udithgpseall14 21gpgppivg Morning Notes 12 January 2015 Market Diary ASI Outlook (based on charts) Today: Blue Diamonds Jewellery Worldwide - Right Issue – Renunciation date MTD Walkers - Right Issue – Trading commencement date Serendib Engineering Group - Sub-Division of shares – Allotment date Tomorrow: Blue Diamonds Jewellery Worldwide - Right Issue – Last date of acceptance & Payment Ceylon Tobacco Company - XD date (LKR 4.40 per share) Corporate Announcements First Capital Treasuries Limited – Debenture Issue of LKR 500mn: 5mn rated, subordinated, unsecured, redeemable debentures at an issue price of LKR 100.00 each. Date of opening of the subscription list – 27th January 2015 Date on which the prospectus would be delivered – 16th January 2015 Arpico Insurance Limited – Initial Public Offering – Offer for subscription: The shares of the above company would be listed on the Diri Savi Board of the CSE and will be classified under the banks finance and insurance sector. Type Security code ISIN Ordinary voting shares AINS-N-0000 LK0434N00007 Dealings by Directors Company Director Purchase The Lighthouse Jetwing Hotels Hotel Management Vallibel Finance S.B.Rangamuwa Indo-Malay Goodhope Asia Holdings Hayleys K.D.D.Perera Sale Total no. of shares to be listed To be listed with effect from 66,230,407 Date 16th January 2015 Quantity Price (LKR) 07 Jan 10,870 60.00 08 Jan 08 Jan 15,134 1,560 48.00-48.10 1,660.00 09 Jan 1,000,000 340.00 Local Business News Nivard Cabraal, Nalaka Godahewa relinquish offices: With Maithripala Sirisena becoming the new President with a clear majority, Ajith Nivard Cabraal who was the Governor of the Sri Lanka Central Bank has resigned from his post. Meanwhile, Sri Lanka’s Securities and Exchange Commission (SEC) Chairman Dr.Nalaka Godahewa has also tendered his resignation. These resignations have been enable the new President to appoint new heads to these government institutions. (ADB) Dinesh Weerakkody to be CB Governor?: Speculation was rife that top professional Dinesh Weerakkody is likely to be appointed as the Governor of the Central Bank for the 100-day period of the new national Government under President Maithripala Sirisena. Weerakkody has been a key strategist of the main Opposition UNP for a long period. He was an Advisor to the Prime Minister of Sri Lanka from 2002-2004 and has served in many Cabinet sub-committees and national level committees on Economic Affairs, International Affairs and Labour Management. He was also the Chairman/CEO of the Employees’ Trust Fund Board under the previous UNP regime. Until last year he served as the Chairman of Commercial Bank Plc whilst at present he serves on the Boards of several listed and unlisted companies. (DFT) MBSL completes merger: Merchant Bank of Sri Lanka PLC (MBSL), the pioneer merchant banking arm of the financial power house, the Bank of Ceylon, marked the New Year dawn with the announcement of consolidating its finance company status after merging with two subsidiaries, MCSL Financial Services Ltd and MBSL Savings Bank. The announcement was made by M. R. Shah, the Chairman of MBSL during the New Year Celebration which was held at Merchant Tower building. The merger of MBSL marks the first successful merger under the financial sector consolidation plan adopted by the Central Bank of Sri Lanka (CBSL). Both, MCSL Financial Services Ltd and MBSL Savings Bank will cease their operations and will continue business under the brand name “Merchant Bank of Sri Lanka”. This will also overcome the capital adequacy shortfalls of the MBSL Savings Bank, which was a challenge over the past couple of years. (DN) Arjuna Mahendran new Treasury Secretary: Senior economist and financial services expert as well as one time Director General of the BOI, Arjuna Mahendran is to be appointed as the Secretary to the Ministry of Finance. Arjuna’s recent position was the Chief Investment 30 Officer-Wealth Management division at Emirates NBD. Prior to joining Emirates NBD, Mahendran was the Managing Director and Chief Investment Strategist-Asia at HSBC Private Bank. (DFT) Comments (short term trend): ASI is trading near lower Bollinger level. Several other technical indicators suggest a possible uptrend in the near term. ASI - Pivot Points Previous day’s close 7,605.79 Pivot Point 7,579.68 R1 7,643.13 S1 R2 7,677.63 S2 ASI - Moving Averages 07 day 7,414.80 50 day 14 day 7,338.30 100 day 21 day 7,301.98 200 day 7,545.18 7,481.73 7,322.80 7,239.67 6,793.57 Short-term Technical Indicators RSI 79 MACD The MACD line has crossed the signal line from below. Global Equity Indices S&P 500 (USA) FTSE 100 (UK) NIKKEI 225 (Japan) Shanghai Comp (China) BSE Sensex (India) KSE All (Pakistan) MSCI frontier markets MSCI emerging markets Index 2,044.81 6,501.14 17,197.73 3,259.21 27,458.38 33,324.82 590.76 958.83 Change -17.33 -68.82 +30.63 -26.20 +183.67 +207.35 +2.91 +17.65 % Change -0.84 -1.05 +0.18 -0.80 +0.67 +0.63 +0.50 +1.88 Global Business News Oil Falls as Goldman Cuts Outlook While Venezuela Seeks Recovery: Oil extended losses from the lowest level in more than 5 1/2 years as Goldman Sachs Group Inc. reduced its price forecasts and Venezuela called on OPEC producers to work together to spur a recovery. Futures slid as much as 2.1 percent in London after a seventh weekly drop. Crude has to “stay lower for longer” if investment in shale is to be curtailed to re-balance the global market, according to Goldman analysts. Prices need to return to $100 a barrel for economic equilibrium, Venezuelan President Nicolas Maduro said in Iran during a tour of Middle East members of the Organization of Petroleum Exporting Countries. (Bloomberg) Gold Extends Gain to One-Month High as U.S. Wages Stall Dollar: Gold rose to the highest level in a month after a report on U.S. wages raised concern that the economy may not be strong enough for the Federal Reserve to start increasing interest rates, hurting the dollar for a second day. Bullion for immediate delivery advanced as much as 0.3 percent to $1,226.95 an ounce, the highest price since Dec. 12, and traded at $1,226.94 at 9:20 a.m. in Singapore, according to Bloomberg generic pricing. The metal climbed 1.2 percent on Jan. 9 to cap the biggest weekly gain since June as assets in the SPDR Gold Trust, the world’s largest exchangetraded product backed by bullion, rose the most since July. (Bloomberg) Copper Holds Losses Near Five-Year Low on Demand Growth Concern: Copper in London held losses near the weakest in more than five years on speculation demand growth my falter amid signs of uneven economic growth in the U.S., Germany and China, the largest metals consumers. Copper was little changed after ending last week at the lowest since October 2009. The biggest drop in U.S. hourly wages since records began in 2006 overshadowed a steeper-than-forecast payrolls increase, while German industrial production in November unexpectedly fell for the first time in three months, data showed Jan. 9. (Bloomberg) Morning Notes Local Business News Cargills goes for compulsory offer on Kotmale to buy remaining 2.74% stake: The Cargills (Ceylon) Group has announced a “compulsory” offer to buy the remaining 2.74% stake at large of Kotmale Holdings Plc (KHPLC). A decision to this effect was made by the Cargills Board last week. The compulsory offer is priced at Rs. 62.50 per KHPLC share. The stock last traded at Rs. 63. The compulsory offer follows the conclusion of a voluntary offer made in October at Rs. 62.50. During the voluntary offer Cargills secured only responses from shareholders owning around 301,000 shares of below 1%. As at September 2014, net assets per share at company level was Rs. 9.82, up from Rs. 8.37 a year ago and at group level it was Rs. 29.41, up from Rs. 26 in November 2013. As of end 2014, the Cargills Group held 97.26% stake, up from 94.07% as at end September. Cargills’ and related parties’ stake comprises Cargills Quality Foods (94.07%), Cargills (Ceylon) Plc and Cargills Quality Dairies Ltd. (DFT) 12 January 2015 Global Business News US jobless claims dip; 2014 layoffs lowest in 17 years: The number of Americans filing new claims for unemployment benefits fell last week and job cuts declined sharply in December, suggesting the labour market is tightening.Thursday’s reports support views of faster growth this year, driven by consumer spending, despite a faltering global economy.“Labour market conditions continue to improve, providing support for consumers and contributing to a virtuous cycle for the economy,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan. Initial claims for state unemployment benefits slipped by 4,000 to a seasonally adjusted 294,000 for the week ended 3 January, the Labour Department said. (DFT) Bond prices tumble during the week on political uncertainties: Considerable selling interest across the yield curve saw secondary market bond yields increase (bond prices dip as yields increase) throughout the week ending 09th January, reflecting a parallel shift upwards of the overall yield curve. In money markets, overnight call money and repo rates decreased to average 6.08% and 5.45% respectively for the week, as average surplus liquidity increased to Rs. 36.91 billion against its previous week’s average of Rs.26.61 billion. An amount of Rs. 33.18 billion was drained out on Friday by way of a seven day repo auction at a weighted average of 5.98%. The rupee on spot next and spot next-next contracts was seen losing ground during the week to close the week ending 09th January at Rs 132.70/90 and Rs.132.80/00 respectively on the back of importer demand as market participants were seen refraining from trading on spot contracts . The daily USD/LKR average traded volume for the first three days of the week stood at US $ 51.73 million. (DFT) Foreigners exiting from Govt. securities market transitionary European investors once more line up to invest: The economy may face a few hiccups with the election of a new regime vis-à-vis the new President Maithripala Sirisena coming to power last week, in the form of foreign investors exiting from the government securities market, but such exits are transitionary, foreign banking sources said. As a result of such exits, the yield of the 2024 maturing Treasury Bond increased by 25 basis points to 8.35% and the exchange rate weakened to Rs 133 to the US dollar in 'spot next' interbank trading and to Rs 133.10 in 'spot next next' trades on Friday (9 January). "It's the uncertainty as to how a coalition government would handle the economy that is causing these foreign investor exits," they said. But once they know that the economy is on terra firma they will return, probably in a short space of another three months’ time," sources said. "Investors will be looking at 'who's who' are in the new Cabinet, that is critical," they said. Nevertheless, European investors have once more lined up to invest in Sri Lanka, sources added. (CFT) Fitch affirms HNB Assurance; assigns rating to HNB General Insurance: Fitch Ratings Lanka has affirmed HNB Assurance PLC's (HNBA) National Insurer Financial Strength Rating and National Long-Term rating at 'A(lka)'. Fitch has also assigned HNBA's subsidiary HNB General Insurance Ltd (HNB GI) a National Insurer Financial Strength Rating and National Long-Term rating of 'A(lka)'. All ratings have a Stable Outlook. The ratings reflect the Sri Lanka-based Insurance group's comfortable capitalization in terms of regulatory solvency, its prudent policy towards investment and modest market share. The ratings also reflect Fitch's expectation that HNBA will receive distributional synergies from parent, Hatton National Bank PLC (HNB, AA-(lka)/Stable), due to HNBA's importance to the bank in providing additional bancassurance products and HNB's 60% ownership of the insurance group. (CFT) ComBank fetes UAE business partners: Strong growth in transaction volumes in the United Arab Emirates (UAE), particularly in remittances, was acknowledged by the Commercial Bank of Ceylon recently when it felicitated its business partners, ex-staff and customers in the Emirate. United Arab Emirates is a key market for remittances to Sri Lanka. The Commercial Bank has 21 agents and four Business Promotion officers in the UAE, covering the four Emirates, Dubai, Abu Dhabi, Sharjah and Ajman. The Bank is one of the most active players in Sri Lanka in the field of remittances, offering customers a range of options including the Bank's own e-Exchange platform, a highly secure, low cost money transfer facility which is available to remitters via a network of agents in over 50 countries. Remitters can send money even without having an account in the Bank. Besides its own e-Exchange remittance platform, Commercial Bank offers customers around the world the facility of transferring funds via MoneyGram, Xpress Money and Ria Financial Services. (SO) New Sri Lankan president expected to kill James Packer’s casino plans: Billionaire James Packer is expected to walk away from a plan to build a $US400 million ($496 million) casino and hotel in Sri Lanka after the island nation elected a new president, Maithripala Sirisena, who has promised to block the project. Mr Sirisena, who is described as a social conservative, defected from the ruling party in November after previously serving under former president Mahinda Rajapaksa as health minister. The manifesto released by his new party, the New Democratic Front, promised to “disallow” licences for casinos proposed by Mr Packer’s Crown Resorts and local developer John Keells Holdings. Crown’s plans progressed rapidly throughout 2013, but stalled in the past year because of opposition from Buddhist leaders, backlash against tax concessions proposed for the project and the recent election campaign. One analyst, who declined to be named, said such a scenario would have been extremely risky for Crown. (ADB) Lanka Securities Research The information contained in this report, researched and compiled for purposes of information do not purport to be complete description of the subject matter referred to herein. In preparing this report care has been exercised to collect information from sources which we believe to be reliable although we do not guarantee the accuracy and completeness thereof. Lanka Securities (Pvt) Ltd. and/or its affiliates and/or its directors, officers and employees shall not in any way be responsible or liable for loss or damage which any person or party may sustain or incur by relying on the contents of this report and acting directly or in directly in any manner whatsoever.
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