q p Today's Turnover (LKR mn) Annual Average Daily Turnover (LKR mn) Volume (mn) Annual Average Daily Volume (mn ) Market Capitalization (LKR bn) Net Foreign Inflow / (Outflow) [LKR mn]- Foreign Buying (LKR mn) - Foreign Selling (LKR mn) YTD Net Foreign Inflow / (Outflow) [LKR bn]YTD Performance S&P SL 20 Index40.6 1,088.9 12.4 1,522.1 433.1 Tuesday, May 21, 2013 889.8% Change Point Change Today 39.5 2,194.6 -0.39 % 0.32 % 2,473.6 ASPIS&P SL 20 Index- 25.03 + 11.59 6,441.64 3,660.94 ASPI 14.2% 18.7% Level 23, East Tower, World Trade Centre, Colombo 01Tel: +94 11 727 7000, Fax: +94 11 727 7099 Email: research@equity .softlogic.lk CSE Diary for 21.05.2013Indices journeyed on a consolidation path: The bourse moved on a consolidation path today as the benchmark index took a steep downturn after a 19 point gain at its peak during mid-day to an intra-day low of 6, 423.04 points ( -43 points). However it clos ed with a lesser dip of 25 points with losses denoted in Nestle Lanka, NDB Capital Holdings and Sri Lanka Telecom outweighing gains in Ceylon Tobacco Company, Commercial Bankand Dialog Axiata. In contrast the S&P SL20 index which saw a number of shares trading at their 52-week high levels secured a gain of 11 points extending its YTD gain to 18.7%.S&P SL2 0 players highlighted the crossings board: The crossings board saw 15 crossings encompassing S&P SL20 caliber counters which took up 48% of turnover. Commercial Bankcontinued its rally gaining 2.6% as it registered 8 crossings carrying c.4.2 mn shares at LKR125.0 while on-board activity in the counterremained strong amidst its price renewing its 52-weekhigh at LKR126.0. S&P players: John Keells Holdings, Distilleries, Cargills, Chevron Lubricants and Sampath Bankalso recorded off-board blocks. YTD NFI touched the LKR12.4 bn mark; JKH and Banks dominated bourse: Foreign interest remained uninterrupted with the day recording a net foreign inflow of LKR1.1 bn carrying the YTD net foreign inflow to the LKR12.4 bn mark. Investor hunt on John Keells Holdings continued with the counter renewing its all- time high at LKR299.8 today. Selling pressure that emerged led the counter to close with a marginal dip at LKR297.0. BFI sector play persisted with greaterfocus on Commercial Bank Voting & Non-Voting and Nations Trust Bankwhich traded at 52-week high levels of LKR126.0, LKR102.0 and LKR68.9 respectively. Retail interest picked up: Retail activity picked up with the recent bullish sentiment prevailing in the bourse. Majority of focus surrounded Amana Takaful, Overseas Realty, Central Investment and Finance and Colombo Fort Land and Building. YTD Net Foreign Inflow at LKR12.4 bn; S&P SL20 index at a YTD gain of 18.7%…
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Debenture Issues: Both Debenture issues of Singer Sri Lanka [SINS:
LKR104.4] and Senkadagala Finance [SFCL: LKR50.0] have been over-
subscribed.
Dealing by Directors:
Local News Sri Lanka Treasuries yields steady: Sri Lanka's Treasuries yields were steady at Wednesday's auction with
the three month yield flat at 8.75%, data from the state debt office showed. The 6-month yield fell 01 basis
point to 9.90% and the 12-month yield rose 02 basis points to 10.86%. The debt office which is a unit of the
Central Bank offered LKR15.0 bn of maturing bills for rollover and accepted LKR16.2 bn in bids. The debt
office sold LKR2.2 bn in 3-month bills, LKR3.0 bn in 6-month bills and LKR11.0 bn rupees in 12-month bills.
Bill yields at auction fell steeply last week following a rate cut.
[Source: www.lbo.lk]
Sri Lanka HNB 'AA-(lka)' rating confirmed, pawning slowed: Fitch Fitch Ratings said an 'AA-(lka)' rating of Sri
Lanka's Hatton National Bank [HNB:LKR173.0] has been confirmed with a stable outlook and the bank has
slowed pawning advances as gold prices fell. It also confirmed an 'A+(lka)' rating of HNB's subordinateddebentures of LKR6.0 bn. "HNB's ratings reflect its strong domestic franchise in lending and deposit
mobilisation as the fourth-largest bank in Sri Lanka, as well as its satisfactory capitalisation and stable
partly owing to higher and more volatile non-performing loan (NPL) ratios and lower provisions coverage,
which constrain its ratings." HNB's Tier 1 capital adequacy ratio (CAR) was 14.1% at end-2012 and is strong
in a domestic context, Fitch said. The ratio fell to 11.85% if HNB set aside the full regulatory capital
requirement against its gold-backed lending (pawning) portfolio (currently zero capital allocation based on
domestic regulations). The adjusted figure would be modest compared with systemically important banks in
the region. Pawning advances accounted for 16% of HNB's loans in 2012 (2011: 14%). At end-2012, the
average loan-to-value (LTV) ratio on the pawning book stood at 70%, but increased to 82% as at end-March
2013 due to falling gold prices. HNB has since cut pawning growth to reduce risk, with monthly portfoliogrowth slowing to 0.4% in April 2013 (January 2013: 1.7%), compared to an overall loan growth of 1.5% in
the first three months of 2013.
[Source: www.lbo.lk]
Sri Lanka's Mercantile Investments to sell LKR1bn bonds: Sri Lanka's Mercantile Investments and Finance
[MERC:LKR2,200.0] plans to sell LKR1.0 bn in senior unsecured debt which has been rated 'BBB+' by RAM
Ratings Lanka. "The ratings are upheld by MIF’s good capitalisation levels," the rating agency said in a
statement. They are, however, tempered by its below-average asset quality as a result of its high exposure
to equity investments, its unseasoned loan portfolio given its recent rapid loan growth, and below-average
performance." MIF's asset quality is below average due to a high exposure to non-core assets (equity
investments) of 70.27% of shareholders funds which exceeds a limit set by the Central Bank at 25%. Its non
performing loan ratio was 2.81% at end December 2012 from 2.94% in March 2012.
[Source: www.lbo.lk]
Company Name Relationship Transacti
on
Quantity Price
(LKR)
Date
Royal Ceramic Lanka [RCL: LKR107.5] A M Weerasinghe Chairman Sale 840,000 109.0 20.05.2013
UK firm secures GBP35mn Lankan bridge deal: A Darlington firm has signed a GBP35 mn contract to build
hundreds of road bridges in Sri Lanka, BBC reported. Cleveland Bridge will design and build the structures in
jungle and rural areas of the country. The company will replace unreliable rope bridges with permanent steel
and concrete crossings. Graham Hutchinson from Cleveland Bridge was quoted as saying that the project
would make a major contribution to the "economic and social development " of Sri Lanka. The firm has
worked on similar projects in the Philippines.
[Source: www.dailymirror.lk]
Global News U.K. Inflation Rate Falls More Than Forecast to 2.4%: Economy: U.K. inflation slowed more than economists
forecast in April to a seven-month low and producer prices rose the least since 2009 as fuel costs fell.
Consumer prices rose 2.4% from a year earlier, down from 2.8% in March, the Office for National Statistics
said in London today. The median forecast of 35 economists in a Bloomberg News survey was 2.6%. Core
inflation also cooled, while factory-gate prices increased at the slowest annual pace in 3 1/2 years. The
pound weakened. The Bank of England lowered its forecasts for inflation last week and said price growth
may hit its 2% target earlier than previously estimated. The central bank, which also raised its growthprojections, kept its bond-purchase program at 375 bn pounds (USD569 bn) this month. Minutes of the
decision to be published tomorrow will show whether Governor Mervyn King continued his bid to boost
quantitative easing. “Looking to short-term inflation in the U.K., it is still likely to move higher in subsequent
months,” said David Tinsley, an economist at BNP Paribas SA in London. Still, the data “support our view that
inflationary pressures are set to wane due both to lower imported price pressures and because domestic cost
pressures are subsiding.”
[Source: www.bloomberg.lk]
RBA Cut Rate to Boost Business; Households Start to Respond: The Reserve Bank of Australia cut its
benchmark interest rate to a record low this month to boost businesses weakened by the currency’s
sustained strength, even as households reacted to earlier reductions. “Conditions in the business sector, asassessed in surveys, generally had remained below average, possibly in part because the exchange rate had
remained high,” the RBA said in minutes of its May 7 meeting released today in Sydney. “ Increasingly, the
household sector had shown signs of responding to” lower rates. Governor Glenn Stevens and his board have
slashed borrowing costs by 2% points over the past 19 months to 2.75%, joining global counterparts in
embracing record-low rates in an economy where inflation is contained, mining spending is predicted to
crest, and credit growth stays subdued. Stevens aims to rebalance growth from mining regions in the north
and west to builders and manufacturers in the south and east. That task has been complicated by the local
dollar’s surge from an October-2008 low that has hurt exporters and manufacturers, forcing them and