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Morning Notes
27 February 2015
Market Diary
ASI Outlook (based on charts)
Today:
Softlogic Finance - Right Issue – XR date
Vallibel Power Erathna - Dividend payment – (LKR 0.50 per share)
Cargills (Ceylon) - Dividend payment – (LKR 0.70 per share)
Monday:
Nestle Lanka – XD date (LKR 28.50 per share)
Corporate Announcements
Interim Financial Statements 31-12-2014 - Sanasa Development Bank (SDB), Hatton
National Bank (HNB), The Lanka Hospital Corporation (LHCL), Seylan Bank (SEYB),
Kahawatte Plantations (KAHA), Nations Trust Bank (NTB).
ASI - Pivot Points
Previous day’s close
Pivot Point
R1
R2
United Motors Lanka – Interim Dividend of LKR 2.00 per share:
XD – 10th Mar 2015
Payment date – 18th Mar 2015
The Nuwara Eliya Hotels Company – Interim Dividend of LKR 22.50 per share:
XD – 10th Mar 2015
Payment date – 19th Mar 2015
ASI - Moving Averages
07 day
14 day
21 day
Seylan Bank – First & Final Dividend of LKR 2.50 per share:
XD – 01st Apr 2015
Payment date – 10th Apr 2015
Nations Trust Bank – First & Final Dividend of LKR 2.10 per share:
XD – 01st Apr 2015
Payment date – 10th Apr 2015
Softlogic Finance – Extraordinary General Meeting (EGM):
At the EGM of the Softlogic Finance held on 26th February 2015, the right issue of shares was
approved by the shareholders by way of an ordinary resolution.
Commercial Bank of Ceylon – Establishment of an employee share option plan 2015:
The total no. of options to be granted for the period commencing from 2016 to 2018 –
16,210,714 ordinary voting shares (subject to exercise of existing ESOPs and scrip
dividend).
Percentage of ordinary voting shares to be issued – up to 2%
(Refer attachment for more details)
Sale
Lanka Walltiles
Date
J.A.P.M. Jayasekara
23-24
Quantity
11,000
7,306.80
7,295.75
7,277.31
S1
S2
7,304.47
7,291.49
50 day
100 day
200 day
7,309.17
7,307.91
6,978.85
Global Equity Indices
Hayleys – Debenture Issue of LKR 2bn:
Company has received applications for over LKR 2bn for the above debenture issue by
Hayleys and accordingly the issue has been oversubscribed. Therefore, the issue closed
yesterday (26th Feb 2015) as per the prospectus.
Director
7,317.44
7,312.85
7,325.83
7,334.21
Short-term Technical Indicators
RSI
51
MACD
The MACD line has crossed the signal
line from above.
Commercial Development Company – Final Dividend of LKR 3.00 per share:
Dates to be notified
Dealings by Directors
Company
Purchase
Comments (short term trend): ASI is trading near the lower
Bollinger. Several other technical indicators suggest an uptrend
in the near term.
Price (LKR)
100.00
Local Business News
Sri Lanka’s forex reserves down to US$7.26bn in Jan 2015: Central bank: Sri
Lanka's forex reserves fell to 7.261 million US dollars in January 2015, from 8.208 million US
dollars in December 2015,official data showed. The Island’s foreign reserves were up in
August 2014 at 9.2 billion US dollars amid weak credit growth and since then it was falling
steadily as domestic credit picked up. According to analysts, the Central Bank would mop up
excess liquidity in the banking system permanently and allow the market interest rates to
move up if the foreign reserves are to be safeguarded. . The interim budget 2015, which
raised public sector salaries from February is also expected to boost consumption and put
pressure on the credit system. (LBO)
Sri Lanka Central Bank asked all banks to pay 15-pct interest to 60+ depositors:
Sri Lanka's Central Bank has asked all the banks to pay 15% interest for term deposits of up
to a million rupees, held by depositors over 60 years of age, the bank said in a statement.
Senior citizens who opened fixed deposits up to 2.5 million rupees before the 16.01.2015
under the previous scheme would also get 12% interest, the bank said. The rule applied to
all banks. The Government of Sri Lanka has now finalised the procedure for implementation
30the Special Interest Scheme for Senior Citizens announced in the Interim Budget 2015.
of
Accordingly, the Central Bank of Sri Lanka issued the necessary Operating Instructions on
behalf of the Government to all banks today. (LBO)
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
2,110.74
6,949.73
18,799.26
3,299.04
28,746.65
33,762.80
610.29
992.80
Change
-3.12
+14.35
+13.47
+0.69
-261.34
-82.50
-0.14
+4.91
% Change
-0.15
+0.21
+0.07
+0.02
-0.90
-0.24
-0.02
+0.50
Global Business News
Japan’s Output Jumps While Retail Sales Sag, Inflation
Slows: Japan’s industrial output increased the most in more than
three years while retail sales slid and inflation slowed,
underscoring strength in export industries and weak domestic
demand. Production jumped 4 percent in January from the
previous month, exceeding forecasts with the biggest gain since
June 2011, according to trade ministry data. (Bloomberg)
Merkel’s Truths Lead Greece to Unavoidable Deal on Euro
Bailout: It took a few simple truths from Germany’s Angela Merkel
on the basics of euro-area crisis management to pacify the
combative new government in Athens. The chancellor explained to
Greek Prime Minister Alexis Tsipras what an aide in her office
called reality. (Bloomberg)
Yellen Seeks Right Blend of Inflation Data to Raise Rates:
Chair Janet Yellen and her Federal Reserve colleagues are just
about finished making promises about short-term interest rates.
They want investors to focus instead on indicators related to their
mandate to keep inflation stable and employment high.
(Bloomberg)
Goldman Asset Predicts Bond Rout as Standish Sees Low
Yields: Goldman Sachs Asset Management says rising Treasury
yields this year will curb returns. Standish Mellon Asset
Management says borrowing costs will stay low. U.S. 10-year
Treasury yields will climb almost 1 percentage point to 3 percent
by Dec. 31, according to Candice Tse, a senior strategist at Goldman
Asset in New York. (Bloomberg)
Dollar Jumps Versus Emerging Peers as U.S. Futures Drop:
Emerging-market currencies weakened against the dollar, with
China’s yuan at its lowest since October 2012, and Standard &
Poor’s 500 Index futures dropped on speculation rising U.S.
inflation will spur interest rate increases. (Bloomberg)
Morning Notes
Local Business News
Overhanging debt, lack of liquidity hampering better ranking – Fitch: The country's
strengths and weaknesses were looked into analytically comparing it to countries in Emerging
Asia by Fitch Ratings Lanka at its second Sovereign and Banking Roundtable. "Sri Lanka is
slightly above the 6% GDP growth which is what other countries in Emerging Asia is
bordering on. Sri Lanka being a country with a BB- ranking is marked as a stable economy,"
she said. "Though the country's GDP growth is positive, in other aspects Sri Lanka is below the
expected ranks when compared to its BB- peers. One of these aspects is the overhanging debt
which is far above Sri Lanka's peers such as Bangladesh," Chandra said. "In terms of voice and
accountability and political stability Sri Lanka is still lower than its peers. However there is
potential for change with changing of the government," Chandra said. The country's Net IDI
inflow is recorded as 1% which so much lower than Sri Lanka's peer countries with BB
medians recording 25% inflow. (DN)
Sri Lanka port city project would create infrastructural and sewage disposal issues:
Deputy Minister: Sri Lanka’s Chinese funded port city project would have infrastructural and
sewage disposal issues once implemented, Eran Wickramaratne, Deputy Minister of Highways,
Higher Education and Investment Promotion said at an event held in Colombo. “Much has
been said in the recent weeks about the port city development in Colombo and I am not going
to make any particular comment on that as the whole project is being reviewd,” he said. “But I
do not know if you have realized, apart from the immediate environmental issues with the
port city, when it is completed and in full flow there will be 300,000 people living on those 500
acres of land which is half the population of this city (Colombo),” “Can you imagine this issues
in terms of water, transport and also in terms of sewarage?” he asked. (LBO)
CSE must broad base to attract rural base - Dr. de Silva: The Government is aiming at
creating an environment where people will want to participate in the stock exchange activities
knowing that they have the equal challenge in either losing or making money. The government
is determined to create a highly competitive social market economy while creating an asset
owning middle class, Policy Planning and Economic Affairs Deputy Minister, Dr. Harsha de
Silva said. “The government's objective is to create a country where we have a large middle
class that own shares we will have two pillars on which our economy will be built. One is
competition and other one is the trust. It is imperative to broad base the activities of the
exchange not just to Colombo, but also to the rural areas. We want to play the level we ought
to play,” de Silva said. The Deputy Minister urged the CSE to make sure to attract more people
to list in the exchange and to start trading in stocks. He said it is the responsibility of the
Securities and Exchange Commission to take necessary measures to free the market from
interference and manipulations while taking necessary action against wrong doers. (DN)
SEC to give investors a fair deal: Securities and Exchange Commission Chairman Thilak
Karunaratne said the SEC's objective is to formulate a well regulated capital market where all
the investors get a fair deal. The SEC is working on addressing the existing weak points by
bringing more amendments to our Act. It will give us more strength and teeth to take care of
shortcomings in the capital market. Karunaratne also added that the Securities and Exchange
Commission was looking forward to closely working with the Colombo Stock Exchange. (DN)
Sri Lanka’s CSE to go for ‘Central Counterparty System’: Colombo Stock Exchange (CSE)
is to set up a ‘Central Counterparty System’ (CCP) as a measure to safeguard both the investors
as well as the stockbrokers. This is being done for the first time in Sri Lanka, CSE Chairman
Vajira Kulatilaka said this morning (26 February). The CCP is a fund which would safeguard
both parties in a CSE transaction, according to Kulatilaka. Currently, if a stockbroker/investor
faces a problem after a transaction he has no assurances for relief. The Central Counterparty
System will be a mechanism to provide this relief. (ADB)
Upward pressure on interest rates: Interest rates are on an upward trend made worse by
a Central Bank of Sri Lanka (CBSL) circular which has made it mandatory for banks to pay a
15% interest on senior citizens' deposits, market sources told Ceylon FT. The market in
secondary market trading in Treasury (T) bills and T-bonds are dealing in the short term Tbills due to expectations that interest rates will rise in the near term, they further said. For
instance, the 'more liquid' three months maturity is being traded at between 6.05 – 10%,
whereas in the primary market auction of Wednesday it fetched a yield of only 5.98%, the
sources said. Meanwhile, commercial banks' average weighted prime lending rate in the week
ended Friday (20 February) increased by a massive 32 basis points (bps) week-on-week to
6.62%. In related developments, the weighted average rate of call rates increased by 1bp to
6.01% and that of overnight market repo transactions by four bps to 5.61% at yesterday's
trading. (CFT)
Bansei by Hotel J opens in Hikkaduwa: The first tourist resort of the Maithri-era Bansei
by Hotel J was opened recently in Hikkaduwa by Japanese investor Bansei Securities in
partnership with Jetwing. Bansei by Hotel J consist of 30-rooms. (DFT)
27 February 2015
Global Business News
Google Is Making Its Biggest Ever Bet on Renewable
Energy: Google Inc. is making its largest bet yet on renewable
energy, a $300 million investment to support at least 25,000
SolarCity Corp. rooftop power plants. Google is contributing to a
SolarCity fund valued at $750 million, the largest ever created for
residential solar, the San Mateo, California-based solar panel
installer said Thursday in a statement. (Bloomberg)
Saudis’ Oil Price War Is Paying Off: Three months after Saudi
Arabia made clear it was going to let oil prices keep tumbling, the
strategy is showing signs of working. U.S. drillers are idling rigs at
a record pace, gutting investment plans and laying off thousands of
workers. (Bloomberg)
Easy Money Outweighs Fed to Fuel Record Debt Flows to
Asia Haven: This year was tipped to be the one when U.S.
interest-rate increases would suck money from emerging markets.
It’s not turning out that way in Asia. Unprecedented economic
stimulus from Europe to Japan has prompted investors to pump a
combined $14.4 billion into Indian, South Korean and Indonesian
local-currency government debt this year, the most on record for
the three markets, exchange data show. (Bloomberg)
Morning Notes
27 February 2015
Local Business News
Rupee ends steady on dollar selling by banks: Rupee forwards recovered to end steady
on Thursday after falling intraday as dollar selling by banks late in the day erased early losses.
One-week forwards, which fell to 133.50/60 per dollar in early trade, ended steady at
133.40/45, as dollar sales by banks offset importer demand for the greenback earlier in the
day, dealers said. Finance Minister Ravi’s statement on Wednesday that Sri Lanka would
defend the rupee currency and that the country has enough foreign exchange reserves to
prevent any further depreciation created uncertainty in the market, dealers said. “If foreign
investors digest the real situation of the reserves, it could trigger profit-taking in their bond
portfolios and will demand more dollars. That might be an additional burden on the reserves
while pressurising the exchange rate,” a currency dealer said. (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