities to overshoot this target," SCB said.

"We forecast a deficit of close to 7.0% due to losses at state owned enterprises (SOEs), electricity subsidies, and the impact of the drought. Fiscal consolidation may prove challenging in the near term given that growth is expected to slow in H2-2012 and tax collection on external trade has fallen short of targets. Higher interest payments and the increase in non-interest expenditure on wages and welfare spending this year have also contributed to fiscal slippage. In 2013, steps to reduce current expenditure, broaden the revenue base and improve the efficiency of SOEs will be needed to reduce public debt and keep the fiscal deficit within our forecast of 6.5% of GDP."

Rupee…

Given the improvements in the BoP due to slowing import growth and steady debt inflows, SCB remains optimistic on the USD-LKR and expect to see sustained appreciation. After heightened volatility when the central bank removed the USD-LKR trading band in February 2012, the LKR has now stabilised, and depreciated c.16% versus the USD in H1-2012.

It is clear that USD-LKR in the 130-132 range is within the central bank’s comfort level. Given that exports have contracted for the past four months, the weaker LKR should benefit exporters.

The sharper-than-expected slowdown in exports due to weak global growth has limited the positive impact of export earnings on the trade deficit and on the LKR.

"We are now less optimistic on the LKR over the medium term and have revised our USD-LKR forecast, expecting it to settle at around 130.0 in Q4-2012 (versus our previous forecast of 123.5). We expect USD-LKR to remain within the 130-132 range until end-2012, as export weakness is likely to prevail. We expect some appreciation pressure in 2013, taking USD-LKR to 126.5 by end-2013, due to a revival of risk appetite as global growth starts to pick up and amid prolonged USD weakness."

Monetary easing

"Two key drivers of the T-bond market – the CBSL’s hawkish monetary policy stance (in response to elevated inflation) and the government’s excess market borrowing have pushed the entire yield curve higher this year. The 4Y T-bond yield is c.420bps higher year-to-date in 2012," SCB said.

"However, the long end of the yield curve has stabilised over the past quarter, while the short end continues to harden on the back of tightening banking-system liquidity, flattening the yield curve. The 1Y/4Y spread has narrowed by c.50bps over the past quarter.

"Given the upward revision of our inflation forecasts for the remainder of 2012, we expect the central bank to maintain its anti-inflation stance via stable policy rates and tight banking system liquidity. We therefore revise up our forecasts for 1Y T-bill rates for Q3-2012 (by 75bps to 13.50%) and Q4-2012 (by 25bps to 13.25%).

"In 2013, we expect slowing growth to prompt a shift in the central bank’s focus from containing inflation to supporting growth, paving the way for mild monetary easing in H1-2013. Such easing would be supportive of T-bonds; in combination with expected fiscal consolidation (we forecast that the fiscal deficit will narrow to 6.5% of GDP in 2013 from 7.0% in 2012), this should trigger a reversal of the up-move in long-end yields. However, we believe the magnitude of the reversal will depend on the extent to which the government front-loads issuance," the bank said.

source - www.island.lk

Turnover tops a billion, all three indices up

NDB continues to gain but Aviva down

Turnover on the Colombo bourse yesterday topped the billion rupee mark and all three indices moved up – the All Share by 10.39 points (0.18%), the Milanka by 35.93 points (0.65%) and S&P by 6.19 points (0.19%) with 151 gainers comfortably ahead of 95 losers while 62 counters closed flat.

"Trading early in the day was relatively quiet but picked up later," a broker said adding that several block trades had contributed to business volumes. Turnover at Rs. 1.07 bn. was up from the previous day’s Rs. 749 million.

The day saw 0.26 million Sampath crossed at Rs.211 in a deal worth Rs.54.9 million, 12 million Asiri crossed at Rs.11.50 in two parcels of 10 million and 2 million each worth Rs.138 million and 5.6 million Dialog at Rs.9 in a......transaction worth Rs.50.4 million.

"Buying interest mainly centred on ASIR, JKH, DIAL, DIST, SAMP and NDB along with speculative activity on second tier counters pushed the indices higher amid healthy turnover levels," John Keells Stock Brokers said in a market report.

Foreigners remained net buyers with purchases at Rs. 221.78 mn. and sales of Rs. 31.79 mn. with an inflow of Rs. 189.99 mn.

NDB continued to attract sustained interest on expectations of the anticipated acquisition of Aviva NDB Insurance. NDB is the second biggest stakeholder in the insurance company in which Aviva holds the controlling share. A Hongkong based insurance giant is believed to be the likely buyer.

NDB gained a further Rs.4.60 yesterday closing at Rs.143 on nearly 0.7 million shares done between Rs.139 and Rs.144 contributing Rs.91.9 million to turnover. The counter hit its one year high of Rs. 144 yesterday.

However Aviva NDB Insurance was down Rs. 26.20 to Rs. 410 on 35,596 shares traded. The counter had gained sharply on news of a pending change of control but has since declined.

Dialog closed 40 cents up at Rs.9 on the trading floor with nearly 9.9 million shares traded between Rs.8.40 and Rs.9.40 contributing Rs.89.1 million to turnover while JKH, among the top favourites of foreign investors, was up Rs.1.50 to close at Rs.251.50 on 0.3 million shares traded on the floor between Rs.218.50 and Rs.221.90 generating a turnover of Rs.67.6 million.

Brokers said that Distilleries attracted heavy retail interest gaining Rs.5.60 to close at Rs.160.60 on over 0.2 million shares done between Rs.155 and Rs.160 contributing Rs.33.7 million to turnover.

Analysts noted that this counter was now close to its one year high of Rs.173.90 but commented that it had topped Rs.200 during the 2010 boom and thereafter slumped to a one year low of Rs.100.

Other stocks that interested retailers yesterday included NDB, Glass, up 40 cents to Rs.6.60 on over 9.9 million shares done between Rs.6.10 and Rs.6.70 generating Rs.63.9 million to turnover, Asiri Surgical up 30 cents to Rs.11.40 on over 4.2 million shares and Lanka Hospitals (Apollo) up Rs.1.20 to Rs.49.20 on nearly 0.6 million shares traded between Rs.46.60 and Rs.49.50 contributing Rs.26.9 million to turnover.

source - www.island.lk

Tuesday, September 25, 2012

Market snapshot -25 09 2012

 



source - CAL Research

Sri Lanka stocks closed up 0.18 pct


 
September 25, 2012 - (LBO) Sri Lanka stocks closed up 0.18 percent Tuesday with market interest in NDB Capital and several other blue chip companies.

 The Colombo All Share Index closed at 5,926.29 up 10.39 points and the S & P SL 20 Index closed 6.19 points higher at 3,201.10 up 0.19 percent.

 Turnover was 1,070.8 million rupees.

Top contributors to the day's turnover were Asiri Hospital Holdings with 186.58 million rupees, Dialog Axiata with 139.4 million rupees and National Development Bank with 91.9 million rupees.

 Most active counters for the day were Piramal Glass, Dialog Axiata and Trade Finance and Investments.

NDB Capital Holdings PLC gained 15.30 rupees to close at 499.60 rupees up 3.16 percent.

Aitken Spence PLC gained 1.70 rupees to close at 129.50 rupees up 1.33 percent.

Ceylon Tobacco Company PLC dropped 3.30 rupees to close at 696.30 rupees down 0.47 percent. The Distilleries Company of Sri Lanka PLC gained 5.60 rupees to close at 160.60 rupees up 3.61 percent.

Commercial Bank dropped 1.10 rupees to close at 113.90 rupees down 0.96 percent. DFCC Bank gained1.40 rupees to close at 120.20 rupees up 1.18 percent. Hatton National Bank PLC gained 0.20 cents to close at 164.20 rupees up 0.12 percent.

 Dialog Axiata gained 0.40 cents to close at 9.00 rupees up 4.65 percent. Index heavy John Keells Holdings gained 1.40 rupees to close at 221.40 up 0.64 percent.

source - www.lbo.lk

Aviva NDB Insurance, NDB Capital share prices soar on impending sale this week

The share price of Aviva NDB Insurance Plc yesterday soared to a record high as investors took speculative positions on the impending sale of its control.

The company’s stock price hit an all time high of Rs. 448.90 during the day before settling down at Rs. 436.60, up by a whopping Rs. 67 or 18% on a single session. At its intra-day peak the gain was Rs. 79.30 or 21.4%.

 Related party NDB Capital also saw its share price rise by Rs. 40 to record levels.

 Exit of Aviva from Sri Lankan operations has been widely speculated for several months now, but the share began to gain only of late, which analysts linked to negotiations nearing completion.

 Daily FT learns the deal will be announced this week though the company has been silent so far.

 Last week, also on speculation, Aviva NDB share price rose by Rs. 89.30 to Rs. 369.60 whilst it hit a 52-week high of Rs. 380 beating the previous best of Rs. 338. A mere 87,699 shares changed hands via 485 trades for Rs. 30 million whole of last week whereas yesterday’s value was Rs. 24 million.

 Analysts said that Aviva NDB price was on the up due to sentiments as sale of control in Lankan entity will not  trigger a mandatory offer. The reason being the control of Aviva (87%) is held by an unlisted entity Aviva NDN Holdings Lanka Ltd., a joint venture between Aviva and NDB Group.

 Aviva Asia Holdings own 58.4% stake in the JV whilst NDB Group’s NDB Capital (formerly CDIC) holds 41.6%. NDB Capital also separately holds 5% direct stake outside the JV.

 Public float of Aviva NDB is only 7.73% whilst there are 2,204 shareholders of whom 1,904 collectively hold a mere 1.69% or 0.5 million shares each below 1,000 and 249 shareholders owning 2% or 0.6 million.

 Aviva NDB share price closed the June quarter at Rs. 153 and yesterday’s peak price of Rs. 449 reflected a massive 193% increase within three months. As at 30 June 2012, net assets value per share was Rs. 11.45 at company level and Rs. 112.95 at Group level. Insurance businesses are sold on different valuation.

Also linked to the sale, NDB Capital saw its share price rise by Rs. 39.70 to Rs. 484.30, a new high whilst it peaked to an intra-day high of Rs. 500. Yesterday’s gain was after NDB Capital established a new high of Rs. 460 last week prior to closing at Rs. 444.60, up by Rs. 25. In the previous week ending 14 September, NDB Capital gained by only Rs. 5.90 to Rs. 419.80 whilst at that time, the 52-week highest was Rs. 448.

 NDB Capital will enjoy a hefty capital gain if it sells out of the insurance venture.

 Related party NDB shares too gained yesterday by Rs. 4.80 to close at Rs. 138.40 whilst it hit an intra-day high of Rs. 139.70 with 492,616 shares traded. Last week NDB share gained by only 70 cents whilst volume of shares traded was 473,164.

 In the first half Aviva NDB revenue was Rs. 5.8 billion, down from Rs. 6.96 billion, whilst net profit before tax was Rs. 163.3 million, marginally lower from Rs. 183.6 million in the first half of FY11, which had the benefit of a one-off gain. Its earnings per share was Rs. 5.44 down from Rs. 6.12 whilst dividend per share was Rs. 9.

 Assets of Aviva NDB as at 30 June 30, 012 was Rs. 37 billion at Group level and Rs. 36.8 billion at Company level. Liabilities amounted to Rs. 33.5 billion. Total equity was Rs. 3.38 billion inclusive of Rs. 3 billion in revenue reserves.
source - www.ft.lk

Nalaka sets record straight

 
SEC Chairman Dr. Nalaka Godahewa yesterday clarified that his only investments in listed companies were Colombo Land (1%) and George Steuart Finance (5%)and he would not be trading in either whilst in office.

“As part of best practices, I have taken a personal decision not to trade in shares during the time I hold office as Chairman SEC. I won’t sell my holdings in Colombo Land, whilst as a promoter shareholder, I am also locked in for one year with regard to George Steuart Finance,” Godahewa said.

In reference to the bizarre rise of the GSF share price, he also said that no one has control of the price of a share as it is determined by the market and sentiments. He also noted that value adduced to a person holding particular shares was only on paper.

“Prior to assuming duties as SEC Chairman, I have resigned from directorship of several companies (except Colombo Lana and Lanka Hospitals) and had divested shares which I could.”

On its debut, GSF which had a reference price of Rs. 20, peaked to Rs. 480 whilst last week it peaked to Rs. 1,500 before closing at Rs. 1,163.30, up by Rs. 700. Only around 200 shares of GSF have traded since debut a fortnight ago. Yesterday three shares traded before closing at Rs. 1,200.

 With a market capitalisation of Rs. 27 billion, GSF was ranked as the 18th most valuable, ahead of more established companies such as Aitken Spence Holdings, Hayleys, Chevron, NDB and others. At its peak of Rs. 1,500, the market cap of GSF was a staggering Rs. 33.75 billion, a value which Sampath Bank was yesterday.

 GSF, formerly Divasa Finance and Asia Commerce, had an asset base of Rs. 1.2 billion as at March 2012 and an operating profit of Rs. 37.3 million, whilst income was Rs. 185 million.

 Some market observers had dismissed the bizarre rise of GSF given the insignificant volume of shares traded as well as on the basis that it was merely sentiment-driven associated with a new listing rather than on fundamentals. Some viewed the rise as being on perceptions of future value given plans for expansion and synergies, though many disapproved this notion.

 GSF operates five offices, including branches in Kalutara, Negombo, Gampaha and Wennappuwa. It has selectively picked locations for branches based on the potential to increase the deposit portfolio.

New branches have significantly contributed to increase in business volumes with an increased clientele.

 Further, as a strategy and in line with the Central Bank requirement for a balanced dispersion of branch network, GSFL plans to concentrate on establishing new branches outside the Western Province in the future.

source - www.ft.lk

Investors welcome Cargill’s tie-up with TGI Friday’s

 
Investors reacted positively to Cargills (Ceylon) Plc’s last week’s announcement of its tie-up with world famous restaurant chain TGI Friday’s, with the former’s share price gaining by 2% or Rs. 2.90 to Rs. 158.90 after hitting an intra-day high of Rs. 159.

The counter saw 8.501 shares traded between a high of Rs. 159 and a low of Rs. 156.90 before closing at Rs. 158.90.

 As part of the market’s rebound last week Cargills hit a high of Rs. 175 but closed at Rs. 156, down by Rs. 15.40. In that context the gain yesterday, though modest, was welcome by analysts.

 In its announcement, which Daily FT reported on Saturday, Cargills said it had struck a deal to be TGI Friday’s exclusive franchise in Sri Lanka.

 TGI Friday is a member of the US-based Carlson Group.

 Cargills plans to open the first TGI Friday’s in Sri Lanka by the fourth quarter of FY13.

 Cargills Group also represents the other world famous restaurant chain, KFC, in Sri Lanka.

The Carlson Group operates over 900 TGI Friday’s restaurants around the world in over 60 countries. Carlson is a global hospitality company with presence in 150 countries, operating over 1,300 hotels including Radisson Blu, Radisson, Park Plaza, etc.

 Analysts expect the latest addition will further boost Cargill’s earnings from the restaurant business.

In the FY12, the existing restaurant business saw revenues grow by 24% to Rs. 1.38 billion, whilst profit before tax reached the Rs. 200 million mark, up by 26% over FY11. Profit after tax was Rs. 192 million, up by 54% and accounted for 18% of the Group figure, up from 12% in FY11.

“We are pleased at the rate of growth in turnover and profits in the restaurant sector which have exceeded our expectations year on year,” Cargills said, adding that in the year ahead it would be investing Rs. 434 million to maximise the growth opportunity in the restaurant segment.

 In the Annual Report for FY12, Cargills said the restaurant sector was on an upward trend with the Central Bank reporting 43% growth in private consumption expenditure in the Hotels, Cafes and Restaurants segment in 2010/2011. The spending on leisure and entertainment has also increased by 38.6% in the same period. The number of standalone casual and fine dining restaurants in Colombo City has increased steadily over the year while the semi-urban market is also seeking a more sophisticated dining experience that serves as an outing for the entire family.

 The sector is also benefitting from the increased number of tourist arrivals to the country. The 41% growth in arrivals in the year concluded also saw a shift to new markets from the traditionally strong Western Europe to India and Middle East. This has led to a rise in demand for off-premise restaurants that offer a variety of dining experiences outside the city hotels.

 During the year the KFC chain added three new restaurants to its fold taking the total count to 18 and retaining its leadership in the Quick-Service-Restaurant (QSR) category.

 Negombo, Katugastota and Jawatta outlets reported an excellent response from the local clientele. The new financial year would see it opening the KFC experience in Wattala, Marine Drive, Galle and Ratnapura.

 Cargills said KFC was now taking its concept well beyond the boundaries of the conventional metropolis to regional cities that are showing an increasing appetite for this novel dining experience.

 The response to its restaurants beyond Colombo has surpassed expectation and it has been encouraged to take KFC islandwide.

 The interiors of KFC are also seeing a rapid transformation with more exciting colour schemes and warm interiors, complete with a variety of zones for families and youth. In line with this all the new restaurants would be complete with family dining and play areas.

 KFC delivery has now launched its operation with the service available in all restaurant trade areas. The concept of dining-out at home is now a growing trend among busy middle class families and the KFC delivery service has been well received.

 Innovation continues to be the key strength of this sector. ‘Chicken Fried Rice’ was added on to the localised offering along with ‘Hot Wings’ that serves as a spicier and more locally appealing variant.

 It has also introduced the better-for-you Kentucky Grilled Chicken for health-conscious customers who enjoy the great taste of KFC. Currently testing at its QSR in Rajagiriya, the product has been well received.

 KFC has also introduced the exciting beverage range ‘Krushers’ to Sri Lanka. The foodie drink offering a unique taste sensation is available in three variants and is now the most popular beverage choice at its restaurants.

source - www.ft.lk

Shareholders approve Riverina, Palm amalgamation

Shareholders of Riverina Hotels Plc (RHL) and Palm Garden Hotels Plc (Palm) yesterday approved the amalgamation of the former with the latter.

 Following this development, trading in the shares of RHL will be suspended with effect from today.


Yesterday RHL share price rose by Rs. 11.70 to Rs. 96.70 whilst it hit an intra-day high of Rs. 104, around Rs. 21 short of its all time high. Nearly 143,000 shares of RHL traded.  Share price of PALM gained by Rs. 4.50 to close at Rs. 178.60 whilst it touched an intra-day high of Rs. 184. Last week it rose by Rs. 4.20.

  The number of issued shares in PALM will increase consequent upon the Registrar General of COmpanies (ROC) issuing the amalgamation certificate and the Colombo Stock Exchange granting a listing for the new shares.

 The date of amalgamation will be the date on which the ROC issues the certificate of amalgamation after which the shares of RHL will cease to exist.

source - www.ft.lk

Bourse edges up on telecoms, banks

Reuters: Sri Lankan stocks edged up Monday as investors picked up telecommunication and banking shares, while retail investors made speculative plays, dealers said.

The Colombo Stock Exchange’s main index, or all share price index (ASPI), ended 0.1%, or 5.83 points, firmer at 5,915.90.

 The index had risen 19% in 15 sessions through to Sept. 17 on hope that a newly appointed Securities and Exchange Commission head would come up with ideas to revive the market, which is down 2.61% this year.

 The bourse has been overbought since Aug. 28, Thomson Reuters data shows. The 14-day Relative Strength Index on Monday was at 93.857, well above the upper neutral range of 70.

 Turnover on Monday was 748.9 million Sri Lanka rupees ($5.70 million) compared with this year’s daily average of 923 million rupees.

 The bourse saw a net foreign inflow of 95.27 million rupees, extending the net foreign inflow this year to 30.16 billion rupees.

 The rupee closed firmer at 131.03/08 to the dollar compared with Friday’s close of 131.40/45 as banks bought rupees, dealers said.
source - www.ft.lk

Bourse makes sluggish start to the week

 
The Colombo bourse experienced some volatility before closing 0.10 percent higher on Monday recording a turnover of Rs. 749.1 million on a little over 31.8 million shares changing hands during the day.

"The bourse opened the week on a sluggish note," DNH Financial said.

The All Share Price Index closed 5.83 points higher at 5,915.90 while the S&P SL20 closed 0.53 percent higher, gaining 16.75 points to 3,194.91. The Milanka Price Index of more liquid stocks closed in the red, down 0.64 percent, losing 35.59 points to 5,498.72.

Earlier in the day, the ASPI had fallen to a low of 5,902.04 points.

"The indices ended on a mixed note amid lower activity levels with trades centred on banking, finance, beverage and tobacco counters accounting for a majority of the day’s turnover," John Keells Stockbrokers said.

There was a net foreign inflow of Rs, 87.35 million with purchases amounting to Rs. 257.08 million.

The biggest mover, SFCL (Senkadagala Finance) closed a sharp 150 percent higher gaining Rs. 30 to Rs. 50 on 100,000 shares changing hands during the day.

SMOT (Sathosa Motors) closed at Rs. 250, up 39.95 percent from the previous close on a volume of 1,595 shares.

CTCE (Aviva NDB Insurance) gained 18.12 percent to close at Rs. 440 with 57,664 changing hands.

CERA (Lanka Ceramic) closed 15.64 percent higher on just 31 shares at Rs. 71.90.

SIL (Samson International) fell 17.08 percent on just one share, closing at Rs. 92.20 while TANG (Tangerine Beach Hotels) closed 12 percent lower at Rs. 70.40 on two shares.

"We expect the market to trade sideways over the next few days with a generally upward bias although profit taking may result in intermittent downward pressure on the bourse. With the 3Q2012 corporate results in the offing, we advise investors to carefully select stocks that are likely to report healthy asset growth and sustainable earnings over a complete market cycle," DNH Financial said.

source - www.island.lk

Monday, September 24, 2012

UPDATE 1-Sri Lanka will cut spending to meet deficit target - top official

* Growth may fall to 6.5 percent - treasury secretary

* Sees inflation dropping below 9 percent after September

* September inflation data due on Friday

By Frank Jack Daniel

COLOMBO, Sept 24 (Reuters) - Sri Lanka will cut spending from the 2012 budget to keep the fiscal deficit to a targeted 6.2 percent, the treasury secretary said on Monday, adding that growth may fall as low as 6.5 percent this year because of a drought and the global slowdown.

By April this year, Sri Lanka's budget deficit was 285.8 billion rupees ($2.14 billion), almost 61 percent of the full-year goal of 468.9 billion rupees, raising concerns it may miss the target.

Treasury Secretary P.B. Jayasundera told Reuters in an interview non-essential expenditure would be rolled over to the next fiscal year with cuts possible in some farm programs.

"In agriculture, some of the programmes we projected for more normal weather conditions will not be implemented because of the conditions. It's that sort of adjustment that we will make," Jayasundera said. "There will be certain cuts."

"Other than the most important committed expenditure everything else will spill to the next year on a rollover basis."

Rising costs for imported fuel and higher interest rates put pressure on finances at the start of the year, but lower outgoings and back-loaded revenue will help keep the budget on track, Jayasundera said.

"The 6.2 percent deficit will be maintained."

Given the impact of the drought, and global economic uncertainty, Jayasundera lowered his forecast for Sri Lanka's growth to a range of 6.5 to 7 percent, and tended to the lower figure.

"I think it could be about 6.5 because 6.5 to 7 is very good growth considering all our major economies are slowing down."

The central bank has forecast 7.2 percent economic growth this year, after revising it down in March from an original 8 percent. Growth last year was a record 8.3 percent. Earlier this month, Jayasundera forecast a 6.7-7.2 percent range.

On Monday, he said inflation was likely to fall below 9 percent in coming months because of a slowdown in demand and credit growth.

"My gut feeling is inflation will slowly decline to about 9 percent and just below nine after September," he said.

Sri Lanka's inflation jumped to a 42-month high of 9.8 percent in July because of the drought and a weakening rupee, and was only slightly lower in August. September inflation figures are due on Friday. (Editing by Robert Birsel)

source -in.reuters.com

Market snapshot -24 09 2012

 



source - CAL Research

Malaysia: Rubber prices to extend strong performance next week

 
Rubber prices in Malaysia are expected to extend its strong performance with tyre-grade SMR 20 hovering between 850 sen and 900 sen per kg.

The strength can be attributed, to some extent, to initiatives by Malaysia and Indonesia to reduce production, a dealer said, adding that prices have been on an uptrend the last two weeks.

The market is hopeful the global economy would recover and, along with it, the demand for rubber.

“The rebound could only be halted and reversed if there are negative signs in the global economy,” he said, adding that there were still challenges in the path of economic recovery.

Throughout the week, rubber prices traded between 858 sen and 874 sen per kg in response to US Federal Reserve’s fresh monetary stimulus.

On a Friday-to-Friday basis, the Malaysian Rubber Board’s sellers official physical price for tyre-grade SMR 20 increased 32.5 sen to 874.5 sen per kg while latex-in-bulk rose 19.5 sen to 612.5 sen per kg.

The unofficial sellers’ closing price for tyre-grade SMR 20 rose 23.5 sen to 874.5 sen per kg and latex-in-bulk increased 16 sen to 615 sen per kg. — BERNAMA

source - rubbermarketnews.net