Mar 19, 2012 (LBO) - Sri Lankan shares closed barely changed Monday although foreign buying into a local conglomerate pushed turnover up over three billion rupees, brokers said.
The main All Share Price Index was stagnant at 5,449.46, while the more liquid Milanka index rose 0.51 percent (24.83) to close at 4,889.08.
Turnover was 3.1 billion rupees, according to stock exchange provisional figures.
A foreign investor bought a five percent stake in Aitken Spence, amounting to 20.5 million shares, from the Employees' Provident Fund, a state-managed retirement fund of private citizens.
The deal was done in three off-market deals totaling 2.36 billion rupees at 115 rupees a share.
Aitken Spence was the highest contributor to the daily turnover. Aitken Spence closed Monday at 116 rupees, up 80 cents.
The EPF on Friday had sold 71 million shares in another conglomerate, John Keells Holdings, to Malaysia's Khazanah Nasional Berhard.
John Keells Holdings closed Monday at 200 rupees, up 4.90 rupees.
Brokers Lanka Securities said foreign participation stood at 47.4 percent of the total market activity with foreign investors being net buyers with a net foreign inflow of 2.5 billion rupees.
source - www.lbo.lk
Monday, March 19, 2012
Sri Lanka Aitken Spence 5-pct stake bought by foreign investor
Mar 19, 2012 (LBO) - A five percents stake in Sri Lanka's Aitken Spence Plc was bought by a foreign buyer from the Employees' Provident Fund, a state-managed retirement fund of private citizens.
The EPF sold 20.5 million shares to a foreign party an official said without elaborating.
The deal was executed in three off-market deals totaling 2.36 billion rupees at 115 rupees.
The EPF on Friday sold 71 million shares in John Keells Holdings to Malaysia's Khazanah Nasional Berhard.
source - www.lbo.lk
The EPF sold 20.5 million shares to a foreign party an official said without elaborating.
The deal was executed in three off-market deals totaling 2.36 billion rupees at 115 rupees.
The EPF on Friday sold 71 million shares in John Keells Holdings to Malaysia's Khazanah Nasional Berhard.
source - www.lbo.lk
Khazana entry an all-round boost as net foreign inflow tops Rs. 17 b
The entry in to Sri Lanka by Malaysia’s sovereign wealth fund Khazanah Nasional Berhad via John Keells Holdings (JKH) is being hailed as a all round boost for the country, the Colombo stock market as well as the premier blue chip.
JKH which has many first to its credit is also the first stock on the Colombo Bourse to draw interest from a sovereign fund. Khazanah on Friday via its Special Purpose Vehicle (SPV) Broga Hill Investments Ltd., acquired an 8.85% stake in JKH for Rs. 14.5 billion. Of the stake, EPF sold 8.4% stake for Rs. 13.7 billion and the rest it collected from the market.
“Khazanah is a long term player and its entry and the mega investment is a vote of confidence on Sri Lanka, CSE and JKH,” analysts said. Khazanah, is estimated to be managing over $ 36 billion in assets. Among its investments are Malaysia’s telecom firm Axiata as well as financial services giant CMIB Group, which incidentally tied up with John Keells Stock Brokers. The Friday’s investment in JKH and the CIMB tie up aren’t related.
In a statement following the investment Khazanah’s Managing Director, Tan Sri Dato’ Azman Haji Mokhtar said: “The entry into JKH offers Khazanah and its group of companies opportunities to participate across a wide range of businesses where the JKH group is involved in.”
At the same time, it allows Khazanah to participate in Sri Lanka’s positive growth story, and is in line with our strategy of investing in the region.”
It also said Sri Lanka has already been a positive experience for Khazanah’s investee companies. Axiata’s subsidiary, Dialog, is the largest mobile telephony player in Sri Lanka, while CIMB Group has established an investment banking joint venture in the country.
“Sri Lanka is currently experiencing a strong economic revival post-conflict as evidenced by recent economic growth of about 8% per annum,” the Khazana’s statement added. Central Bank last week however downgraded 2012 GDP growth forecast to 7.2%.
Analysts said that entry of Khazanah could also trigger interest by Singapore Government investment firm Temasek. There was talk that Temasek was originally keen to buy a big block in JKH but following the introduction of the Revival or Expropriation Bill, it backed out.
The investment by Khazanah saw the year to date net foreign inflow top Rs. 17 billion mark. This has boosted sentiments of broker who viewed it as a major plus for Colombo Bourse reversing fortunes after suffering net outflow between 2009 and 2011. The year to date net inflow of $ 146 million is almost close to $ 168 million net outflow figure of 2011 whilst in 2010 it was $ 240 million.
“We strongly believe that if the market can witness massive foreign inflows, the much expected Bull Run could easily be achieved in near future,” Asia Wealth Management said. Apart from bringing in much needed dollar inflow to the economy, Asia Wealth put Khazanah’s investment in context saying it took place despite the adversities in the current economic sphere and negative ambiance placed over human rights issues by UN Human Rights Council.
There was speculation that Khazanah could be having an appetite for more of JKH but couldn’t be confirmed.
Some expressed concerns over EPF’s sell out. “EPF may have booked hefty capital gains and the sale has brought in much needed foreign funds but when a foreign fun exits usually EPF or some other local fund buys back at a premium which ultimately results in outflow,” they added. However other analysts dismissed this view as subjective and not the case always.
Whilst the foreign interest is a major boost, Colombo Bourse continues to struggle with year to date negative return remaining at 10% level. After being world’s most consistent best performer for 2009 and 2010, CSE is currently the worst performer. On the other hand the MSCI’s Asia Pacific index excluding Japan has so far gained by over 13%.
Reuters quoting unnamed analysts reported on Friday that foreign investors still see the market as overheated, and have also been discouraged from investing by lack of liquidity, insider trading, and market manipulation, mainly driven by local retail investors.
DNH Financial said on dollar terms Colombo was the worst performer down 19% year to date. However it emphasised there still remains strong opportunity.
“Despite the country’s robust macro-economics, it is very disappointing to note that the Sri Lanka bourse has significantly underperformed all global markets this year and is currently the worst performing equity market in the world, down 19%YTD in dollar terms,” DNH said.
“While most market commentators have cited no credible reason for the market’s decline, we believe that it is purely a matter of negative sentiment that has stifled investment flows into the bourse over the last couple of months, while in contrast, foreign investors have been cherry picking investments in blue chip counters. Consequently, we believe the biggest risk to the bourse now is not one of fundamentals but that of negative sentiment that is denting performance and barring the market from re-rating to higher levels,” DNH stressed.
Khazanah is the strategic investment fund of the Government of Malaysia entrusted to hold and manage the commercial assets of the Government and to undertake strategic investments. Khazanah is involved in various sectors such as power, telecommunications, banking, airport management, infrastructure, property development, broadcasting, semiconductor, steel production, electronics, investment holding, technology and venture capital. Some of the key listed companies in Khazanah’s investment portfolio include Telekom Malaysia Berhad, Tenaga Nasional Berhad, CIMB Group, Malaysia Airlines System Berhad, Malaysia Airport Holdings Berhad, UEM Land Holdings Berhad, Axiata Group Berhad and Time dotCom Berhad.
Khazanah made a total of 13 investments amounting to RM5.8 billion (Rs. 238 billion) in 2011 and eight divestments that brought in proceeds of RM7.7 billion, generating gains amounting to RM2.0 billion. In total between 2004 and 2011, Khazanah has made 89 investments worth RM45.5 billion and 45 divestments valued at RM31.7 billion, recording gains on divestments of RM13.6 billion. One Malaysian Ringgit is Rs. 41.
The JKH group has business interests in several key sectors of the Sri Lankan economy including tourism, transportation, leisure and tourism, property, retail and financial services.
source - www.ft.lk
JKH which has many first to its credit is also the first stock on the Colombo Bourse to draw interest from a sovereign fund. Khazanah on Friday via its Special Purpose Vehicle (SPV) Broga Hill Investments Ltd., acquired an 8.85% stake in JKH for Rs. 14.5 billion. Of the stake, EPF sold 8.4% stake for Rs. 13.7 billion and the rest it collected from the market.
“Khazanah is a long term player and its entry and the mega investment is a vote of confidence on Sri Lanka, CSE and JKH,” analysts said. Khazanah, is estimated to be managing over $ 36 billion in assets. Among its investments are Malaysia’s telecom firm Axiata as well as financial services giant CMIB Group, which incidentally tied up with John Keells Stock Brokers. The Friday’s investment in JKH and the CIMB tie up aren’t related.
In a statement following the investment Khazanah’s Managing Director, Tan Sri Dato’ Azman Haji Mokhtar said: “The entry into JKH offers Khazanah and its group of companies opportunities to participate across a wide range of businesses where the JKH group is involved in.”
At the same time, it allows Khazanah to participate in Sri Lanka’s positive growth story, and is in line with our strategy of investing in the region.”
It also said Sri Lanka has already been a positive experience for Khazanah’s investee companies. Axiata’s subsidiary, Dialog, is the largest mobile telephony player in Sri Lanka, while CIMB Group has established an investment banking joint venture in the country.
“Sri Lanka is currently experiencing a strong economic revival post-conflict as evidenced by recent economic growth of about 8% per annum,” the Khazana’s statement added. Central Bank last week however downgraded 2012 GDP growth forecast to 7.2%.
Analysts said that entry of Khazanah could also trigger interest by Singapore Government investment firm Temasek. There was talk that Temasek was originally keen to buy a big block in JKH but following the introduction of the Revival or Expropriation Bill, it backed out.
The investment by Khazanah saw the year to date net foreign inflow top Rs. 17 billion mark. This has boosted sentiments of broker who viewed it as a major plus for Colombo Bourse reversing fortunes after suffering net outflow between 2009 and 2011. The year to date net inflow of $ 146 million is almost close to $ 168 million net outflow figure of 2011 whilst in 2010 it was $ 240 million.
“We strongly believe that if the market can witness massive foreign inflows, the much expected Bull Run could easily be achieved in near future,” Asia Wealth Management said. Apart from bringing in much needed dollar inflow to the economy, Asia Wealth put Khazanah’s investment in context saying it took place despite the adversities in the current economic sphere and negative ambiance placed over human rights issues by UN Human Rights Council.
There was speculation that Khazanah could be having an appetite for more of JKH but couldn’t be confirmed.
Some expressed concerns over EPF’s sell out. “EPF may have booked hefty capital gains and the sale has brought in much needed foreign funds but when a foreign fun exits usually EPF or some other local fund buys back at a premium which ultimately results in outflow,” they added. However other analysts dismissed this view as subjective and not the case always.
Whilst the foreign interest is a major boost, Colombo Bourse continues to struggle with year to date negative return remaining at 10% level. After being world’s most consistent best performer for 2009 and 2010, CSE is currently the worst performer. On the other hand the MSCI’s Asia Pacific index excluding Japan has so far gained by over 13%.
Reuters quoting unnamed analysts reported on Friday that foreign investors still see the market as overheated, and have also been discouraged from investing by lack of liquidity, insider trading, and market manipulation, mainly driven by local retail investors.
DNH Financial said on dollar terms Colombo was the worst performer down 19% year to date. However it emphasised there still remains strong opportunity.
“Despite the country’s robust macro-economics, it is very disappointing to note that the Sri Lanka bourse has significantly underperformed all global markets this year and is currently the worst performing equity market in the world, down 19%YTD in dollar terms,” DNH said.
“While most market commentators have cited no credible reason for the market’s decline, we believe that it is purely a matter of negative sentiment that has stifled investment flows into the bourse over the last couple of months, while in contrast, foreign investors have been cherry picking investments in blue chip counters. Consequently, we believe the biggest risk to the bourse now is not one of fundamentals but that of negative sentiment that is denting performance and barring the market from re-rating to higher levels,” DNH stressed.
Khazanah is the strategic investment fund of the Government of Malaysia entrusted to hold and manage the commercial assets of the Government and to undertake strategic investments. Khazanah is involved in various sectors such as power, telecommunications, banking, airport management, infrastructure, property development, broadcasting, semiconductor, steel production, electronics, investment holding, technology and venture capital. Some of the key listed companies in Khazanah’s investment portfolio include Telekom Malaysia Berhad, Tenaga Nasional Berhad, CIMB Group, Malaysia Airlines System Berhad, Malaysia Airport Holdings Berhad, UEM Land Holdings Berhad, Axiata Group Berhad and Time dotCom Berhad.
Khazanah made a total of 13 investments amounting to RM5.8 billion (Rs. 238 billion) in 2011 and eight divestments that brought in proceeds of RM7.7 billion, generating gains amounting to RM2.0 billion. In total between 2004 and 2011, Khazanah has made 89 investments worth RM45.5 billion and 45 divestments valued at RM31.7 billion, recording gains on divestments of RM13.6 billion. One Malaysian Ringgit is Rs. 41.
The JKH group has business interests in several key sectors of the Sri Lankan economy including tourism, transportation, leisure and tourism, property, retail and financial services.
source - www.ft.lk
Govt bullish on US$ 500 m foreign equity target for capital market - CB Governor
* Khazanah deal has triggered positive foreign fund manager sentiment
By Ravi Ladduwahetty
The Government is extremely bullish in its target of UD$ 500 million in foreign investment flows into the Colombo Stock Market, which it expects to be a reality before end 2012.
The Central Bank announced in its road map that it has targeted US$ 500 million in terms of inflows from Foreign Fund Managers into the Colombo Stock Exchange and out of which there has been around US$ 140 million through the just concluded Khazanah Fund of Malaysia deal with John Keells Holdings PLC which yielded around US$ 120 million as well as others who accounted for another US$ 20 million, Central Bank Governor Ajith Nivard Cabraal told The Island Financial Review yesterday He also said that there was lots of foreign interest in the equity market which also meant that there was lots of scope for the development of the market with top blue chip corporate reporting excellent earnings and growth prospects which has been triggered from last Friday’s deal which was also the second largest ever transaction which crossed the floor of the Colombo Stock Exchange as well.
There has been a lot of inflows into various market portfolios and foreign fund managers are seeing value in the market with excellent growth prospects,
Meanwhile, John Keells Stockbrokers CEO Thivanka Ratnayaka said that the interest shown by the foreign fund managers following the Khazanah acquisition of John Keells Holdings PLC was an ongoing process of value based positions which was very encouraging.
The interest is on right now despite their were no specific transactions on at the moment, he said, adding that JKSB were putting the finishing touches to the Kazanah deal.
Top market sources also said that the government should also get Singapore’s Temasek, the Singaporean government ‘s investment arm to invest in the Colombo Stock Exchange in the wake of the success in the Khazanah deal and also the Templeton Fund of Mark Mobius and the world’s biggest equity investment portfolio – Berkshire Hathaway of business magnate Warren Buffet here as the returns that he reaped was less than 20% since the crash of the US economy in 2008.
Of the other foreign fund managers – JP Morgan, has also opened a Colombo office and has recently bought into Expo Lanka as well. There is also the Aberdeen Fund and the CF Ruffer Fund of the UK which are already in Sri Lanka, the latter which has been acquired by CT Capital.
source - www.island.lk
By Ravi Ladduwahetty
The Government is extremely bullish in its target of UD$ 500 million in foreign investment flows into the Colombo Stock Market, which it expects to be a reality before end 2012.
The Central Bank announced in its road map that it has targeted US$ 500 million in terms of inflows from Foreign Fund Managers into the Colombo Stock Exchange and out of which there has been around US$ 140 million through the just concluded Khazanah Fund of Malaysia deal with John Keells Holdings PLC which yielded around US$ 120 million as well as others who accounted for another US$ 20 million, Central Bank Governor Ajith Nivard Cabraal told The Island Financial Review yesterday He also said that there was lots of foreign interest in the equity market which also meant that there was lots of scope for the development of the market with top blue chip corporate reporting excellent earnings and growth prospects which has been triggered from last Friday’s deal which was also the second largest ever transaction which crossed the floor of the Colombo Stock Exchange as well.
There has been a lot of inflows into various market portfolios and foreign fund managers are seeing value in the market with excellent growth prospects,
Meanwhile, John Keells Stockbrokers CEO Thivanka Ratnayaka said that the interest shown by the foreign fund managers following the Khazanah acquisition of John Keells Holdings PLC was an ongoing process of value based positions which was very encouraging.
The interest is on right now despite their were no specific transactions on at the moment, he said, adding that JKSB were putting the finishing touches to the Kazanah deal.
Top market sources also said that the government should also get Singapore’s Temasek, the Singaporean government ‘s investment arm to invest in the Colombo Stock Exchange in the wake of the success in the Khazanah deal and also the Templeton Fund of Mark Mobius and the world’s biggest equity investment portfolio – Berkshire Hathaway of business magnate Warren Buffet here as the returns that he reaped was less than 20% since the crash of the US economy in 2008.
Of the other foreign fund managers – JP Morgan, has also opened a Colombo office and has recently bought into Expo Lanka as well. There is also the Aberdeen Fund and the CF Ruffer Fund of the UK which are already in Sri Lanka, the latter which has been acquired by CT Capital.
source - www.island.lk
Colombo worst hit exchange among frontier markets
* Huge JKH deal gives EPF Rs. 800mn capital gain, but only time will tell whether the exchange would recover
The Colombo Stock Exchange is the worst hit among frontier markets and only time will tell whether or not the huge Rs. 14.5 billion trade last Friday involving the sale of JKH shares held by the EPF to a Malaysian government controlled fund, Khazanah, would uplift sentiments as the high of cost credit hold back speculators.
Central Bank Governor Ajith Nivard Cabraal told The Sunday Island that the capital gain from the transaction was around Rs. 800 million.
"As retails go into hibernation, the institutional market has to become very active this year. On Friday the 16th the Malaysian Sovereign wealth fund made a massive purchase of JKH showing confidence in the Sri Lankan economy. The foreign interest being generated this year is a positive sign for the larger economy; however we are yet to see this positive move flow into the speculators who are most likely being held back by the higher cost of credit," Bartleet Religare Securities (BRS) said.
"The Colombo Stock Exchange has lost 10% YTD. It has lost 19% YTD when taking the currency into consideration which has depreciated to 125 to date from 114 this year against the USD. This puts CSE amongst the worst hit exchanges in the frontier markets group. Other markets such as Vietnam and Pakistan have gained 24% and 18 % YTD respectively along with other global indices which seems to be more correlated with global affairs. This makes Sri Lanka an interesting opportunity for global value investors who seek alpha. According to Bloomberg the Sri Lankan markets is now trading at 11.50 which is in aligned with the SP Asia 50 index which is currently trading at a multiple of 11.13.
Other markets are trading at much higher multiples.
"The ASPI has been trading in a range of 5,000 and 5,650. Since the downfall of the market in February 2011 we are yet to experience a solid bear market rally. The market has made a temporary bottom at 5,000 for now and a bear market rally at these present levels could be in the cards. This would take the index towards 6,200. On the downside however if we continue to see selling pressure we are likely to break 5,000 and head towards 4,400 the market’s 200 weekly moving average. We are correctly going through a period of consolidation and the market is yet to decide which way it wants to go," BRS said.
source - www.island.lk
The Colombo Stock Exchange is the worst hit among frontier markets and only time will tell whether or not the huge Rs. 14.5 billion trade last Friday involving the sale of JKH shares held by the EPF to a Malaysian government controlled fund, Khazanah, would uplift sentiments as the high of cost credit hold back speculators.
Central Bank Governor Ajith Nivard Cabraal told The Sunday Island that the capital gain from the transaction was around Rs. 800 million.
"As retails go into hibernation, the institutional market has to become very active this year. On Friday the 16th the Malaysian Sovereign wealth fund made a massive purchase of JKH showing confidence in the Sri Lankan economy. The foreign interest being generated this year is a positive sign for the larger economy; however we are yet to see this positive move flow into the speculators who are most likely being held back by the higher cost of credit," Bartleet Religare Securities (BRS) said.
"The Colombo Stock Exchange has lost 10% YTD. It has lost 19% YTD when taking the currency into consideration which has depreciated to 125 to date from 114 this year against the USD. This puts CSE amongst the worst hit exchanges in the frontier markets group. Other markets such as Vietnam and Pakistan have gained 24% and 18 % YTD respectively along with other global indices which seems to be more correlated with global affairs. This makes Sri Lanka an interesting opportunity for global value investors who seek alpha. According to Bloomberg the Sri Lankan markets is now trading at 11.50 which is in aligned with the SP Asia 50 index which is currently trading at a multiple of 11.13.
Other markets are trading at much higher multiples.
"The ASPI has been trading in a range of 5,000 and 5,650. Since the downfall of the market in February 2011 we are yet to experience a solid bear market rally. The market has made a temporary bottom at 5,000 for now and a bear market rally at these present levels could be in the cards. This would take the index towards 6,200. On the downside however if we continue to see selling pressure we are likely to break 5,000 and head towards 4,400 the market’s 200 weekly moving average. We are correctly going through a period of consolidation and the market is yet to decide which way it wants to go," BRS said.
source - www.island.lk
Sunday, March 18, 2012
Sri Lanka consumer durable firm in bicycle push
Mar 18, 2012 (LBO) - Singer (Sri Lanka) Plc, a listed consumer durables distributor which 22 billion rupees in revenues in 2011 said it has seen strong sales of bicycles in former war-torn areas, where the product has been traditionally popular.
Singer sells 'Lumala' branded vehicles through its distribution network, which grew in 2011, the company told shareholders in the annual report.
"This was growth was experienced due to high concentration in the Northern and Eastern provinces," the firm said.
"We expect this growth to continue in the future years too. The major contribution is from models Lumala Ladies bicycles and Lumala Standard bicycles."
Ladies in areas like Jaffna has traditionally used bicycles. Since the end of a war in 2009 however they have started to use motorized scooter, a key form of transport for ladies in many emerging East Asian countries.
Singer said its motor cycle sales was below expectations because their Indian supplier, Kinetic closed down.
"However the company is expecting to revive the motor cycle product categoty in 2012 by introducing Singer branded mopeds and scooter of 80 cc (cubic centimeter engine capacity), 100 cc and 125 cc and 90cc super cubs," the firm said.
"Arrangements in this regard have already been initiated."
source - www.lbo.lk
Singer sells 'Lumala' branded vehicles through its distribution network, which grew in 2011, the company told shareholders in the annual report.
"This was growth was experienced due to high concentration in the Northern and Eastern provinces," the firm said.
"We expect this growth to continue in the future years too. The major contribution is from models Lumala Ladies bicycles and Lumala Standard bicycles."
Ladies in areas like Jaffna has traditionally used bicycles. Since the end of a war in 2009 however they have started to use motorized scooter, a key form of transport for ladies in many emerging East Asian countries.
Singer said its motor cycle sales was below expectations because their Indian supplier, Kinetic closed down.
"However the company is expecting to revive the motor cycle product categoty in 2012 by introducing Singer branded mopeds and scooter of 80 cc (cubic centimeter engine capacity), 100 cc and 125 cc and 90cc super cubs," the firm said.
"Arrangements in this regard have already been initiated."
source - www.lbo.lk
Sri Lanka’s Post-War Economic Miracle Sours
Colombo. Sri Lanka’s president began his second term vowing an economic miracle after decades of conflict, but the post-war boom is already fraying, putting his record on economic management to the test.
Mahinda Rajapakse launched his second six-year term in 2010 promising to turn Sri Lanka into the “wonder of Asia” by doubling GDP per capita income to $4,000 by 2014.
After the end of the island’s civil war in 2009, brought about by an army onslaught that is dogged by war crime allegations, Sri Lanka reaped a peace dividend that has seen some of the fastest development in Asia.
But now, less than three years later, the government must tackle a ballooning trade deficit, a falling currency, and discontent about rising living costs after huge hikes in fuel and electricity prices.
“Right now our problem is the trade deficit,” Sri Lanka’s Economic Development Minister Basil Rajapakse said last week. “In fact, I would say it is our only problem.”
The government has allowed the rupee to depreciate and slapped credit ceilings on commercial banks to discourage loans that could fuel further imports.
Last year’s trade deficit hit nearly $10 billion, or a fifth of the country’s GDP, imposing a massive strain on the country’s dwindling foreign reserves and hurting the island’s credit-worthiness.
Rajapakse’s former Foreign Minister Mangala Samaraweera accuses the administration of “mismanagement and corruption” for the economic woes, which has seen the currency weaken 10 percent against the dollar this year.
“The looming economic crisis is not something that happened suddenly,” says Samaraweera, an MP from the opposition United National Party. “It’s the result of mismanagement and corruption in the past five to six years.”
The Colombo Stock Exchange, which doubled in value in 2010 and was Asia’s best performer, has slid this year, shedding 10 percent of its value.
Sri Lanka’s former central bank deputy governor W. A. Wijewardena believes the economy is in trouble despite an official 7.2 percent growth forecast for 2012.
He says the balance of payments issue will have a knock-on effect on Sri Lanka’s ability to service its large commercially raised foreign debt, the value of the local currency and domestic prices.
Sri Lanka needs to borrow heavily to finance the trade deficit and repay debt, which could push the country into a vicious debt cycle, experts warn. The government has insisted, however, that it does not risk a sovereign default.
The government raised fuel prices by up to 49 percent and electricity by 40 percent last month, blaming the move on surging global crude prices.
Several public demonstrations against the rising living costs in the island’s south last month were brutally put down by police, with at least one demonstrator killed during anti-government riots.
The need for increasing prices “had been felt by the economy for a long time and the problem had accumulated to an explosive level,” Wijewardena said.
The Center for Policy Alternatives, a think tank in Colombo, says the government is likely to try to mask domestic economic problems with anti-Western rhetoric.
“The government has already organized anti-Western demonstrations to divert attention,” said the center’s director, Paikiasothy Saravanamuttu. “But they won’t be able to do it for long because people are feeling the pinch.”
source - www.thejakartaglobe.com
Mahinda Rajapakse launched his second six-year term in 2010 promising to turn Sri Lanka into the “wonder of Asia” by doubling GDP per capita income to $4,000 by 2014.
After the end of the island’s civil war in 2009, brought about by an army onslaught that is dogged by war crime allegations, Sri Lanka reaped a peace dividend that has seen some of the fastest development in Asia.
But now, less than three years later, the government must tackle a ballooning trade deficit, a falling currency, and discontent about rising living costs after huge hikes in fuel and electricity prices.
“Right now our problem is the trade deficit,” Sri Lanka’s Economic Development Minister Basil Rajapakse said last week. “In fact, I would say it is our only problem.”
The government has allowed the rupee to depreciate and slapped credit ceilings on commercial banks to discourage loans that could fuel further imports.
Last year’s trade deficit hit nearly $10 billion, or a fifth of the country’s GDP, imposing a massive strain on the country’s dwindling foreign reserves and hurting the island’s credit-worthiness.
Rajapakse’s former Foreign Minister Mangala Samaraweera accuses the administration of “mismanagement and corruption” for the economic woes, which has seen the currency weaken 10 percent against the dollar this year.
“The looming economic crisis is not something that happened suddenly,” says Samaraweera, an MP from the opposition United National Party. “It’s the result of mismanagement and corruption in the past five to six years.”
The Colombo Stock Exchange, which doubled in value in 2010 and was Asia’s best performer, has slid this year, shedding 10 percent of its value.
Sri Lanka’s former central bank deputy governor W. A. Wijewardena believes the economy is in trouble despite an official 7.2 percent growth forecast for 2012.
He says the balance of payments issue will have a knock-on effect on Sri Lanka’s ability to service its large commercially raised foreign debt, the value of the local currency and domestic prices.
Sri Lanka needs to borrow heavily to finance the trade deficit and repay debt, which could push the country into a vicious debt cycle, experts warn. The government has insisted, however, that it does not risk a sovereign default.
The government raised fuel prices by up to 49 percent and electricity by 40 percent last month, blaming the move on surging global crude prices.
Several public demonstrations against the rising living costs in the island’s south last month were brutally put down by police, with at least one demonstrator killed during anti-government riots.
The need for increasing prices “had been felt by the economy for a long time and the problem had accumulated to an explosive level,” Wijewardena said.
The Center for Policy Alternatives, a think tank in Colombo, says the government is likely to try to mask domestic economic problems with anti-Western rhetoric.
“The government has already organized anti-Western demonstrations to divert attention,” said the center’s director, Paikiasothy Saravanamuttu. “But they won’t be able to do it for long because people are feeling the pinch.”
source - www.thejakartaglobe.com
EPF books Rs. 800 mn. capital gain selling JKH stake
The Employees Provident Fund has booked a capital gain of around Rs.800 million by selling off its 8.85% stake in John Keells Holdings to Malaysia’s Khazanah Nasional Bhd, for Rs.14.5 billion paying Rs.194 per share in the second biggest deal ever done on the Colombo Stock Exchange.
"I haven’t got the final figures yet but it’s around Rs. 800 million." Central Bank Governor Ajit Nivard Cabraal said yesterday. "The EPF held the shares for about four years with the bigger quantities held for around two years. In addition to the capital gain, the fund enjoyed dividends and made trading profits on the share."
The Governor said that the buyer which is the Malaysian Government’s investment arm has financial muscle similar to that of Singapore’s Temasek Holdings and was almost a replica of Temasek. Khazanah is chaired by Malaysia’s Prime Minister.
"The entry into JKH offers Khazanah and its group of companies opportunities to participate across a wide range of businesses where the JKH group is involved in. At the same time, it allows Khazanah to participate in Sri Lanka’s positive growth story, and is in line with our strategy of investing in the region," Khazanah managing director, Tan Sri Azman Mokhtar said in a statement on Friday.
Malaysia’s CIMB group with which John Keells Stockbrokers recently tied up is 32% owned by Khazanah. CIMB and Bank of America Merrill Lynch were joint advisors to Khazanah on Friday’s deal which was second in size only to the acquisition of a major slice of Sri Lanka Telecom by Malaysia’s Maxis group.
The Business Times in Kuala Lumpur yesterday reported the deal saying that Sri Lanka is currently experiencing a strong economic revival as evidenced by recent economic growth of about 8% a year.
Cabraal said that Khazanah buying into JKH was a vote of confidence on Sri Lanka internationally and would send a very good signal to other global investors. Business leaders concurred with this view.
Foreign interest in Sri Lanka’s stock market was lacking last year, analysts noted. However, the picture has changed this year with several interested investors looking at possibilities.
Khazanah’s Azman said that Sri Lanka has been a ``positive experience" to companies in which the Malaysian Fund has invested. He noted that Dialog Axiata group in which Khazanah held a stake was the largest mobile telephony player here. The CIMB group has an investment banking joint venture in Sri Lanka.
Earlier this month, CIMB entered into a strategic collaboration with JKH’s stock broking unit, John Keells Stockbrokers (Pvt) Ltd.. to promote and facilitate trading on the Colombo Stock Exchange (CSE) and provide co-branded research for JKSB clients.
The Business Times (of Malaysia) said that Khazanah’s entry into JKH was through its special purpose vehicle Global Hill Investments Limited.
The deal has been under discussion for about six months and has been concluded at a price considerably higher than the Rs.160 level at which JKH was traded earlier this year. Many investors sensing that the EPF may book a capital gain on its JKH stake bought into the company expecting an upward movement in the JKH share price.
Mr. Sohli Captain remains the top shareholder of JKH with 13.7% with Paints and General Industry controlled by him holding 3.9% and other connected parties hold up to another 3.2% according to JKH’s interim report covering the nine months ended December 31.
Khazanah will now become the third biggest shareholder of the blue chip conglomerate behind Captain and Janus Overseas Fund which owns 10.3%. Janus Aspen Overseas Portfolio Fund connected to Janus Overseas Fund owns 2.3%.
source - www.island.lk
"I haven’t got the final figures yet but it’s around Rs. 800 million." Central Bank Governor Ajit Nivard Cabraal said yesterday. "The EPF held the shares for about four years with the bigger quantities held for around two years. In addition to the capital gain, the fund enjoyed dividends and made trading profits on the share."
The Governor said that the buyer which is the Malaysian Government’s investment arm has financial muscle similar to that of Singapore’s Temasek Holdings and was almost a replica of Temasek. Khazanah is chaired by Malaysia’s Prime Minister.
"The entry into JKH offers Khazanah and its group of companies opportunities to participate across a wide range of businesses where the JKH group is involved in. At the same time, it allows Khazanah to participate in Sri Lanka’s positive growth story, and is in line with our strategy of investing in the region," Khazanah managing director, Tan Sri Azman Mokhtar said in a statement on Friday.
Malaysia’s CIMB group with which John Keells Stockbrokers recently tied up is 32% owned by Khazanah. CIMB and Bank of America Merrill Lynch were joint advisors to Khazanah on Friday’s deal which was second in size only to the acquisition of a major slice of Sri Lanka Telecom by Malaysia’s Maxis group.
The Business Times in Kuala Lumpur yesterday reported the deal saying that Sri Lanka is currently experiencing a strong economic revival as evidenced by recent economic growth of about 8% a year.
Cabraal said that Khazanah buying into JKH was a vote of confidence on Sri Lanka internationally and would send a very good signal to other global investors. Business leaders concurred with this view.
Foreign interest in Sri Lanka’s stock market was lacking last year, analysts noted. However, the picture has changed this year with several interested investors looking at possibilities.
Khazanah’s Azman said that Sri Lanka has been a ``positive experience" to companies in which the Malaysian Fund has invested. He noted that Dialog Axiata group in which Khazanah held a stake was the largest mobile telephony player here. The CIMB group has an investment banking joint venture in Sri Lanka.
Earlier this month, CIMB entered into a strategic collaboration with JKH’s stock broking unit, John Keells Stockbrokers (Pvt) Ltd.. to promote and facilitate trading on the Colombo Stock Exchange (CSE) and provide co-branded research for JKSB clients.
The Business Times (of Malaysia) said that Khazanah’s entry into JKH was through its special purpose vehicle Global Hill Investments Limited.
The deal has been under discussion for about six months and has been concluded at a price considerably higher than the Rs.160 level at which JKH was traded earlier this year. Many investors sensing that the EPF may book a capital gain on its JKH stake bought into the company expecting an upward movement in the JKH share price.
Mr. Sohli Captain remains the top shareholder of JKH with 13.7% with Paints and General Industry controlled by him holding 3.9% and other connected parties hold up to another 3.2% according to JKH’s interim report covering the nine months ended December 31.
Khazanah will now become the third biggest shareholder of the blue chip conglomerate behind Captain and Janus Overseas Fund which owns 10.3%. Janus Aspen Overseas Portfolio Fund connected to Janus Overseas Fund owns 2.3%.
source - www.island.lk
Sri Lanka - Economy Update: 16 Mar 12
· Sri Lanka targets USD 12bn in exports in 2012
* Sri Lanka is targeting USD 12bn in exports in 2012 up 1.6% from USD 10.4bn in 2011, which will be helped by an upcoming trade fair and a weaker rupee.
* An upcoming 'Expo 2012' trade fair to kick off on 28th March is expected to boost Sri Lanka's exports with more than 1000 foreign delegates having signed up.
* The trade fair will not only target merchandise exports but also services and investments with the travel trade and IT and business process outsourcing firms also exhibiting, said the Export Development Board Chief.
· Tourist arrivals February 2012 increase 27% Y-o-Y
* Sri Lanka's tourist arrivals increased to 83,549 in February 2012 from 65,797 arrivals in February 2011.
* Total arrivals for the first two months recorded 169,423 up 21% from the same period an year ago.
* The largest arrival of tourist in February were from India recording 11,342 (an increase of 12.6% from February 2011), followed by UK with arrivals of 8,762 (down 9% from February 2011).
* According to the Tourist Board, the sector is likely to become a key economic driver in the years ahead as over a billion people are expected to cross borders as tourist in 2012 alone; in 2011, the sector contributed 1.6% to the country's GDP.
source - Acuity Research
* Sri Lanka is targeting USD 12bn in exports in 2012 up 1.6% from USD 10.4bn in 2011, which will be helped by an upcoming trade fair and a weaker rupee.
* An upcoming 'Expo 2012' trade fair to kick off on 28th March is expected to boost Sri Lanka's exports with more than 1000 foreign delegates having signed up.
* The trade fair will not only target merchandise exports but also services and investments with the travel trade and IT and business process outsourcing firms also exhibiting, said the Export Development Board Chief.
· Tourist arrivals February 2012 increase 27% Y-o-Y
* Total arrivals for the first two months recorded 169,423 up 21% from the same period an year ago.
* The largest arrival of tourist in February were from India recording 11,342 (an increase of 12.6% from February 2011), followed by UK with arrivals of 8,762 (down 9% from February 2011).
* According to the Tourist Board, the sector is likely to become a key economic driver in the years ahead as over a billion people are expected to cross borders as tourist in 2012 alone; in 2011, the sector contributed 1.6% to the country's GDP.
source - Acuity Research
Saturday, March 17, 2012
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