udithgpseall14 21gpgppivg Morning Notes 24 February 2015 Market Diary ASI Outlook (based on charts) Today: Lanka Century Investments - Warrant 0006 – Expiry Date Central Bank of Sri Lanka - Monetary Policy Review – February 2015 Tomorrow: Asian Alliance Insurance - XD date (LKR 5.00 per share) Dunamis Capital - XD date (LKR 1.00 per share) National Development Bank - XD date (LKR 4.00 per share) Corporate Announcements Interim Financial Statements 31-12-2014 - Property Development (PDL) & Commercial Bank of Ceylon (COMB). Comments (short term trend): ASI is trading near the lower Bollinger. Several other technical indicators suggest an uptrend in the near term. Commercial Bank – Final Dividend of LKR 2.00 per share: Dates to be notified ASI - Pivot Points Previous day’s close Pivot Point R1 R2 Commercial Bank – Scrip Dividend: Proportion – Voting – 01 share for 99.888889 existing shares Non-voting – 01 share for 77.222222 existing shares Quantity offered – Voting – 8,114,083 shares Non-voting – 719,740 shares Dates to be notified ASI - Moving Averages 07 day 14 day 21 day CIC Holdings – Interim Dividend of LKR 1.00 per share: XD – 04th March 2015 Payment date – 16th March 2015 ISIN Number 5 Year Fixed rate debentures (9.00%) payable annually RDB-BD-29/01/20C2292-9 LK0437D22922 5 Year Fixed rate debentures (8.81%) payable bi-annually RDB-BD-29/01/20C2294-8.81 LK0437D22948 5 Year Fixed rate debentures (8.71%) payable quarterly RDB-BD-29/01/20C2293-8.71 LK0437D22930 Central Bank of Sri Lanka – Monetary policy review of February 2015: Policy rates unchanged. Access to SDF Monetary Policy Decision remains rationalized. Standing Deposit Facility Rate (SDFR) 6.50% Standing Lending Facility Rate (SLFR) 8.00% Statutory Reserve Ratio 6.00% Alumex 7,311.67 7,297.04 50 day 100 day 200 day 7,305.21 7,306.10 6,961.77 Global Equity Indices Pradeshiya Sanwardana Bank – Debenture Issue: The debentures of the above bank will be listed on 25th February 2015. Debenture Type Security ID Sale Alumex 7,311.70 7,245.33 7,277.18 S1 S2 Short-term Technical Indicators RSI 52 MACD The MACD line has crossed the signal line from above. Colombo City Holdings – Interim Dividend of LKR 5.00 per share: XD – 04th March 2015 Payment date – 16th March 2015 Dealings by Directors Company Purchase Good Hope 7,326.31 7,321.01 7,335.64 7,344.98 Director Date Quantity Price (LKR) Goodhope Asia Limited 20 Feb 02 1,601.00 Zenith Insurance Brokers Ceylon Knit Trend Ltd 19 Feb 130,000 17.00-17.20 20 Feb 10,000 17.00 Local Business News National policy on economy tomorrow: Ravi Karunanayake: Finance Minister confirmed that a positive outlook over the country’s economy had optimized investor confidence. He said that the Government would announce its national policy on the economy next Wednesday (25), which would provide a clear direction as to where the Government intended to take the economy during the next few years. The Minister was speaking at an event entitled ‘A discussion with the Finance Minister’, which was held yesterday. Karunanayake further stated that the Department of Excise was able to collect Rs. 4 billion during the last 20 days compared to what the previous regime had been collecting in the corresponding period. Customs revenue too has increased to Rs. 12 billion during the past 12 months. Karunanayake said that the IMF would assist the Government to have more stability on the Balance of Payment (BOP) while the World Bank would continue to assist in 30 lending support for better growth. “One of the key requests made by both parties was to drive the economy in a cleaner, consistent and more transparent basis. We are getting three or four times more support than we used to get in the past from them. (DFT) 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 2,109.66 6,912.16 18,490.02 3,246.91 28,975.11 33,926.70 603.11 984.42 Change -0.64 -3.04 +23.10 +24.54 -256.30 -66.30 +1.36 -0.65 % Change -0.03 -0.04 +0.13 +0.76 -0.88 -0.20 +0.23 -0.07 Global Business News Singapore Unveils Robin-Hood Budget With Boost to Top Tax Rate: Singapore took another step toward Western welfare systems and further from low-tax models like Hong Kong. With the first increase in its top income tax rate in decades, the Southeast Asian city’s budget on Monday revealed policy makers’ latest step to address a widening wealth gap. While the richest 5 percent face higher levies, beneficiaries will include senior citizens who will get bigger payouts. (Bloomberg) Obama warns U.S. security funding lapse would hurt economy: U.S. President Barack Obama warned on Monday that a partial shutdown of the Department of Homeland Security would suspend pay for more than 100,000 border patrol, port inspection and airport security agents. "It will have a direct impact on your economy, and it will have a direct impact on America's national security because their hard work helps to keep us safe," Obama said in a speech to a meeting of state governors at the White House. (Reuters) Modi Wants to Replace Crowded Slums in India With 20 Million Homes: Faced with increased living costs in 2012, Suresh Kumar sent his wife and children back to their village in eastern India and took in two migrant workers to share his one-room apartment on the fringes of Delhi. That brought his rent down to 3,000 rupees ($50), about a third of what he earns each month as a chauffeur in India’s capital. (Bloomberg) Euro Holds Slide as Greece Works on Commitments Before Yellen: The euro stayed lower after a Greek official said the nation was working to finalize a list of pledges to the European Union as part of its four-month bailout extension. The currency declined versus most major peers yesterday after the Greek government sent a draft list of commitments to auditors. (Bloomberg) Morning Notes Local Business News Market expects uniform SDF rate of 6.5%: Central Bank of Sri Lanka (CBSL) persisted in preventing the rupee from depreciating, by going above the Rs 132.90 level to the US dollar in interbank spot trading by moral suasion, as a result of which volumes continued to remain low, market sources told Ceylon FT. Further, forward premia have been capped at five cents per day on the administered spot price. Meanwhile, they expected today's monetary policy statement of CBSL to merge the two band standing deposit facility (SDF) to one, at 6.50% in order to push rates, due to the twin issues of declining excess liquidity in the market, coupled with demand for dollars, when interest rates rise that may diminish market's appetite for dollars due to the higher borrowing costs involved. Currently, CBSL operates a two band SDF regime, that is a maximum (6.5%) and a minimum (5%) rate. The maximum rate is applicable when markets park their excess liquidity on the first three days of a calendar month. On all other days of a month, the lower 5% rate is applicable. (CFT) Petition filed at Human Rights Commission over Port City: A petition was filed at the Human Rights Commission of Sri Lanka (HRCSL) yesterday against the Colombo Port City project by environmental groups. The environmental groups said that the human rights of the public, including fishermen, had been violated as a result of the Chinese-funded project. They also alleged that an initial environment assessment report issued by a leading Sri Lankan university, which had cleared the project, was issued with the involvement of the Chinese. The environmental groups said that they would stage a protest in Colombo against the project with the participation of fishermen and others. Prime Minister Ranil had recently said that the project is still under review and a final decision has yet to be taken. He said that there had been several concerns and allegations over the project, including allegations of corruption and a special committee was still investigating those concerns. (DFT) Malwatte Valley to invest Rs 1b on leisure, real estate: Malwatte Valley Plantations PLC Company is investing over Rs. one billion to diversify their portfolio mainly into leisure and real estate sectors. Malwatte Valley Plantations Managing Director and CEO Willem L. Bogtstra said the tea industry is facing stiff competition and with high manufacturing costs they needed to diversify. “Firstly we have invested nearly US $ 450,000 in Melbourne to build four town housing units as a pilot project. This project was very successful as we have sold all four which has given us confidence to do a bigger project soon.” “We now plan to build a further 12 units this year under the same concept,” he said. Bogtstra said doing business was easy in Australia and this was another reason for them to re invest. He said that with the Sri Lanka leisure sector booming they have decided to build a three star hotel in Hakgala in one of their estates. “Under a subsidiary company, Uva Resorts and Resorts Pvt Ltd, we will build on a defunct Tea factory and have 60 rooms.” “This will be mainly targeting the budget travellers and room rates would start from US$ 60 and we would also offer single occupancy.” (DN) Redress for Golden Key depositors: Finance Minister Ravi Karunanayake gave an undertaking yesterday, to redress the grievances of the Golden Key depositors within a short period. The Minister said he was exploring the prospect of accomplishing this mission before the end of the government's 100 day programme. The Golden Key depositors continuously engaged in an extensive struggle staging protests, holding press conferences and appearing before court seeking redress for their grievances. Addressing the media after meeting the British High Commissioner at the ministry yesterday, Minister Karunanayake said the present management of the Ceylinco Group of Companies had given an undertaking in writing to pay back the money to the Golden Key depositors before the completion of the 100 day programme of the Maithripala Sirisena government. (DN) Sri Lanka and nuclear pacts: Best decision for energy security?: President Maithripala Sirisena during his first official visit since becoming President, entered into a bilateral on nuclear energy with the Sri Lanka’s neighbour India. The bilateral agreement signed on cooperation in the peaceful uses of nuclear energy 16 February 2015, envisages transfer and exchange of knowledge, expertise as well as capacity building and training of personnel on several areas relating to the use of nuclear energy. These include basic and applied research in the peaceful uses of nuclear technology, production and utilisation of radioactive isotopes for use in industry, agriculture and water management, nuclear security, treatment and management of radio wasters as well as the use of radioactive isotopes for health care including nuclear medicine. (DM) Moves to cancel local contracts already offered for Sri Lanka’s Northern Expressway: The former government has selected local contractors for the Northern Expressway project, considered the largest such projects in Sri Lanka, not on a competitive and open basis and hence action would be taken to cancel these contracts, Deputy Minister of Highways and Investment Promotion Eran Wickramaratne. The Minister said that when the suspended construction work of the Northern Expressway project is resumed, instead of the current contractors, the new government would pick a team of local contractors through an open and competitive process. “These contracts have been offered without any transparency. We will cancel these contracts,” he said. The Colombo-Kandy Expressway is also included in the first phase of the Northern Expressway. The Kandy Expressway was planned to link with the Northern Expressway at Pothuhera and up to Gannoruwa via Rambukkana and Galagedara. (ADB) 24 February 2015 Global Business News Goldman Sees Value Outside of ‘Stretched’ U.S. Equities: Seven months after the Federal Reserve warned that valuations of some smaller, biotechnology and social-media stocks may be “stretched” in the U.S., Goldman Sachs Group Inc. is using the same word to describe the whole shebang. “Stocks with attractive valuation are rare in the current environment of stretched share prices,” Goldman’s chief U.S. equity strategist David Kostin and colleagues wrote in a Feb. 20 report, citing the ratio of price to estimates of future profit and the ratio of enterprise value to earnings before interest, taxes, depreciation and amortization. (Bloomberg) The Fed's Own Data Show U.S. Manufacturers Don't Share Its Optimism: Tucked away in last week's report on industrial production from the Federal Reserve was an important piece of news: Manufacturers, miners and utility companies don't seem as optimistic as monetary policy makers are that 2015 will be a markedly better year for the economy. Industrial companies will raise capacity by 1.8 percent in 2015, the smallest increase since 2011, after boosting it 3.1 percent in 2014, the Fed said in its Feb. 18 release on production. (Bloomberg) Morning Notes 24 February 2015 Local Business News Lanka Hospitals creates history at Colombo Stock Exchange: The Board of Directors at Lanka Hospitals PLC, which comes under the purview of the Finance Ministry, was replaced by the new government. Venerable Theeniyawala Palitha Thera too has been included in the new 13 member Board of Directors. Thus, Lanka Hospitals PLC enters history as the first Listed Company at the Colombo Stock Exchange to have a Buddhist monk on its Board of Directors. (ADB) SriLankan to exit Mattala ground handling?: The management of the Mattala Airport has requested SriLankan Airlines to cancel their ground handling management contract at the airport. This contact was given to SriLankan Airlines for a period of 10 years. An official from the Mattala Airport said that they are not getting any returns from this deal. “We are planning to re market the ground handling management once again. And we are looking at attracting a foreign management company for this whereby we could earn revenue.” (DN) Ceylon Tea shines at Gulfood in Dubai: Ceylon Tea” which pioneered to help the popularity of the small Indian Ocean Island to global stardom for more than a century received a terrific upgrading recently at the world’s largest annual Food and Beverage Exhibition “Gulfood” in Dubai. The platform was a Ceylon Specialty Estate Tea of the Year Competition and a Charity Tea Auction focusing on the discerning tea consumers in the Middle East and Gulf Region. The event portrayed the strength of unity and understanding of another public and private partnership within the Sri Lanka tea industry. (DN) Bond yields continue to rise ahead of monetary policy announcement: The upward trend in secondary market Treasury bond yields continued yesterday as well with yields seen hitting one month highs ahead of Central Banks monitory policy announcement for the month of February due today. In money markets, overnight call money and repo rates remained mostly unchanged to average 6.00% and 5.62% respectively as surplus liquidity in the system on an overnight basis stood at Rs. 19.24 billion. The Open Market Operations (OMO) department of Central Bank drained out an amount of Rs. 10 billion on an overnight basis at a weighted average rate of 5.91%. The removal of the limitation on forward premiums to two cents per day saw the quote on one week forward contracts depreciate to Rs 133.40/50 yesterday. However, quotes on spot and spot next contracts remained at Rs 132.90/20 and Rs 132.92/20 respectively as activity continued to remain very dull. The total USD/LKR traded volume for 20 February was at $ 47.80 million. (DFT) 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. Lanka Securities Research
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