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Sri Lanka Equity Forum » Stock Market Talk » CSE THIS WEEK


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1 CSE THIS WEEK on Fri Nov 02, 2018 6:42 am


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
First topic message reminder :

Sri Lanka looking at trade, payments 'measures' to stabilize rupee: Finance Ministry

Nov 01, 2018

Sri Lanka says it is looking at 'external trade' and 'payment transactions," measures to stabilize the exchange rate, the finance ministry said as the rupee continued to slide amid sterilized intervention. 

"The measures to further consolidation of external trade and payment transactions are also being examined to provide much needed stability to the exchange rate," the finance ministry said.

It is not clear whether 'further consolidation' refers to additional trade, exchange, or remmittance controls. Sri Lanka has already placed import controls on cars and some other products.

Sri Lanka operates a soft-pegged exchange rate regime, involving sterilizing interventions with new money, which tends to bring further pressure to the exchange rate, analysts have warned. (Colombo/Nov01/2018)

Last edited by ruwan326 on Fri Nov 02, 2018 6:46 am; edited 1 time in total

41 Re: CSE THIS WEEK on Mon Dec 31, 2018 10:30 pm


Vice President - Equity Analytics
Vice President - Equity Analytics
@ruwan326 wrote:
@Yahapalanaya wrote:CSE GREEN
ASPI 6052

37 points up 

Sorry Samariyan,Maharaja,Kithsiri,Ryan

Basketball Basketball Basketball
Who are these members????????
Samariyan & Kithsiri?????????? Wink Wink Wink
MARA ge golayo.. Very Happy Very Happy Very Happy

42 Re: CSE THIS WEEK on Tue Jan 01, 2019 8:20 pm


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Sri Lanka rupee ends flat after sudden rise, stocks up on Jan 01

Jan 01, 2019 

Sri Lanka's rupee closed around 182.80/183.00 around the same as a day earlier, after a sudden rise in intra-day trading, while stocks closed up in the first day of trading in 2019, dealers and brokers said.

The rupee closed around 182.90/183.00 on Monday against the US dollar in the spot market.
In intra-day trading on Tuesday the rupee was seen trading as strong as 182.00 before falling towards the end of the day, market participants said.

The Colombo All Share Index closed up 0.6 percent, with Ceylon Tobacco Company closing up 40 rupees 2.4 percent at 1,707.60 rupees.
John Keells Holdings closed up 3.70 at 159.70 rupees.

Bond yields were mostly flat, ahead of a Treasury bill auction on Wednesday.
A bond maturing on 15.12.2021, was quoted at 11.45/50 percent Tuesday, about the same from Tuesday close of 11.50/52 percent, dealers said.

A bond maturing on 15.07.2023, was quoted at 11.60/65 percent Tuesday, flat dealers said.
A bond maturing on 01.08.2026 bond was quoted around at 11.66/11.70 percent flat.,_stocks_up_on_Jan_01-3-13026-3.html

43 Re: CSE THIS WEEK on Wed Jan 02, 2019 6:43 am


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

44 Re: CSE THIS WEEK on Wed Jan 02, 2019 12:31 pm


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Sri Lanka to halve foreign investor limit of rupee Treasuries

Jan 02, 2019 

Sri Lanka will cut the volume of rupee bonds foreigners can hold from 10 percent of total outstanding to 5 percent, Central Bank Governor Indrajit Coomaraswamy said as a soft-pegged regime has put renewed pressure on the currency.
Some bond investors are footloose, and making the external sector volatile, he said.

"In view of the increased volatility global financial markets we intend to reduce the threshold for foreign investment in rupee denominated from 10 percent to 5 percent," Governor Coomaraswamy said presenting a road map for monetary policy for 2019.
Sri Lanka runs a soft-peg with the US dollar and has found it difficult to cope with bond outflows as it tries to prevent a 'disorderly adjustment' of the exchange rate and then print money to keep rates down.

Rupee bond holders have been fleeing Sri Lanka from around May after the central bank cut rates and injected liquidity in April.
Analysts have warned that Sri Lanka has to reform the central bank or abandon the soft-peg to allow free capital mobility and help make the island financial centre. 
Foreign companies raised capital in Sri Lanka's stock market during British rule when Sri Lanka had a currency board, when the agency intervenes in forex markets, but does not print money after the intervention.

45 Re: CSE THIS WEEK on Wed Jan 02, 2019 5:50 pm


Vice President - Equity Analytics
Vice President - Equity Analytics
Today also Green

ASPI 6062

Increased by 9.8 points

Machan Soil,Samaritan,Maharajah group when will it come to 5500..

Good 2019 beginning to all real Srilankan investors.. Very Happy Very Happy Very Happy

46 Re: CSE THIS WEEK on Wed Jan 02, 2019 7:43 pm


Equity Analytic
Equity Analytic
Will the positive vibes of new year inject some energy to see.Things are good for last week or so.

47 Re: CSE THIS WEEK on Wed Jan 02, 2019 8:10 pm


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
I think we are understating Sri Lanka’s GDP under new methodology: CB Governor
Jan 02, 2019 

Sri Lanka’s Central Bank Governor on Wednesday pointed out that the authorities need to look at carefully whether they are recording the GDP of the country accurately.
According to Coomaraswamy’s own view, the growth in 2018 should be somewhere between 3.5 and 4 percent.

“I don’t think this is a 3 percent growth economy, the IMF said 3.5 percent, the World Bank said 4 percent and we thought it was about 3.8 percent,” he said.
“My own view is that we are understating GDP. Not that anybody doing it intentionally, it’s just the process of going into a new methodology that needs to support with the certain amount of surveys.”
Sri Lanka adopted a new methodology for recording GDP estimates a few years ago which was commended by experts as a good methodology.

“But that methodology needs a lot of surveys to support it. We at the moment don’t have the resources to undertake all the surveys that are necessary to support that methodology,” he said.
“So, they tend to use proxies, when you use proxies it tends to be a judgment call. So what is not certain is that whether they have picked the right proxies or enough proxies.”
Coomaraswamy said even though the Census and Statistics Department is the statutory authority publishing growth figures, they also have challenges.

“One particular number I’m challenged by is the transport sector; it contracted. Maybe it’s true but that’s something that I have doubts because proxies used for that may not be completed as they could be,”
“Even the port city, I think there is some challenge in how to record that activity.”

48 Re: CSE THIS WEEK on Thu Jan 03, 2019 9:19 am


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Sri Lanka to be 'brutal' on finance companies that lose capital

Jan 03, 2019 

Sri Lanka will act fast to resolve finance companies that fall short of capital, Central Bank Governor Indrajit Coomaraswamy said., which had led to large holes in balance sheets and collapses, ending a the practice of procrastination or regulatory forbearance.

Finance companies in future will have to boost capital quickly when required.
"If finance companies don't, we will have to take regulatory action. We will have to be brutal when we apply that," Governor Coomaraswamy told reporters.

In the US, the policymakers took away the discretion and the Federal Deposit Insurance Corporation, a resolution agency now acts quickly, because delays expanded the capital shortage and the gap between deposits and assets widened.

It was easy to find a buyer when the capital shortage was small, and even if there were no takers, the FDIC had to put in only a small amount of cash in a liquidation, when a lender was closed as soon as capital fell below a pre-determined threshold like 200 basis points. 

The US has thousands of independent banks, dating back from its free banking era and also when branch banking was prohibited and a number of banks fail each year. 
When the housing bubble fired by the Federal Reserve collapsed in 2008/2009, 140 banks coming under FDIC mandate failed, another 157 failed the following year.
At end-September 2018, the ratio of capital held at finance companies in Sri Lanka to cover risks (capital adequacy) fell to 11.1 percent from 13.2 percent a year earlier.
Because finance companies give loans to riskier clients than ordinary banks, they need higher capital buffers, according to some analysts.

Central Bank regulations introduced in July 2018 call for finance companies to have at least 10 percent capital adequacy. By July 2019, capital adequacy has to increase to 10.5 percent, eventually requiring 12.5 percent July 2021 onwards.

Analysts say Sri Lanka will need to legislate a threshold like 8 percent to effectively end regulatory forbearance.

Coomaraswamy said another step existing finance companies could take is to merge with peers to meet the minimum capital levels, since having over 40 finance companies in the country is 'ridiculous', although the central bank will not force firms to take either option.

There was a spurt of new finance company licenses issued during the Rajapaksa regime. Several shadow banking institutions also failed at the time.
The current problems in firms like The Finance and ETI Finance, date back to the forbearance period.
"Non-compliance will result in restrictions on deposit and business expansion and, where necessary, winding up of businesses," Coomaraswamy said.

"Therefore, it will be necessary for finance companies to give priority to capital augmentation plans in the near future," he said.
"The change in the regulatory posture of the central bank will result in early interventions against noncompliant, distressed and high risk finance companies."
Many finance companies have primitive IT systems which are not capable of complex risk management. 
Bad loans across finance companies were 7 percent at end-September 2018, up from 5.7 percent a year earlier.

Coomaraswamy's hard hitting stance amidst concerns raised by officials that some that some finance companies are ignoring regulations, rights of depositors and risk management practices to please wishes of shareholders. Coomaraswamy said central bank officials are closely monitoring and talking with other at-risk finance companies to stabilize them.

He said there is little risk to Sri Lanka's economy if finance companies go bust, as they hold only 7.9 percent of the total assets in the financial sector.

"This long tail of very vulnerable finance companies are in turn a very small part of the total assets," 
Coomaraswamy said.

"Some larger finance companies are robust, and are as strong as banks."
"Having said that clearly there can be a contagion effect if there is instability in some institutions," he said.
Coomaraswamy said a deposit insurance scheme is settling what the companies owe their depositors.

49 Re: CSE THIS WEEK on Thu Jan 03, 2019 9:22 am


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
PM, biz leaders beeline for Orchids!
3 January 2019

Prime Minister Ranil Wickremesinghe, flanked by Urban Areas and Western Development Minister Patali Champika Ranawaka, Health Minister Rajitha Senaratne, Skills Development and Vocational Training Deputy Minister Karunarathna Paranawithana, Waters Edge Chairman Chamath Silva, Laugfs Holdings Chairman W.K.H. Wegapitiya, Access Group Chairman Sumal Perera, and Vallibel One Group Chairman Dhammika Perera, at the launch of ‘50K Orchids’ restaurant at Water’s Edge, Battaramulla on Tuesday.

50 Re: CSE THIS WEEK on Thu Jan 03, 2019 9:19 pm


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Sri Lanka preparing for sovereign bond, state banks loans to go ahead

Jan 03, 2019

Sri Lanka is preparing the groundwork to sell a sovereign bond at a suitable time Central Bank Governor Indrajit Coomaraswamy said, though a maturing billion dollar bond in January will be repaid instead of being rolled over in 2018 after political crisis hit the island in October.

Sri Lanka will get cabinet approval to sell the sovereign bond appoint managers who will then go for a bond sale at a appropriate time, he said.
Sri Lanka was downgraded by Moody's, Fitch and Standard and Poors to B-, during the crisis, just as the country was about to sign a deal with the International Monetary Fund for the last stretch in a 3 year program.

"If we get downgraded again, we will lose access to capital markets," he said.
President Maithripala Sirisena after he triggered a political crisis by appointing Mahinda Rajapaksa as Prime Minister and illegally dissolving parliament delaying plans to raise loans and rollover bonds.
Three state banks were also planning to raise loans from the Middle East and give the government, which were delayed by the crisis will also go ahead, Coomaraswamy said.
But the rates had increased after the downgrade, and had to be re-negotiated.

Coomaraswamy said Sri Lanka will repay a sovereign bond in January out of its own resources, with the Treasury already having about 650 million dollars in proceeds from the sale of the Hambantota port.
Sri Lanka has about 5.9 billion US dollars of debt to repay in 2019 including dollar denominated domestic debt.

Sri Lanka's forex reserves fell below 7 billion US dollars in December, down from a target of 10 billion in the beginning of the year, with the central bank losing control of a peg after it cut rates and printed money in April followed by another unsterilized build up of liquidity in August, which undermined the credibility of its peg.

In the November the central bank lost 500 million dollars in interventions amid the political crisis.,_state_banks_loans_to_go_ahead-3-13045-1.html

51 Re: CSE THIS WEEK on Thu Jan 03, 2019 9:25 pm


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

EU Parliamentarians meet Finance Minister

January, 3, 2019

Two European Union Parliamentary Members, Lord William Dartmouth and Geoffrey Van Orden, who visited Sri Lanka as members of the “Friends of Sri Lanka Group”, paid a courtesy call on the Minister of Finance and Mass Media Mr. Mangala Samaraweera, at the latter’s office on 2nd January. During the call both the parties exchanged views on matters of mutual interests and agreed to enhance bilateral trade and tourism cooperation, maximizing the benefits for Sri Lanka under the EU’s GSP+ facility.
Mr. Malik Samarawickrema, Minister of Development Strategies and International Trade, Dr. R.H.S.Samaratunge, Secretary to the Treasury and Ministry of Finance and Mass Media and Mr. Mano Tittawella, Senior Adviser to Finance Minister were also present.

52 Re: CSE THIS WEEK on Tue Jan 08, 2019 9:38 am


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Sri Lanka cement use flat in 2018, but pick up in September

Jan 08, 2019

Sri Lanka's cement production was down 3.2 percent to 2.086 million tonnes in the first nine months of the year and imports were also flat, but there has been a pick-up in September, official data shows.
Total imports and production was flat at 6.204 million tonnes in the first nine months of the year, against 6.229 million tonnes a year earlier, central bank data showed.

In September domestic production picked up 11.4 percent to 262,000 metric tonnes.
Imports also picked up 18 percent to 909,000 metric tonnes during the month. Imports however may vary over months, as stocks change.

Sri Lanka's statistics office said the construction sector grew 2.5 percent in real terms during the third quarter of 2018, compared to a year earlier. Nominal growth was 7.5 percent.

53 Re: CSE THIS WEEK on Tue Jan 08, 2019 8:20 pm


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

Sri Lanka for removal of trade barriers

January, 8, 2019

LAHORE: Sri Lanka has sought removal of non-tariff barriers (NTBs) and other issues to improve trade with Pakistan.

Addressing the Lahore Chamber of Commerce and Industry on Monday, High Commissioner of Sri Lanka to Pakistan Noordeen Mohamed Shaheid said that though the two countries signed Free Trade Agreement (FTA), certain issues including NTBs need to be resolved to improve trade between the two countries.

The envoy said Pakistan and Sri Lanka had signed the FTA in June 2005 under which the private sectors of both the countries were provided with greater opportunities to take trade and economic relations to next level. From 2005 onwards, there was significant increase in bilateral trade, he said. “But it is also a fact that the two countries could not succeed in fully exploiting the trade potential,” he added.

The Sri Lankan high commissioner said there was a vast scope for the expansion of bilateral between Pakistan and Sri Lank.

He urged that both countries should introduce new products for trade and make business-to-business contacts stronger. “Sri Lanka offers huge opportunities in various sectors of economy,” he added. He said though terrorism remained a big challenge for Sri Lanka, but today it a peaceful country. “We have defeated terrorism due to immense support of Pakistan,” he said.

Speaking on the occasion, LCCI President Almas Hyder said Sri Lanka was at the take-off stage and Pakistani business community should avail this great opportunity. “Both Pakistan and Sri Lanka are members of Saarc and enjoy friendly relations based on historical linkages.

Cooperation between two countries especially in defence sector has played major role in further strengthening the mutual ties,” he added.

Earlier, National Assembly Deputy Speaker Qasim Khan Suri also visited the LCCI and said the government was making all-out efforts to overcome the inherited economic crisis. “The business community has a key role in economy and economic challenges will be tackled with their cooperation,” he said.

54 Re: CSE THIS WEEK on Tue Jan 08, 2019 8:25 pm


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Recent rupee depreciation aligned with capital outflows not current account
Jan 08, 2019

Sri Lanka’s Central Bank Governor says that the rupee depreciation is no longer aligned with fundamentals in terms of current account flows and it is now being driven by capital outflows from the government securities market.

Governor Indrajit Coomaraswamy recently revealed that foreigners who held about two billion US dollars worth of rupee denominate government securities have now brought it down to just nine hundred million dollars.

“That money has had to be fed through the market and that has created a lot of pressure in a thin market of somewhere between sixty to hundred million a day,” he said.

“If 10 or 20 million of government securities money flows out it clearly creates an imbalance between supply and demand in the market.”

Coomaraswamy says that they had to intervene in the foreign exchange market as they think the current depreciation of the currency is a disorderly depreciation.

“The currency has depreciated almost sixteen percent and the real effective exchange rate is well below hundred, so it is now undervalued,” he said.

“So there is no justification for the central bank to prevent what we think now is a disorderly depreciation of the currency, so we have to intervene.”

Governor Coomaraswamy said that they also had to take a remedial action last year to reduce current account outflows. Gold imports, vehicle imports, and oil imports are the main sources that affected current account outflows.

“So those three main sources of instability in the current account have been looked after but now what we need to do is change sentiment,” he said.

According to the Governor, people need change sentiment at three levels. Importers need confidence not to accelerate imports, exporters need to start converting export proceeds or at least convert in a more timely basis and thirdly the holders of gov securities needs to have greater confidence to hold their money.

“Now it’s a matter of confidence in terms of the way we are managing the economy both on the fiscal and monetary side. We are very confident that on all those fronts going forward with the support of the government we can do what is necessary.”

55 Re: CSE THIS WEEK on Tue Jan 08, 2019 10:01 pm


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
New Sri Lanka logistics facility targets exporters

Jan 08, 2019 

Sri Lanka’s investment agency has approved a project to build a warehouse and container depot near the Biyagama export processing zone to help exporters bring raw materials and machinery and ship outbound finished products.

The project by Skylift Container Depot and Logistics (Private) Limited, with a total value of 1.83 million US dollars will be located at Walgama, Malwana and employ 49 people, the Board of Investment said.

“We have considerable experience in handling of logistics and container depots both in Sri Lanka and in Melbourne, Australia,” the BOI statement quoted Roshan Buthgama, Director and Managing Director of Skylift as saying.

“We are confident that many of the BOI enterprises at the Biyagama Export Processing Zone will be our future customers, as this will be very advantageous for all companies.

“The activities of the logistic center would include handling of both inbound containers which would include raw materials and machinery and outbound finished products.”

The firm will set up a facility that would be engaged in warehousing and logistic services with a container depot.

56 Re: CSE THIS WEEK on Wed Jan 09, 2019 9:00 pm


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
RBI Agrees to USD 400 mn SWAP – Boost to Reserves

January, 9, 2019

The Reserve Bank of India (RBI) has agreed to provide USD 400 mn to the Central Bank of Sri Lanka (CBSL) under its SAARC SWAP facility.

CBSL has also requested a further bilateral SWAP arrangement of USD 1 billion between the RBI and CBSL which is under consideration.

The RBI’s very rapid and timely assistance will serve to boost investor confidence by supporting Sri Lanka to maintain an adequate level of external reserves while accommodating outflows related to imports, debt servicing and, if necessary, support for the currency to avoid disorderly adjustment.

The CBSL acknowledges the very active role played by the Government of India, the Sri Lankan High Commission, in Delhi, and the Indian High Commission, in Colombo, in facilitating these arrangements.

With the end of the delays related to the political developments in the country, the Government of Sri Lanka (GoSL) and the CBSL have also already revived action to: (1) issue international sovereign bonds; (ii) obtain term loans; and (iii) negotiate credit lines through the State banks on behalf of the GoSL. It is expected that these operations will be completed in 1Q 2019.

In addition, Hon Mangala Samaraweera, Minister of Finance and Mass Media will be visiting Washington (14 – 16 January 2019) to resume negotiations with the IMF on the Extended Fund Facility.

57 Re: CSE THIS WEEK on Wed Jan 09, 2019 9:01 pm


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@ruwan326 wrote:RBI Agrees to USD 400 mn SWAP – Boost to Reserves

January, 9, 2019

The Reserve Bank of India (RBI) has agreed to provide USD 400 mn to the Central Bank of Sri Lanka (CBSL) under its SAARC SWAP facility.

CBSL has also requested a further bilateral SWAP arrangement of USD 1 billion between the RBI and CBSL which is under consideration.

The RBI’s very rapid and timely assistance will serve to boost investor confidence by supporting Sri Lanka to maintain an adequate level of external reserves while accommodating outflows related to imports, debt servicing and, if necessary, support for the currency to avoid disorderly adjustment.

The CBSL acknowledges the very active role played by the Government of India, the Sri Lankan High Commission, in Delhi, and the Indian High Commission, in Colombo, in facilitating these arrangements.

With the end of the delays related to the political developments in the country, the Government of Sri Lanka (GoSL) and the CBSL have also already revived action to: (1) issue international sovereign bonds; (ii) obtain term loans; and (iii) negotiate credit lines through the State banks on behalf of the GoSL. It is expected that these operations will be completed in 1Q 2019.

In addition, Hon Mangala Samaraweera, Minister of Finance and Mass Media will be visiting Washington (14 – 16 January 2019) to resume negotiations with the IMF on the Extended Fund Facility. 
Hope these two news will give a green day tomorrow  Wink

58 Re: CSE THIS WEEK on Mon Jan 14, 2019 8:56 am


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
UN wants Sri Lanka banks to contribute to agriculture credit line

Jan 11, 2019

The International Fund for Agricultural Development (IFAD) of the United Nations is looking for further funding from banks and cooperative societies to expand credit lines to poor Sri Lankan farmers.
"We are asking banks to contribute 30 percent of the funds in a line of credit," IFAD project consultant Rauno Zander, a rural finance expert, told a business forum in Colombo on January 10.
He said currently the project fund covers the entire credit line, which provides loans to farmers at a concessional 6.5 percent.

Under the Smallholder Agribusiness Partnership Programme (SAPP), IFAD has provided 11.5 million dollars as a direct line of credit, while a further 18.5 million dollars has been provided by the Sri Lankan government, loaned through a revolving fund at the central bank.
A central bank official said the interest rate would have to be higher if banks are to contribute 30 percent of funds to each loan, since they borrow from money markets at rates much higher than 6.5 percent, to which Zander agreed.

IFAD is also expecting banks to fully finance short-term working capital loans of farmers in the programme, leaving credit lines for other loans.

The programme, which is running from July 2017 until June 2023, provides long-term capital loans, short-term working capital loans, and youth loans.
"These working capital loans are safer, and these are the type of loans banks do anyway," Zander said.
"The repayment period is short, around 6 to 12 months, and so the risk profile is low," he said.

Zander also wants more flexibility in loan repayments for farmers, which the central bank said it would consider after talks with the nine banks in the programme.
Zander said cooperative societies such as Sanasa are more active in agricultural areas compared to banks, and they should be brought into the programme as lenders.
However, the central bank representative said such an option is not possible under the Monetary Law Act, since the central bank cannot deal with such societies.

Currently, only around 10 percent of the funds available under the fund have been loaned to farmers.
Zander said the need to follow regulations had slowed down the process at the start, but it is working smoothly now.

59 Re: CSE THIS WEEK on Mon Jan 14, 2019 12:30 pm


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Chinese loans not main source of debt trap, says think tank

  • Funds borrowed through ISBs at higher rates outweigh loans from China
  • ISB debt growth caused by shift from concessional debt to commercial debt 
  • Price of debt  more crucial than quantity of debt- Verité Research

Sri Lanka getting caught in a debt trap and finding itself in a precarious position has less to do with its borrowings from China but more to do with its participation in international bond market activities, according to Colombo-based economic think tank Verité Research.

While Sri Lanka is being made the poster child of falling into the Chinese debt trap, where it is largely perceived that the nation’s sovereignty and geo-political space is compromised, the latest insights by Verité Research narrate a different story. 
Of Sri Lanka’s total external debt, Verité Research identifies that less than 15 percent is from China. Although the share of debt to that country cannot be considered low, it is certainly is not the main source of the debt trap, according to Verité Research Executive Director and Head of Research Nishan de Mel.

Acknowledging that Sri Lanka’s debt exposure to China has increased from 2 percent and has grown fast, de Mel pointed out that it is not the monopolizing source of debt. 
According to him, the dominating source of the debt trap is the debt to international financial and bond markets, where the rate of borrowing is almost three times higher.
Analysis by Verité Research showed that almost 50 percent of Sri Lanka’s debt liabilities are to international financial and bond markets, which have grown from almost zero percent since 2007—the year the country started issuing international sovereign bonds (ISBs). 

This source of debt picked up at a fast pace as Sri Lanka lost access to bilateral concessional debt in 2005 and 2006. De Mel said that the shift from concessional debt to commercial debt is what has essentially forced this growth. 
In addition to Sri Lanka borrowing at over 6 percent, the other aspect of ISBs is that it is short term and has to be refinanced every seven years on average. 
When compared with the debt from China post-2012, such loans were extended at a concessionary rate of 2 percent and are to be refinanced approximately in 19 years. 

“Looking at it from a Sri Lankan perspective, it is important to recognize that there are significant to simple financial advantages in borrowing from China at 2 percent and having 19 years to sort that out than borrowing from international financial markets at over 6 percent and having only 7 years to recycle that,” explained de Mel.
“That has a significant implication to Sri Lanka as the cost of the commercial debt is quite high compared to the cost of multilateral and bilateral debt.” 
He elaborated that with the ISBs having a weighted average of 6.29 percent, the rate is high and it is getting too expensive to borrow from such sources. Although it’s a decade since the end of the war, Sri Lanka’s risk premium too has not declined as much as it should, de Mel noted.

“Our thought process is that even though people talk about the quantity of debt, it is not necessarily the fundamental problem. It is the price of debt; placing our monetary position at risk is the price we are paying,” he said.

60 Re: CSE THIS WEEK on Wed Jan 16, 2019 8:50 am


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
CSE expresses optimism amidst headwinds

16 January 2019

  • CSE bosses say political and stability, and fast-tracking economic growth key to draw foreign investors

  • Urges return of captive funds such as EPF, NSB, SLIC; opines it was a miracle market survived without them for 4 years

  • Colombo remains one of the most attractive based on price multiples among regional peers

  • Rs. 99.3 b raised via CSE in 2018 was highest since 2016; domestic investor purchases up Rs. 15 b

Despite the challenging times ahead, the county’s capital market is optimistic that the progressive line-up measures will continue anticipating sizeable investments to take-off ground this year.

Outlining the key elements of the Colombo Stock Exchange (CSE) wish-list for 2019, its Chairman Ray Abeywardena said reinstating political stability, currency and fast-tracking economic growth were some of the priorities they believed that the Government together with all stakeholders would attend to, to retain and attract new foreign investors.

“Ensuring political stability, exchange rate and getting the economy back on the track are essential in order to attract foreign investors as these are key factors they look into when they explore markets,” he told the Daily FT. 

Abeywardena also called on the Government to bring back captive funds which had been kept away for the past four years. “It is a miracle that our market survived without those captive funds, which includesEPF, ETF, NSB and SLIC. 

Four years is a long enough to create a framework for these institutions. It is time that the Government made it a reality,” he stressed.

Noting that trade unions had been actively engaged in this matter and hadn’t opposed, he said the market was now eagerly waiting for the Government to take steps through either the Central Bank or the Finance Ministry.

In terms of performance, he said although in 2018 the market had closed on a negative note, CSE still remained one of the most attractive based on price multiples among regional peers, adding that contribution to total market turnover by local institutional investors had increased by 6% compared to a year earlier.

“Both indices ended on negative note with All Share Index -4.9% and S&P Sri Lanka 20 Index -14.6%. However, a negative trend was evident among regional peers,” Abeywardena noted. 

According to him almost all Asian markets have ended on a negative note, including India, Hong Kong, Malaysia, Indonesia, Pakistan, Korea, Philippines, Shanghai,Singapore, Taiwan and Thailand. The ASI is in fourth place in terms of regional market indices performance. 

“Although the ASI has ended 2018 on a negative note, considering the regional context, other regional indices have shown a much greater decline. In terms of performance, frontier and emerging markets at large have underperformed compared to US high-yield in 2018,” he added.

CSE Chief also highlighted that in terms of capital raising, the market had fared better than in the two previous years, noting that Rs.99.3 billion had been raised through IPOs, debt issues, rights issues and private and placements. In 2017 CSE raised Rs.73.5 billion and in 2016 it was Rs.85.6 billion. Domestic investor purchases had increased by Rs.15.1 billion to Rs. 122.5 billion compared to Rs.107.4 billion in 2017.

He stated that the net foreign outflow of both primary and secondary market wasRs.15. 6 billion last year.Total foreign investor contribution in 2018 declined marginally from 46.9% to 44.5%. 

“Foreign participation remained more or less the same as in 2017, but what is significant is that foreign purchases increased from Rs.112.2 billion to Rs.268.2 billion. Foreign investors have continued to engage in our market amid a challenging year for Sri Lanka on the macro front and tightening global financing conditions,” Abeywardena said. 

Asked about the game plan to turnaround the foreign outflow in the backdrop of the US being likely to announce more rate hikes, CSE Chief Executive Officer Rajeeva Bandaranaike said market should not be unduly concerned as these funds would return as the CSE was still at attractive multiples.

“All stock markets experience foreign inflows and outflows and these are hot money flows which are dependent on a number of external factors. A strengthening US economy, interest rates and US Dollar havethe potential to affect investment flows into markets in general. However, we anticipate that attractive valuations in the Sri Lankan stock market, especially compared to regional and frontier peers, will place us as a noteworthy market in our segment,” he added. 

Asserting that frontier market focused fundsconstitute a large portion of our foreign investments, he said it had the mandate to look at investment opportunities outside the US and go by the investment case of the particular market. 

“Especially in this context, it leaves Sri Lanka well placed when attracting frontier funds, should the macro outlook offer signs of stability. We therefore will continue to engage frontier market focused investors in 2019 as well,” Bandaranaike said. 

Given the slow growth in the economy, asked about CSE’s plans to make the capital market more attractive particularly to local investors, Bandaranaike stressed that they had provided an opportunity for the entire spectrum of the corporate sector to raise equity and debt capital. 

“The Main Board for the larger companies both in the State sector and the private sector, the Diri Savi Board for the medium-sized companies, the SME Board for the SMEs with different listing criteria, and multi-currency board for foreign companies wishing to list and trade dollar-denominated securities. We believe that we have a wide base of investors, both local and foreign, that companies can tap into and we have put the necessary regulatory and governance framework in place. We stand ready to support and guide any company. It is upto the State sector and private sector companies to avail themselves of these opportunities,” he emphasised.

With 2019 being an election year, he said they expected the market to feature volatile behaviour, which was natural. “Sometimes elections result in some amount of speculation on the part of investors. There may be some volatility but volatility also proves opportunity for investors. We actually may see more volumes this year,” Bandaranaike asserted.

61 Re: CSE THIS WEEK on Wed Jan 16, 2019 8:22 pm


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

SPSE and CSE enter a memorandum of understanding to enhance collaboration

January, 16, 2019

The South Pacific Stock Exchange (SPSE) and the Colombo Stock Exchange (CSE) are pleased to announce the signing of a Memorandum of Understanding (MoU) to establish a collaborative relationship between the two exchanges seeking mutual development opportunities in the Fijian and the Sri Lankan capital markets.

A MoU enables the two exchanges to work together and learn from each other’s experiences. Given that most stock exchanges are unique in their countries, such cross-border collaboration and exchange of information and knowledge can enhance market development. These benefits can be particularly important for activities that often fall exclusively to securities exchanges in any given country, such as investor awareness initiatives, advancing trading and settlement and integrating market data with website development.

The potential forms of cooperation between SPSE and CSE can help the two institutions to become the preferred securities exchanges in their respective regions. Because CSE is a larger, more developed exchange, it presents an ideal partnership opportunity for the SPSE to gain greater insight about technological advancements. The particular MoU includes provisions to encourage exchanging information about market development efforts, regional cooperation and expansion initiatives and the use of information technology systems to enhance ease of doing business in both jurisdictions. The MoU also can facilitate staff secondments to further explore ways to share knowledge and means to develop the respective exchanges further.

On the signing of the MoU with CSE, the SPSE CEO, Ms Krishika Narayan said that “this signing of the MoU is a milestone achievement for SPSE as this is going to establish a framework for collaboration between SPSE and CSE and express the common goals of the two institutions inaugurating a pathway towards the success of both institutions. SPSE is a progressive organisation and our intention is to optimise our operational capacity which we believe can be significantly enhanced through fostering professional relationships with institutions with similar intent.”

Commenting on the development, Mr. Rajeeva Bandaranaike, the CEO of CSE said “the MoU with SPSE further strengthens our collaborative effort with peer exchanges in the Asia-Pacific region and opens up new possibilities for CSE. We look forward to an engaging and mutually beneficial relationship with SPSE. We anticipate that the MoU will pave the way for CSE to build fruitful relationships with key stakeholders in the Fijian capital market.”

The SPSE was established in 1979 and is the only licensed securities exchange under the Companies Act of Fiji and is regulated by the Reserve Bank of Fiji. SPSE is a business in transformation and operates in an evolving era where development of growth opportunities in order to enhance its competitiveness remains pivotal for further progress and as such it’s concentration revolves around scaling up the activities of the SPSE by means of increasing the number of listed securities, increasing the scope of products currently traded on its platform and improving its visibility at the international level in a move towards regional expansion.

CSE is the nucleus of Sri Lanka's capital market as the licensed operator of the stock market. CSE is regulated by the Securities and Exchange Commission of Sri Lanka and was incorporated as a company limited by guarantee in 1985. CSE acts as a conduit of both equity and debt capital and provides the necessary market infrastructure to buyers and sellers in order to transact. CSE also performs regulatory oversight to ensure the fairness and integrity of the Sri Lankan capital market. The post-trade services provided by CSE currently comprise of settlement and safekeeping and are provided through a fully owned subsidiary, Central Depository Systems (Private) Limited (CDS).

Through this collaboration effort both the Exchanges envisage further growth in their respective capital markets and look forward to fostering a propitious business relationship going forward.


62 Re: CSE THIS WEEK on Fri Jan 18, 2019 9:06 pm


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Sri Lankan stocks down, interest in Lankem Developments

Jan 18, 2019 

Sri Lanka’s benchmark stock market index closed lower Friday in moderate turnover with interest seen in Lankem Developments, brokers said. 

The All Share Price Index fell 1.05 points or 0.02 percent to end at 5,988.07 while the more liquid S&P SL20 index closed at 3,066.29, up 13.04 points or 0.43 percent. Turnover was 661 million rupees.

The ASPI was dragged lower mainly by Commercial Leasing & Finance, which fell 30 cents or almost 11 percent to close at 2.50 rupees  a share,  Melstacorp which fell one rupee or two percent to end at 47 rupees and Aitken Spence which ended at 44 rupees, down 1.50 or 3.3 percent.

Lankem Developments was the most actively traded share and the day’s highest gainer, closing at 4.40 rupees, up 50 cents or 13 percent.,_interest_in_Lankem_Developments-3-13177-3.html

63 Re: CSE THIS WEEK on Sat Jan 19, 2019 8:08 am


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
UK assures existing GSP+ tariffs will continue post-Brexit
19 January 2019​​​​​​​

  • Britain to set up trade preference team to implement new system in three tiers to provide same rates as EU
  • Says UK will remain a key economic partner in the world 
  • Calls on local entrepreneurs to proactively engage with policymakers to take local economy forward 

British High Commissioner to Sri Lanka James Dauris on Thursday assured local exporters the UK would extend the same preferential tariff rates to countries which were currently beneficiaries of the Generalised System of Preferences (GSP) of the European Union to ensure there would be minimal impact to their exports post-Brexit.

Delivering the keynote address at the 24th Annual General Meeting of the National Chamber of Exporters, he highlighted some of the key issues related to international trade and Britain’s ambitions post-Brexit outlook as well as responsibilities of local exporters and business leaders in charting Sri Lanka’s future growth.

“There are a lot of queries related to Brexit. Day one after the exit from the European Union (EU) we will set up a trade preference team to introduce preferential market access to developing countries under the EU GSP scheme to minimise business disruption,” he assured the export fraternity of Sri Lanka. He said this intended system of the UK would be implemented in three tiers and rates would be set at the same rates as the EU, while also noting that they would remain open, encouraging and friendly towards investors and businesses from around the world including Sri Lanka even after leaving the EU. 

He affirmed that the UK, after Brexit, would have in place a system of tariffs which would extend the same preferential tariff rates to countries which were currently beneficiaries of the Generalised System of Preferences (GSP) including Sri Lanka.

The High Commissioner said the UK was confident of continuing its growth post-Brexit, which has also been acknowledged by the EU. “The UK is an outward-looking, engaging and key partner in economic development in the world,” he added.

Referring to the world’s fast-changing economic landscape and challenges related to international trade, the High Commissioner pointed out that countries needed to be more cautious in the face of these profound new developments. 

“There are significant changes taking place in the world economy. China’s growth in the past few years has been remarkable and according to research studies, it shows that it will take over the world’s biggest economy, which is the US, by 2030. Experts also predict that by 2050 China and India put together will be equal to all the G7 economies. Power always follows money, so you must not underestimate the profound impact of all these activities,” he warned.

The High Commissioner also called on local entrepreneurs, exporters and business leaders to actively voice their concerns to direct the country’s growth trajectory in the right direction through collective engagement.

“While the Government will set out the regulations and fiscal management at macro level, as entrepreneurs and business leaders you all have an active and a responsible role to play to navigate Sri Lanka to be one of the prosperous economies. Focus on innovation and higher customer services, collectively call on the Government to simplify process of doing business, liberalise labour laws and have outward-looking polices. The voice of business leaders matters,” he insisted.

64 Re: CSE THIS WEEK on Mon Jan 21, 2019 9:29 am


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Sri Lanka's EPF loses most from Laugfs, Dockyard, Carsons; gains from banks

Jan 21, 2019 

Sri Lanka's Employees Provident Fund, managed by the central bank has lost 9.2 billion rupees on its stock portfolio up to June 2018 despite investments in banks gaining it about 9 billion rupees led by Sampath Bank, a report from the agency said.

The stocks have been bought at different times, but among the most controversial were those made at the height of a stock market bubble which ended around 2011.

The Employees' Provident Fund (EPF) Department on January 16 said the 2 trillion rupee fund made up of private sector employee retirement savings has lost 8.4 billion rupees in the value of stocks held for investment, since it first purchased each stock, up to June 2018.
This was a fall of 10.9 percent to 68.88 billion rupees.

Stocks held for trading lost 24.9 percent of their value, or 742.7 million rupees, with the biggest hit coming from Aitken Spence and its hotel subsidiary.
The EF had lost about 2.0 billion rupees on Colombo Dockyard shares which It had bought for 2,791 million rupees and was in its books at 765 million rupees, losing about three fourths of the value.

Market value of Laugfs Gas Plc voting and non-voting stocks fell 56.9 percent or 1.9 billion rupees. Voting stock the EFP bought for 2.68 billion rupees was worth 1.15 billion rupees, by June 2018.
A 1.7 billion rupee fall in value came through Carsons Cumberbatch Plc, which is currently attempting to delist most of its companies from the stock exchange, with the initial investment value down 64.5 percent compared to the market value in June 2018.

The EPF had bought Carsons Cumberbatch, which owned several Malaysian oil palm firm, for 2.59 billion rupees, but it was now worth 919 million rupees.
Another 1.7 billion hit came from Carsons oil palm unit Bukit Darah Plc. Bukit stock had been bought for 2.3 billion rupees and was now worth 577 million rupees.
Over a billion rupees each were also slashed from market values of Browns & Co Plc, the troubled The Finance Company Plc and the John Keells hotel subsidiary Asian Hotels & Properties Plc.
In total 43 stocks lost value for EPF shareholders after being bought, out of 66 stocks held in the investment portfolio.
Five of the six bank stocks, adding 9 billion rupees to market value of the investment equity portfolio.
Sampath Bank, Hatton National Bank and Commercial Bank, three of the country's systemically important banks, contributed 88.8 percent to the gain.
Sampath stock bought for 4.8 billion rupees were worth 8.4 billion rupees.

DFCC was the sole bank to lose market value after being purchased by the EPF, devaluing by 842.1 million rupees or 24.8 percent.
The central bank has been criticized for buying bank shares through the EPF, as the central bank then becomes both a controlling shareholder and the regulator, but had bought the most gains.
The EPF had invested 10.8 billion rupees in companies not listed publicly, most of which had generated had not paid dividends up to end-2017, the central bank said in a disclosure under the right to information law in 2018.

Sri Lanka's stock market is now at lower price to earnings multiples, unlike the 2011 bubble, leading to some making a cases for it to enter the market.
Current governor Indrajit Coomaraswamy had said that corporate Sri Lanka was going at 'fire sale' prices.

Coomaraswamy had said he was setting up a more transparent framework for stock market investments.
He had said stock investments make up around 2.5 percent of EPF assets,  and the central bank plans to increase this to around 5 percent. 

The EPF dealers had earlier made controversial 'pump and dump' deals with some market participants in the run up to 2011, earning it the sobriquet 'buyer of last resort.'
Some critics suspect that the relationships made at the time made the so-called 'bondscam' possible.,_Dockyard,_Carsons;_gains_from_banks-3-13184-3.html

65 Re: CSE THIS WEEK on Mon Jan 21, 2019 8:42 pm


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
More should be done to win confidence of exporters - Ramal J.
Monday, January 21

With the implementation of the National Export Strategy (NES), much work is left to be done in terms of winning confidence of the export community said Ramal Jasinghe, immediate Past President of National Chamber of Exporters (NCE) of Sri Lanka.

“NCE is now engaged as a participant to the implementation process of the NES, with seats on the Advisory and Working Committees.” Jasinghe told at the 17th Annual General Meeting of NCE, held at Galadari Hotel, Colombo.

He said that Chamber was continually in the forefront raising concerns of exporters related to the negotiations of the proposed Free Trade Agreements (FTAs) with larger countries who enjoy greater economies of scale, to mitigate difficulties to enter their territories due to non-tariff barriers, non-recognition of quarantine and laboratory test reports of Sri Lankan institutions, country of origin requirements, and items included in the negative lists which impact Sri Lankan manufacturers.

“However the Chamber recognizes the need to reach a wider global customer base through FTAs or a similar mechanism, to achieve inclusion to the global market place, on fair trading terms. “he said.

He also noted that the Chamber has presented to the Ministry of Finance a comprehensive set of budget of proposals following consultations with member exporters, and the conduct of a pre-budget workshop to identify issues. We trust that these proposals will be taken in to consideration following the resolution of the prevalent political issues, which the Chamber will follow up on behalf of our members”

With the real possibility of the GSP concession eventually being withdrawn to the growing Middle Income Status of the Country, emphasis on the export of Services would attract more focus of the Chamber.

“Having made positive through the initiatives of our ICT cluster, we recognize as a sustainable way forward the need to add on more service providers earning foreign exchange to augment the service sector portfolio of the Chamber, such as education , Tourism and Professional services, to develop a robust export economy.” he said.

He also stressed Sri Lanka’s competitor countries in the region such as Pakistan, Bangladesh, Vietnam, Cambodia, have overtaken Sri Lanka in apparel exports sector this year by a wide margin due to their gains during the period where Sri Lanka lost GSP+ benefits, with total exports from Bangladesh which is categorized as a least developed country reaching US$ 40 billion.

66 Re: CSE THIS WEEK on Tue Jan 22, 2019 9:03 pm


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Sri Lanka rupee 'undervalued' with REER at 96 amid soft-peg collapse

Jan 22, 2019 


Sri Lanka's real effective exchange rate (REER) index has dropped below 100 amid a collapse of a soft-peg with the US dollar, forcing the central bank to spend 1.2 billion US dollars to prop up the currency while printing money.

A REER index calculated by the central bank dropped from 102.24 in September to 98.10 in October and 96.29 in November, as credibility of Sri Lanka's dollar peg was lost making exporters hold dollars and borrow printed money and foreign holders of rupee bonds to flee.

The rupee fell from 161 to the US dollar in August to 179 to the US dollar by end November. Meanwhile other currencies such as the Indian rupee appreciated. The rupee has fallen from 151 from the beginning of 2018.

A real effective exchange rate index is calculated by measuring the changes against a basket (usually trade weighted) and adjusted for inflation.

Sri Lanka is targeting the exchange rate to maintain a REER peg of around 100.

Central Bank Governor Indrajit Coomaraswamy said earlier in January that the rupee had depreciated almost 20 percent in 2018 and it was a 'disorderly depreciation,' of the currency.

"The real effective exchange rate is well below 100, so it is undervalued," Coomaraswamy said.

"So now we have to intervene. The depreciation of the currency is no longer aligned with fundamentals in terms of current account flows. It is being driven by capital outflows from the government securities market."

Analysts had warned that a soft-pegged central bank which prints large volumes of money to offset interventions in forex markets through open market operations to target interest rates (sterilizing outflows), allowing banks to give loans (or buy securities) without raising deposits, cannot hope to target an exchange rate with any degree of success.

Analysts have said that targeting the REER index requires currency board like tools (hard peg), such as a floating policy rate to limit or eliminate outflow sterilization with new money and a variable target reduces the credibility further.


67 Re: CSE THIS WEEK on Wed Jan 23, 2019 8:13 pm


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
U.S. Navy doing cargo transfer at Sri Lanka’s main airport

Jan 23, 2019 

The United States Navy is doing a cargo transfer operation at Sri Lanka’s main international airport under a plan to use the island’s location to make it a military logistics hub, the U.S embassy in Colombo said.

Under the initiative, several U.S. naval aircraft are scheduled to land and depart from the Bandaranaike International Airport outside Colombo, a commercial airport, bringing in a variety of non-lethal supplies, a statement said.  

The supplies will be transferred between planes and then flown to the U.S.S. John C. Stennis aircraft carrier at sea from January 21 to 29.  
Supplies may include personal mail for sailors, paper goods, spare parts and tools, and other items, the embassy said.  
No cargo, military equipment, or personnel associated with this initiative will remain in Sri Lanka after the completion of the cargo transfer. 

“This is part of a larger temporary cargo transfer initiative that promotes Sri Lanka's efforts to become a regional hub for logistics and commerce,” the statement said.  
The January transfers will contribute about 25 million Sri Lankan rupees to the country’s economy.  
“Sri Lanka's leaders have outlined their vision for the country’s regional engagement that reflects its location at the nexus of the Indo-Pacific and seizes the opportunities that this unique position presents,” said U.S. Ambassador Alaina B. Teplitz.  

“We are happy to support this vision through a range of mutually beneficial initiatives, such as contracting Sri Lankan services and goods to support U.S. military and commercial vessels that often transit the Indo-Pacific’s busy sea lanes.”

This is the third iteration of the temporary cargo transfer initiative.  
It follows two successful transfers that took place in August 2018 at Bandaranaike International Airport and Trincomalee and in December 2018 at Bandaranaike International Airport.
The statement said U.S.-Sri Lanka security cooperation encompasses a variety of joint exercises and training that has developed the skills and interoperability of both countries.

68 Re: CSE THIS WEEK on Mon Jan 28, 2019 11:05 am


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Sri Lanka rupee wider, bond market quiet in early trading

Jan 28, 2019 

Sri Lanka's rupee was quoted at 181.50/70 to the US dollar in the spot market in mid-morning trade Monday, while bond markets were flat, dealers said.

The rupee closed at 182.60/65 levels to the US dollar Friday, dealers said.
Bond were quoted mostly around the levels seen at closing time Friday, with active trading yet to start, dealers said.

A bond maturing on 15.12.2021 was quoted at 10.85/95 around Friday's level.
A bond maturing on 15.12.2023, was quoted at 11.35/45 percent.

A 7-year bond maturing 01.08.2016 was quoted at 11.52/62 percent.
A bond maturing on 01.06.2026 was quoted at 11.55/65 percent.
A bond maturing on 01.09.2028 was quoted at 11.58/68 percent.

At the Colombo Stock Exchange, the All Share Price Index was down 0.05 percent or 3.06 points to 5975.24 in the first half hour of trading compared to Friday's close.
The more liquid stocks in the S&P SL20 Index were up 0.44 percent or 13.32 points to 3059.55.

Market turnover was 23.5 million rupees.
Lanka IOC stock was down 1 rupee to 22.00 rupees, while HVA Foods was down 10 cents to 4.40 rupees, and  Cargills Ceylon was down 3.70 rupees to 200 rupees.
Stocks of plantation companies were also down after getting hit by higher minimum wages.,_bond_market_quiet_in_early_trading-3-13263-3.html

69 Re: CSE THIS WEEK on Tue Jan 29, 2019 8:37 pm


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Limits, depreciation trigger first import dip in 17 months
29 January 2019



  • Expenditure on imports in November down 9.1% to $ 1.76 b
  • Personal vehicle imports drop 34.8% 
  • Exports in November up 4.1% to $ 980 m
  • Twin development helps significantly narrow trade deficit
  • First 11 months imports top Rs. 20 b; Exports near $ 11 b mark


Restrictions and depreciation have triggered imports to report first ever decline in 17 months in November and help significantly narrow the trade deficit with exports improving by a modest 4.1%.

The Central Bank said yesterday expenditure on merchandise imports declined by 9.1% (year-on-year) for the first time since June 2017 to $ 1.76 billion in November 2018. 

“The decline in consumer and investment goods contributed to the decline reflecting mainly the impact of restrictions on personal vehicles and non-essential consumer goods imports, while the relatively larger depreciation of the rupee may also have contributed to curtailing imports,” the Bank added.

Earnings from merchandise exports increased moderately by 4.1% (year-on-year) to $ 980 million in November 2018. The growth in exports was driven by industrial exports while agricultural exports continued to decline. The twin development saw trade deficit narrow significantly in November to $ 785 million as against $ 999 million a year earlier. 

Exports in the first 11 months grew by 5% to $ 10.85 billion whilst imports were up 8.3% to $ 20.5 billion, resulting in the cumulative deficit expanding to $ 9.64 billion in comparison to $ 8.59 billion in the corresponding period of 2017.


Terms of trade, which represents the relative price of imports in terms of exports, improved by 1.6% (year-on-year) to 112.8 index points in November 2018 due to an increase of export prices supported by a marginal decline in import prices.

In November under industrial exports, export earnings from textiles and garments increased notably in November 2018 mainly driven by exports to the USA. In addition, garment exports to non-traditional markets such as India, Canada and Australia as well as the EU market increased along with textile and other made up textile articles. 

Earnings from petroleum products increased significantly in November 2018 reflecting higher bunker and aviation fuel prices despite a slight reduction in export volumes in comparison to that of November 2017. Export earnings from machinery and mechanical appliances also increased substantially during November 2018 due to improved performance in all sub-categories therein.

Further, export earnings from food, beverages and tobacco, rubber products and base metals and articles rose in November 2018, contributing towards the increase in industrial exports. However, export earnings from printing industry products, gems, diamonds and jewellery and leather, travel goods and footwear declined in November 2018.

Earnings from agricultural exports recorded a decline during the month due to poor performance in almost all sub-categories except the categories of unmanufactured tobacco and vegetables. Reflecting lower average export prices and exported volumes, export earnings from tea declined in November 2018.

Export earnings from spices also declined during the month due to the lower volumes in most categories of spices. Further, earnings from coconut exports declined due to the drop in both kernel and non-kernel products. Earnings from seafood exports also declined in November 2018 while in cumulative terms, seafood exports rose with higher exports to the EU market.

The export volume index in November 2018 increased by 2.9% while the export unit value index increased by 1.1%, implying that the growth in exports was driven mainly by the increased volume, rather than the price, compared to the volume and unit value indices in November 2017. 

Import expenditure on consumer goods declined (year-on-year) notably in November 2018 due to lower expenditure on food and beverages driven by rice, vegetables, dairy products and sugar imports. Such reduction in imports on food and beverages can be attributed to the combined effect of lower import volumes due to higher domestic production and lower commodity prices in the international market. Expenditure on non-food consumer goods such as telecommunication devices and home appliances decreased in November 2018 on a year-on-year basis, partly due to measures taken by the Central Bank to restrict certain categories of non-essential consumer goods imports. 

“Expenditure on personal vehicle imports showed a significant decline of 34.8% in November 2018 from the previous month, reflecting the impact of policy measures put in place to curtail personal vehicle imports. It is expected that the importation of motor vehicles and non-essential consumer goods could decelerate further in the coming months,” it said. 

Expenditure on the importation of investment goods also decreased in November 2018 mainly due to lower imports under many sub-categories. Specifically, a significant decline was seen in expenditure on the importation of cement and vehicles for commercial purposes compared to November 2017.

In contrast, import expenditure on intermediate goods increased, albeit marginally, driven by fuel, base metals and fertiliser imports. 

Expenditure on fuel imports increased with the combined effect of higher import prices and volumes of both refined petroleum products and coal, despite a reduction recorded in the import volume of crude oil. Meanwhile, expenditure on base metal imports increased driven by iron and steel. However, expenditure on gold imports continued to decline significantly in November 2018, reflecting the impact of customs duty imposed on gold in April 2018. 

Expenditure on wheat and maize also dropped during the month mainly due to lower imported volumes. Import expenditure on mineral products and textiles and textile articles also declined during the month, contributing to mitigate the pressure on import expenditure.

Both import volume and unit value indices decreased by 8.6% and 0.5%, respectively in November 2018. This indicates that the decline in imports during the month was driven by the reduction in volumes imported despite lower prices of imported goods in comparison to the corresponding period of 2017.

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