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Sri Lanka Equity Forum » Stock Market Talk » EPF will invest in CSE only if Trade Unions Agree: CB Governor

EPF will invest in CSE only if Trade Unions Agree: CB Governor

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DS Wijesinghe


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
https://economynext.com/EPF_looks_for_bargains_in_Sri_Lankan_stocks_with_trade_union_approval-3-12088-3.html

ECONOMYNEXT- The Employees' Provident Fund, Sri Lanka's largest retirement fund with 2 trillion rupees in assets under management, is looking for bargain sales in shares listed on the Colombo Stock Exchange as government securities become scarce over the coming years, the Central Bank governor said.

"In the future the government domestic funding requirement will get lower. The domestic repayment is peaking at 980 billion rupees this year, 600 billion rupees next year. After that it's 500 or 400 billion rupees," Indrajit Coomaraswamy told reporters at the October Monetary Policy briefing.

"Then the opportunity for the EPF to invest in government securities becomes less and the fund is becoming bigger. Then we need to find other opportunities," he said.

The EPF department is currently observing the stock market to find the best bargains, Coomaraswamy said.

"This is a buying opportunity. There's a fire sale of corporate Sri Lanka at the moment. The Investment Committee will look at this," he said.

"Some trade unions have said that they don't like this. We will meet with them and discuss," he said.


We will explain to them the safeguards taken to protect the funds. Only if they agree will the Monetary Board go ahead."

Trade and investment guidelines have been agreed upon as preparation for the EPF becoming more active in the stock market, he said.

Trade and investment guidelines for EPF assets are regularly revised, with the last revision happening in 2014.

He said under the agreed guidelines, the Investment Committee will make a list of potential shares to buy with support from the Colombo Stock Exchange and the Securities and Exchange Commission, and forward it to the Monetary Board for approval.

Going forward, the EPF will not be able to deviate from this list. It will be restricted from buying other listed shares or unlisted shares, Coomaraswamy said.

"One trader can't go and make traders like in the past. There will be CCTVs, voice records and training given to officials," he said.

The 2014 guideline had not distinguished between listed and unlisted investments.

"The Monetary Board has the discretion to invest in… shares and debt instruments issued by private corporates, which are considered fit by the monetary board," the document said.

EPF investments in listed shares are unlikely to go above 5 percent of the total portfolio, Coomaraswamy said.

Even this would be a doubling of the fund's exposure to listed shares, as Coomaraswamy said the current investment in the stock market is around 2.5 percent of the portfolio.

The EPF has been quiet in the stock market since 2016, when the fund made sales in blue chip shares, which then governor Arjuna Mahendran had attributed to a need to boost liquidity in the fund, as members were given a new option to refund part of their savings to finance housing.

Major acquisitions of shares had not taken place since the current government came into power in 2015.

The fund would exit non-performing private equity investments when chances arise, Coomaraswamy said.

"We need to wait till the market recovers a little bit," he said.

"The investment committee will look at this, if there are worthwhile exits.  We have to see if there is a buyer also to buy some of this."

A right to information disclosure from the central bank this February showed that the fund is holding on to 10.8 billion rupees in private equity investments, made during the period from 2010 to 2015, of which 9.3 billion rupees in investments had made no returns.

The 2014 guidelines say that the EPF is to consider investments in foreign instruments.

2 Sri lankan trade unions and JVP on Wed Oct 03, 2018 7:44 pm

ruwan326

avatar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
"Some trade unions have said that they don't like this. We will meet with them and discuss," he said.





Sri lankan trade unions and JVP Very Happy Very Happy Very Happy Very Happy


https://www.facebook.com/chaminda.senarathne.165/videos/882553078590225/

samaritan


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
One time people use to say Mahaweli was diverted to Trinco via Finco, likewise EPF may be diverted to CSE via JKH. This can only be interpreted as a move to prop up the falling shares of the conglomerate. This govt has carried out many things surreptitiously, for example inclusions at committee stage and passing of bills. EPF moved under brother when simultaneously sister takes up position in the JKH board. Cat is out of the bag! 

Eugine Fernando


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
PCOI probing SriLankan Airlines, SriLankan Catering and Mihin Lanka
Hundreds of millions of rupees from EPF invested in eight unlisted companies - Witness



Hundreds of millions of rupees belonging to the Employees Provident Fund (EPF), the largest Social Security Scheme in Sri Lanka has been invested in eight unlisted companies including the SriLankan Airlines (SLA), it was revealed before the Presidential Commission of Inquiry (PCOI) on SriLankan Airlines, SriLankan Catering and the Mihin Lanka Pvt. Ltd yesterday.
According to the testimony of EPF Superintendent of CBSL, Nalini Malkanthi Bandara which continued for the second day, it was also revealed that the EPF has not received returns by investing in four of these eight companies including the SLA.


EPF has invested Rs.5 Billion in Canvil Holdings, Rs.2.9 Billion in West Coast Company, Rs.1 Billion SriLankan Catering, Rs.500 Million in SriLankan Airlines, Rs.495 Million in Cargills Bank, Rs.450 Million in Weligama Hotel Properties Company, Rs. 350 Million in Jetwing Symphony Company, and also in Fitch Ratings Company.
According to the EPF Act No. 15 of 1958, the Monetary Board of the Central Bank of Sri Lanka (CBSL) is the sole authority of investing EPF fund. Therefore, it should make a determination before making any investment using EPF funds. The most highlighting thing that was revealed through Bandara’s testimony pertaining to the investment made with the SLA is that the CBSL has no any plan or prior study for this investment in its possession. The investment was made in July 2010, during the tenure of former CBSL Governor Ajith Nivard Cabraal and Treasury Secretary P.B.Jayasundara, who was a permanent member to the Monetary Board.

The Investment Committee of the EPF had sent its recommendations without carrying out any study pertaining to this investment and the Monetary Board had ratified it without any plan or related document, it was revealed.
The other thing highlighted yesterday was that according to the Investment and Trading Guideline of the EPF published on March 21, 2007, there are no provisions to purchase shares of unlisted companies.
When asked by Additional Solicitor General Neil Unamboowe, who led evidence, as to whether the EPF was benefitted from the investment, the witness said that there have been no returns from this investment so far. However, the investment has been recorded in the accounts book as a notional value of Rs. 100.

Yahapalanaya

avatar
Vice President - Equity Analytics
Vice President - Equity Analytics
@Eugine Fernando wrote:PCOI probing SriLankan Airlines, SriLankan Catering and Mihin Lanka
Hundreds of millions of rupees from EPF invested in eight unlisted companies - Witness



Hundreds of millions of rupees belonging to the Employees Provident Fund (EPF), the largest Social Security Scheme in Sri Lanka has been invested in eight unlisted companies including the SriLankan Airlines (SLA), it was revealed before the Presidential Commission of Inquiry (PCOI) on SriLankan Airlines, SriLankan Catering and the Mihin Lanka Pvt. Ltd yesterday.
According to the testimony of EPF Superintendent of CBSL, Nalini Malkanthi Bandara which continued for the second day, it was also revealed that the EPF has not received returns by investing in four of these eight companies including the SLA.


EPF has invested Rs.5 Billion in Canvil Holdings, Rs.2.9 Billion in West Coast Company, Rs.1 Billion SriLankan Catering, Rs.500 Million in SriLankan Airlines, Rs.495 Million in Cargills Bank, Rs.450 Million in Weligama Hotel Properties Company, Rs. 350 Million in Jetwing Symphony Company, and also in Fitch Ratings Company.
According to the EPF Act No. 15 of 1958, the Monetary Board of the Central Bank of Sri Lanka (CBSL) is the sole authority of investing EPF fund. Therefore, it should make a determination before making any investment using EPF funds. The most highlighting thing that was revealed through Bandara’s testimony pertaining to the investment made with the SLA is that the CBSL has no any plan or prior study for this investment in its possession. The investment was made in July 2010, during the tenure of former CBSL Governor Ajith Nivard Cabraal and Treasury Secretary P.B.Jayasundara, who was a permanent member to the Monetary Board.

The Investment Committee of the EPF had sent its recommendations without carrying out any study pertaining to this investment and the Monetary Board had ratified it without any plan or related document, it was revealed.
The other thing highlighted yesterday was that according to the Investment and Trading Guideline of the EPF published on March 21, 2007, there are no provisions to purchase shares of unlisted companies.
When asked by Additional Solicitor General Neil Unamboowe, who led evidence, as to whether the EPF was benefitted from the investment, the witness said that there have been no returns from this investment so far. However, the investment has been recorded in the accounts book as a notional value of Rs. 100.
Investing in unlisted white elephants Srilankan air lines, Mihin lanka!!!!! Sad Sad Sad

samaritan


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@Yahapalanaya wrote:
@Eugine Fernando wrote:PCOI probing SriLankan Airlines, SriLankan Catering and Mihin Lanka
Investing in unlisted white elephants Srilankan air lines, Mihin lanka!!!!! :( :( :(
Robbing the Central Bank in broad day light after meticulously planning the act in Singapore.
 Is it an autoimmune disorder for the govt to eat into its own Central Bank the heart of the nation's financial system????

Even with the Hambantota Harbour which is of great value to China the govt struck a raw deal b'cos of the strained relationship they had with China. The strategic Port is invaluable to China in order to fulfill their ambitious 'silk road' project.

When you throw rotten egg on the face of an economic giant and subsequently go to them with a begging bowl what will you get?????????????
Obviously agree to their term & conditions.

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