27 April 2010

How to Invest in Sri Lanka Equity Market - Colombo Stock Exchange, the Best Performing Capital Market of the World

The Colombo Stock Exchange (CSE) became the best performing capital market in the world recording a growth of 111.14 percent. All Share Price Index (ASPI) of the CSE and Milanka Price Index (MPI) both have crossed 7,000 milestone creating history. (2nd October 2010).

Institutions incorporated outside Sri Lanka and individuals resident outside Sri Lanka inclusive of Sri Lankan residents out side Sri Lanka are permitted to buy and/or sell shares in a listed company of Colombo Stock Exchange up to 100% of the issued capital of such company.

Investment in shares in Sri Lanka and repatriation of proceeds should take place through Share Investment External Rupee Accounts (SIERA) opened with licensed commercial banks, which are appointed as Authorized Dealers in foreign exchange under the Exchange Control Act.

Individuals resident outside Sri Lanka (inclusive of Sri Lankans resident outside Sri Lanka), approved regional funds, approved country funds as well as corporate bodies incorporated outside Sri Lanka are permitted to open SIERA accounts. (Note: Securities Investment Accounts (SIA) replace SIERA).


• How do you purchase shares
• Types of securities traded at the CSE
• What is Central Depository Systems (Pvt) Ltd?
• How do I open a CDS account?
• What is the purpose of my CDS account?
• What is the reason for holding my securities in scrip-less form?
• Who are stockbrokers?
• Can I use a different broker from the one I have been using?
• How Safe Is CDS?

• Who is a Stockbroker?
• What services do they provide?
• What are their fees?
• Members of CSE (List of Stock Brokers)

• What are the types of shares?
• Benefits of Investing in Equity
• How do you buy/ sell shares?

• The Automated Trading System (ATS)
• The Debt Securities Trading System (DEX)
• The Boards

The Exchange is open for continuous trading from Monday to Friday from 9.30 a.m. to 2.30 p.m.

Secondary trading of corporate and government debt securities through the DEX takes place from 9.30a.m. to 12.30p.m.

• Transaction cost applicable for equity & debt securities


The CSE offers a variety of tools to help market professionals and investors monitor trading activity and keep the pulse of the market.
• Daily market summary
• Share price list
• Market Indices
• Total Return Indices
• Sector-wies market summaries
• Market capitalisation of listed companies
• Trading statistics
• Reserch papers

Stock Markety Report - Daily
Stock Markety Report - Weekly

MyCSE offers additional features such as live market information for the stocks in your portfolio, etc.

The Colombo Stock Exchange (CSE) has facilities for the secondary trading of Corporate and Government Securities. A separate trading system (DEX) and a separate clearing and settlement mechanism is in place for debt securities. Presently 69 corporate debt securities are listed on the CSE. All Government Debt is tradable through the DEX system.


ADDITIONAL INFORMATIONInvestnow.lk - Best place to discuss matters concerning the Colombo Stock Exchange
Colombo Stock Exchange on Wikipedia
Securities & Exchange Commission of Sri Lanka
The Stock Market in Sri Lanka: An Investment Opportunity Outlook for 2009 and Beyond
• Stocks in Sri Lanka are "the only equities" Jim Rogers would "consider buying at the moment" - Bloomberg newswire report
• “If I weren’t here, I’d be on a plane to Sri Lanka" - Jim Rogers on wonderful opportunities in Sri Lanka
How to Pick Winning Stocks
Share Valuation - Risks & Returns

Related Info :
Securities Investment Accounts (SIA) Replace SIERA & TIERA Accounts - For Investment in Sri Lankan Equity, Debt and Unit Trusts
Sri Lanka Offers Special Visas to Investors, Professionals & Senior Citizens

25 April 2010

US to Host Twenty20 Cricket Series in Florida for the First Time in May

23rd April 2010, www.bloomberg.com, By Dan Baynes

New Zealand and Sri Lanka will play a Twenty20 cricket series in Florida next month, marking the first time two elite international teams have played each other in the U.S.

The three-match series in the sport’s newest and shortest format will take place May 20-23 in Lauderhill, Florida, New Zealand Cricket said today in an e-mailed statement.

It will be the first contest between so-called full members of the International Cricket Council in the U.S., New Zealand Cricket said, adding that it hopes to play matches in the U.S. on an annual basis after entering a stategic partnership with USA Cricket.

What is Twenty20 - Cricket's Newest and Shortest Format

Colombo Stock Exchange Ecstatic on Government's Stability

23rd April 2010, www.sundaytimes.lk

The Colombo bourse ended trading on Friday on ecstatic investor sentiment, with analysts saying that the new government’s stability has given them a positive outlook in this post-war economy in the country.

“The market saw a significant shift in investor sentiment during this week as investors, mostly retailers denoted buying interest in most of the blue chip stocks,” an analyst said.

He said that the market recorded lavish gains on all four trading days of the shortened trading week as premier banking counters, diversified counters, manufacturing counters and Hotel counters registered significant price appreciations.

The All Share Price Index rose 44.09 points to close at 4,121.64 points (+1.08%), whilst the Milanka Price Index also increased 19.05 points to close at 4,695.83 points (+0.41%).

Share Volume was at 60,243,597 with the total turnover at Rs 1,780.8 million.

Domestic purchases amounted to Rs 1,686.5 million while domestic sales amounted to Rs 1,329.6 million.

Foreign purchases amounted to Rs.94.3 million whilst foreign sales amounted to Rs.451.1 million.

24 April 2010

Sri Lanka's Inflation Down 6.3pct in March

24th April 2010, www.dailynews.lk

April Monetary Policy Review

Inflation, as measured by the year on year change in the Colombo Consumers' Price Index has declined to 6.3 percent in March.

The annual average inflation increased marginally to 3.2 per cent compared to the previous month.

The decline in year on year inflation is largely attributable to the reduction in the price of several key food items. The continued improvement in supply conditions is expected to subdue inflationary pressures, the Central Bank said.

The Monetary Board, at its meeting held on April 21, has decided to maintain policy interest rates of the Central Bank unchanged.

The expansion in monetary aggregates has begun to decelerate. Growth in broad money supply, which picked up towards end 2009, has declined to 17.4 per cent by February 2010.

The declining trend in credit to the private sector bottomed out in October 2009 and has since been growing in absolute terms, reflecting the gradual recovery in economic activity. This has been aided by the recovery in the global economy, the easing of the monetary policy stance as well as increased investor confidence.

Growth in the domestic economy is expected to gain momentum during the year, supported by these favourable conditions.

Reserve money has been expanding at a higher rate since the last quarter of 2009. The expansion has been mainly due to the increase in currency in circulation on account of the two elections held during the early part of 2010 coupled with the seasonal demand for currency.

The Bank is also monitoring the developments in the money market as excess rupee liquidity continues to remain high.

However, reserve money has begun to contract following the festive period. The Bank will continue to closely monitor the movements in monetary aggregates and take appropriate action if necessary.

Sri Lanka's Raigam to Invest in Salterns and Chemical Plants

24th April 2010, www.dailynews.lk

After the successful completion of the initial public offering (IPO), trading of Raigam Wayamba Saltern shares will commence on April 29 at the Colombo Stock Exchange.

The funds raised through the IPO will be utilized to increase salt production and meet the country's salt requirements, said Raigam Group Chairman/CEO Dr. Ravi Liyanage.

Raigam will invest in three salterns in Tangalle, Trincomalee and Puttalam.

"We expect to complete the Tangalle Saltern construction soon. Seventy five percent of the work has been completed under this project. We have imported a refinery machine to the Saltern costing Rs.125 million," he told a press conference, yesterday.

"Wayamba Saltern is a subsidiary of Raigam Group and we will establish a chemical plant in Trincomalee with an invest of over Rs.500 million.

This will follow as the second phase of the Saltern in Trincomalee," he said.

He said this chemical plant will cater to the local and the export market.

Sri Lanka's Malwatte Valley Gets Record Price for Rubber

24th April 2010, www.dailynews.lk

Malwatte Valley Plantation obtained a record price over Rs 450 per kg for its Centrifuged Rubber Latex manufactured at their Vincit estate in Avissawella.
The company has now sold its entire production of rubber until the end of its first half financial year ending June 2010 at today's boom prices.

Company Managing Director W.L. Bogtstra said such forward sales were done to insure the profit of this sector arising out of these lucrative prices to end June 2010.

Tea prices though slightly lower recently have resulted in favourable profits so far this year. With increased crops earnings and brought leaf operations the financial prospects of the company are encouraging.

Profit up by 102pct for Sri Lanka's Lighthouse Hotel, Galle

23rd April 2010, www.lankabusinessonline.com

Lighthouse Hotel, a unit of Sri Lanka's Jetwing leisure group said profits rose 102 percent in the March quarter to 32.2 million rupees amid a pick up in tourism, interim accounts showed.

Revenues rose 34 percent to 110.3 million rupees in the quarter. Sri Lanka's peak tourism season is the European winter, Sri Lankan hotels make most of their money in the December and March quarters.

Lighthouse's full-year profits 22.6 million rupees, giving earnings per share of 49 cents for the year.

The firm is trading at around 65 rupees giving a price to earnings multiple of 132 times. The dot com type earnings multiples are reflect the current highly optimistic expectations for hotel shares.

The hotel has 63 rooms and analysts say expansion prospects are not high.

Hayleys, a listed Sri Lankan group sold out earlier in the quarter at prices over 60 rupees and the latest shareholder list shows large stakes owned by state institutions.

The two main shareholders are Jetwing Hotels Management Services (24.02 percent) and Mercantile Investments (14.36 percent).

Employees Provident, a pension fund of private citizens managed by the state now has 11.09 percent, the Bank of Ceylon 9.78 percent, National Savings Bank 4.35 percent.

Sri Lanka's state state banks, have been active players in the market in recent months, despite the government going through a cash crunch and concern being raised about renewed money printing and rising inflation.

Sri Lanka's New Cabinet Sworn in

23rd April 2010, www.news.lk

The new Cabinet of Ministers of the UPFA government headed by President Mahinda Rajapaksa was sworn in at the Presidential Secretariat this afternoon (23 April).

37 Ministers and 39 Deputy Ministers were sworn in. The previous Cabinet comprised 51 Ministers, 39 non- Cabinet Ministers and 19 Deputy Ministers. Thus, the new Cabinet is significantly smaller with the number of Cabinet Ministers reduced to 37.

More on the new Cabinet, the Ministers and their portfolios:

Image courtesy of www.colombopage.com

22 April 2010

SriLankan Re-commences Flights to London, Paris and Milan with the Lifting of Restrictions by Eurocontrol

22nd April 2010, www.dailymirror.lk

SriLankan Airlines re-commenced flights to London, Paris and Milan following the lifting of restrictions by Eurocontrol, yesterday, the Airline said in a statement. SriLankan operated flights to Paris and Milan early last morning, while flights to London commenced in the late afternoon.
The airline, when this issue went to print was awaiting the latest information from Eurocontrol with regard to restarting flights to Frankfurt. Services to Rome were not disrupted and are continuing as scheduled.

However the Airline acknowledges that the situation is continuously changing due to wind patterns and further eruptions from the volcano. Sri Lankan is liaising with Eurocontrol and monitoring the situation.

The Airline is planning several additional flights for the convenience of passengers whose travel was disrupted. The airline’s regular schedule consists of 19 flights per week to its five European destinations.

Eurocontrol is the organization which has authority over all commercial flying in Europe. Passengers whose flights were disrupted will be accommodated on additional flights, with those booked on the earliest flights which were disrupted being accommodated first.

The Airline advises passengers to call ahead several hours prior to flight departure to check if their flight is operating as scheduled.

Passengers whose flights were disrupted should call SriLankan Airlines on 01 9733 5500 to check on their alternate flights.

Sri Lanka Ornamental Fish Industry Can Reach $1bn by 2012

22nd April 2010, www.dailynews.lk

The peaceful environment in the country will fuel the industry development and growth momentum will continue with the growth in the tourist sector, Association of Live Tropical Fish Exporters of Sri Lanka, President Sathyendra Wijayapura told Daily News Business.

“It is important to provide assistance to industry stakeholder as it contributes 100 percent to the national economy. The benefit derived is widespread due to the stakeholder distributed countrywide”, he said.

The industry suffered a setback due to recent air travel cancellations that hampered ornamental fish exports. The time was right to earn higher value of foreign exchange as it was just after the Easter holidays and the tailend of the spring season.

“This was a big blow to the country as it was the time where the European market was booming and the demand was at peak. However, the industry could recover if air travel reaches normality to participate in the largest international pet exhibition - Inter Zoo to be held in Eurnbury Germany in early May.

This is an important event where all importers and wholesellers participate. Sri Lanka will conduct a pavilion with the participation of ten large-scale exporters. They expect to promote and generate more business.

Sri Lanka’s economy is progressing well and the stock market is performing steadily. There are indications that the ornamental fish industry could prosper with the banking industry also being receptive towards the business community.

There are 50,000 stakeholders including breeders, suppliers and collectors and the ornamental fish industry could thrive, as the restriction to use Northern and Eastern waters is no more there.

The marine fish that are exported is caught from the lower level of the food chain where the numbers are high. This ensures the preservation of the natural balance in the ecosystem. The fish breeds fast at this level and it helps the sustainability of the industry.

The industry has a promising future. The Association is working towards educating divers to enable them to develop diving and collecting skills not to destroy the natural habitat and to use safety measures.

This will ensure minimal loss to the industry. “We have natural conditions to breed marine fish and urge the Government to support this industry as it could earn high foreign exchange in future”, Wijayapura said.

BOI Sri Lanka Accelerates Projects under Rapid Investor Facilitation

22nd April 2010, www.dailynews.lk

The Board of Investment (BOI) is now accelerating proposed projects under implementation through rapid investor facilitation.
The BOI has taken this step since there were many Foreign Direct Investments (FDIs) directed to Sri Lanka during the first four months of this year which was US $ 250 million, BOI Chairman Dhammika Perera said.

Thirty percent of the FDI to Sri Lanka is directed fully by foreign investors. Joint ventures too have a 30 percent share in FDIs. The locals have contributed with 30 percent share in to total investments.

“We are at present looking at re-evaluating our resume of incentives to the investors. Apart from that, BOI expects to encourage investments in the Northern and Eastern areas. The investments in agriculture, fisheries and food processing will be encouraged in the Northern and Eastern areas,” Perera said.

The BOI encourages joint venture investments with Sri Lankans. Those joint ventures will promote application of latest technology and knowledge to various industries. Thus the focus on joint ventures should grow further, he said.

“Tourism will be the other area that many investments should focus on.

“There are several infrastructure facilities that must be developed to accommodate many tourists. These facilities definitely have to be on par with international standards,” Perera said.

There is good potential in the East coast with many natural reserves.

But what Sri Lanka needs at present is formal training institutes to improve the service provided by leisure sector employees.

He said that industries such as agriculture, fisheries should come to the market with value addition.

21 April 2010

USAID Launches $2bn Business Alliance Program in North/East of Sri Lanka to Create 5000 Jobs

20th April 2010, www.dailynews.lk

The U.S. Agency for International Development announced a new business alliance program with Sri Lanka’s private sector.

Partnering with five local businesses, the USAID Public-Private Partnerships for Northern and Eastern Sri Lanka (PPP) Program is expected to create around 5,000 full-time jobs in the North East.

These five alliances are all with indigenous Sri Lankan private companies. USAIDs investment of about Rs.600 million will generate an additional Rs.1,400 million investment from the private sector for a total of about Rs 2 billion.

The sectors include aquaculture, apparel manufacturing, logistics, and horticulture.

By establishing a ready-made garment plant in Omanthai, near Vavuniya in the Northern Province, an alliance between USAID and a leading garment manufacturing and export company will create 1,000 jobs for the internally displaced people, including young widows.

An alliance between USAID and a Sri Lankan aquaculture company will bring expanded production in the Eastern and Northern provinces with the dual goal of increasing fish-based income and enhancing the aquaculture supply chain of high value seafood products. By the end of the three-year project, 1,300 smallholder farmers will increase their net income by 300 percent.

A leading logistics company will invest in logistics activities to help farming communities.

Through this alliance, farmers in Northern and Eastern provinces will have an opportunity to increase both their production and income.

At least 1,500 farmers and fishermen will benefit from this alliance.

Cold storage units will be built in Jaffna, Ampara, and Batticaloa.

An alliance between USAID and a Sri Lankan horticulture company will improve the productivity and profitability of fruit and vegetable farming in Jaffna, Vavuniya, and Mannar by minimizing post harvest losses and by enhancing farmers skills in modern farming.

Around 1,100 farmers will participate in the program.

In order to rebuild economic security in the Eastern Province, the alliance with a local garment company will invest in a ready-made garment factory in Samanthurai in Ampara.

The ready-made apparel manufacturing plant will consist of 15 to 20 machine lines and more than 1,000 employees.

Amitabh Bachchan in Sri Lanka to Promote IIFA 2010 Awards Ceremony to be Held in Sri Lanka from June 03 to 05

20th April 2010, www.lankabusinessonline.com

Sri Lanka will host an annual Indian film awards in Colombo in June drawing Bollywood stars to the country and opening opportunities for films to be shot on location in the former war-torn island industry officials said.

The International Indian Film Academy Awards will be held in Sri Lanka from June 03 to 05.

"A size of a country is measured by the size of the heart and Sri Lanka has a big heart," veteran Bollywood star Amitabh Bachchan, who is the brand ambassador for the International Indian Film Academy (IIFA) awards told reporters.

"I have hosted IIFA for the last 10 years and this by far is the best welcome I had so far."

Sri Lanka's tourism official said Sri Lanka has been chosen amid rival bids from Durban, Seoul, Bangkok and Singapore which had hosted the event earlier.

The first awards were held in London. Other locations included Amsterdam, Malaysia, Singapore, Dubai and Johannesburg.

The Biggest

Indian cinema eclipses the more glamorous Hollywood cinema industry in the US by producing the highest number of movies every year, though production budgets of Indian films may be smaller.

"What we are celebrating through IIFA is the world's largest film industry," Sabash Joseph, director IIFA said.

"We film the highest number of movies and sell the highest number of tickets (in the world)."

A business forum, fashion show, celebrity cricket match, world premiers of upcoming Indian films and a film workshop would be part of the show.

The event will be broadcast to a 600 million global audience across 110 countries.

Organizers say the event brings a publicity to valued at over 50 million US dollars to an economy.

"Already the BBC (British Broadcasting Corporation) and CNN (Cable News Network) have booked hotel rooms to use as studios," Joseph said.

Closer Links
Bachchan said he would ask Indian cinema to consider Sri Lanka as a location to shoot movies with Indian films increasingly going abroad in search of new locations.

Hollywood blockbuster movies, Bridge on the River Kwai (1957), and Indiana Jones 'Temple of Doom' (1984) were shot in Sri Lankan central hills, but separatist war waged by Tamil Tiger separatists which intensified in 1983 turned Sri Lanka into a war zone. The war ended last May.

Bachchan said closer links could be built between Indiana and Sri Lankan cinema.

Sri Lanka's domestic industry has been heavily influenced by Indian cinema, featuring singing stars dancing around trees and with the first films being edited in South India.

A former Miss Sri Lanka, Jackie Fernandez has broken into Hollywood is making wavers there now, but Sri Lanka's government fines producers who use Indian talent through penal levies.

Hindi films broadcast on Sri Lankan television are also taxed at the highest rate, though Tamil films have been spared.

"We were delighted when we hear that IIFA had selected Sri Lanka to host its award ceremony," Achala Jagoda, former tourism minister said.

"This is a clear sign that Sri Lankan is heading towards a bright direction after years of trauma."

20 April 2010

Sri Lanka's All Share Price Index at Record High. Hits 4,000 Points

19th April 2010, www.lankabusinessonline.com

Sri Lankan stocks shot through the 4,000-point mark on the benchmark index Monday, hitting a new high as investors returned after holidays, enthused by anticipated higher corporate earnings and political stability after an election, brokers said.

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The All Share Price Index closed at 4,015.36, up 1.22 percent (48.49 points) while the more liquid Milanka index rose 1.29 percent (58.36 points) to close at 4,576.10.

Turnover was 1.76 billion rupees, according to stock exchange provisional figures.

The ASPI is up 18 percent so far this year.

"The high sentiment on the hotels and tourism sector continued," said Nikita Tissera, research manager at stock brokering firm SC Securities.

"All the highest trading stocks today were either hotel stocks or had high exposure to hotel stocks in their investment portfolios."

John Keells Hotels, the leisure unit of the John Keells Holdings group, was the most actively traded stock, with 13.5 million shares changing hands, generating a turnover of 288.8 million rupees.

The stock closed at 22 rupees, up 1.75.

Hotel stocks have become an investor favourite in anticipation of higher earnings propelled by a post-war tourism boom.

Nawaloka Hospitals was also heavily traded, with 24.4 million shares done, generating 102.9 million rupees in turnover. The share closed at 4.50, up 60 cents.

Brokers said the rise of Nawaloka Hospitals can be attributed to the expected good performance in Galadari Hotels in which it holds a big stake.

The reporting season for March earnings is just around the corner and most companies are expected to post better earnings as the economy improves with the end of the 30-year ethnic war last May.

A government victory in parliamentary polls earlier this month has also buoyed investor confidence as it is seen as ensuring political stability.

Sri Lanka's Power Sector Attracts Private investors

19th April 2010, www.lankabusinessonline.com

More private investment is likely to get attracted to Sri Lanka's power sector given stable and growing demand and improve profitability especially among hydro-power producers, a ratings agency report said.

However, investments will be restricted to small power plants of less than 25 megawatts capacity as a new electricity law requires bigger plants to be controlled by government, RAM Ratings (Lanka) said.

It said in a report on the island's power sector that it was important to restore the long-term financial viability of the loss-making, heavily indebted sole buyer of power, the state-owned Ceylon Electricity Board.

"While Sri Lanka may have closed its door to large-scale IPPs, it has embraced the role of IPPs in the 'less than 25 MW' capacity segment," the RAM report said.

" . . . we note that more IPPs are likely to be attracted to the power sector given its salient features such as stable demand, moderate operating risks and long life of assets."

However, the ratings agency identified several inherent risks from a credit-rating perspective.

These include customer-concentration risk as the CEB is the sole purchaser of power, as well as construction risk involving a company’s possible failure to complete construction on time, and fuel risk based on possible interruptions in fuel supply.

RAM Ratings noted that private hydro-power players have improved their profitability of late.

"Their impressive profit performance is underpinned by lower debt levels, better tariff rates and heightened power generation," the report said.

"We observe that these profitability indicators may entice further investor interest in the local power sector."

Private power producers have also sought to dilute their site risks through acquisitions, which so far have not "overly strained" the companies’ balance sheets.

"From a private-investment perspective, the power sector is unique as it is a non-cyclical industry," the report said.

Demand for electricity in Sri Lanka has been increasing with economic growth and more electrification and remains resilient even amid economic downturns.

"This fundamental characteristic results in a stable or predictable cash flow provided there is no off-taker default," the rating agency said referring to the loss-making CEB's capacity to pay.

"In Sri Lanka, the CEB is the sole off-taker; hence the IPPs’ debt-servicing aptitude depends on the off-taker’s willingness and ability to pay its bills on time."

RAM Ratings Lanka said its assessment of the CEB is based more on its systemic importance rather than its financial profile.

In 2008, the state utility company owed 57 billion rupees to the IPPs.

According to the Central Bank the CEB's finances remained weak in 2009 although it had managed to reduce its operating loss to 7.4 billion rupees from 33.3 billion in 2008.

CEB’s short-term borrowings from banks and other outstanding liabilities to the state-owned fuel refiner and to Independent Power Producers increased to 71.6 billion rupees in 2009, the Central Bank said.

Replica Ship Jewel of Muscat in Galle, Sri Lanka on a Historic Voyage from Oman to Singapore

19th April 2010, www.news.lk

The ‘Jewel of Muscat’, a replica of a 9th century Arab trading vessel which is on a historic voyage sailing from Oman to Singapore has arrived in Galle. The 18-meter-long vessel left the Kerala port of Cochin in India on 10th April and sailed through a tropical storm to arrive in Galle.

A ceremony will be held today to welcome the old world Arabian ship. The ship, a gift from Oman to Singapore set sail on 16th February from the Omani port of Sultan Qaboos. Using the 9th century navigation techniques the vessel reached the port of Cochin in India on March 15th after covering 1300 miles in 28 days.

Tuanie Ismail, a native of Kandy joined the voyage from Cochin for the second leg along with a British national, Geoffrey Dobbs, who currently lives in Galle. From Galle the ship will sail across the Bay of Bengal through the Straits of Malacca to Singapore where it will be displayed in a museum. It is expected to reach Singapore in June 2010.

Sri Lankan Equities Index May Reach 5,000 : Video

15th April 2010, www.bloomberg.com

Ranjan Hulugalle, director of equities at First Guardian Equities, talks with Bloomberg's Susan Li about his forecast for the Sri Lanka Stock Market Colombo All-Share Index.

Hulugalle, speaking from Singapore, also discusses his investment strategy for Sri Lankan stocks. Hugh Young, head of equities at Aberdeen Asset Management Plc, also speaks.

Watch Video

08 April 2010

Nine Investors to Start Projects in Horana Export Promotion Zone in Sri Lanka at US$ 57mn

08th April 2010, www.island.lk

The Board of Investments (BOI) says renewed investor confidence in Sri Lanka would lead to nine new factories being stablished in the Export Processing Zone (EPZ) at Horana.

The BOI announced that nine new companies would start projects at the Horana Export Processing Zone. The total value of their investments once completed would be US$ 57.15 million and they will employ 1,221 staff at the Horana Export Processing Zone.

"This is very significant as the new enterprises decision to invest will result in almost doubling both the Foreign Direct Investment (FDI) and the number of jobs available at the Horana Export Processing Zone (HEPZ)," the BOI said in a statement.

The new factories would be set up by the following companies:

1. Unilever Sri Lanka (Pvt) Ltd, a UK investment, that will be producing food items, soap and toothpaste and investing US$ 40 million and providing employment at capacity for 100 workers.

2. Aspic Bio Tea (Pvt) Ltd, a Malaysian investment will be producing liquid tea and bio tea and investing US$ 2.5 million and providing employment at capacity for 49 workers.

3. Cavin Care (Pvt) Ltd, an Indian investment will be producing cosmetic products and investing US$ 0.65 million and employing 110 workers.

4. Auto Link International (Pvt Ltd), a Sri Lankan enterprise will be engaged in vehicle reconditioning

5. Heritage Foods (Pvt) Ltd is an Indian company engaged in the production of food and beverages, representing an investment of US$ 0.35 million that will provide employment for 202 workers.

6. Phoenix Industries Ltd is a Sri Lankan plastic personal care & packaging products company which is an investment of US$ 2 million which will employ 55 workers at capacity.

7. Nithiya Packaging (pvt) Ltd is an Indian manufacturer of paper products, representing an investment of US$ 7 million that will employ 350 workers at capacity.

8. Hwagin Medical Lanka (Pvt) Ltd is a Chinese manufacturer of disposable syringes representing an investment of US$ 4.2 million, which will employ 100 workers at capacity.

9. Digital Engineering Lanka (Pvt) Ltd is a Sri Lankan company that will manufacture anti adhesive oil, concreting and foaming grease, representing an investment of US$ 0.45 million and employing at capacity 55.

The Horana Export Processing Zone, which is in the Kalutara District commenced operations in November 1999. It is located 50 kilometers from Colombo on a land of an area of 385 acres.

The HEPZ is equipped with a complete road network, power supply, treated water supply, telecom facilities, water treatment plants, waste water treatment plants and security services.

The current total investment at the HEPZ is US$ 54 million and its 11 enterprises provides employment to 1,623 workers. These enterprises are involved in the manufacture of garment accessories, essential oil, plastishell products, non ferrous metal recycling, MDF boards, electric power generation and glassware.

The nationalities of the enterprises currently at the HEPZ include Sri Lankan, Indian, Malaysian companies and three joint venture companies consisting of India/Singapore, Finland/India/Sri Lanka and India/Sri Lanka investments.

MphasiS Invests in IT Enabled Services in Sri Lanka. BOI Promotes Knowledge Sector in IT/BPO/KPO Operations

08th April 2010, www.dailynews.lk

The Board of Investment of Sri Lanka (BOI) granted investment approval to MphasiS Lanka (Private) Limited. Chairman/ Director General Dhammika Perera signed the agreement on behalf of the BOI and presented the BOI Certificate of Registration to the investors.

MphasiS Lanka signed an investment agreement worth US $ 3.5 million to establish a venture to provide IT enabled services.

The company will provide employment for a work force of 500 initially. MphasiS is one of the fastest growing and dynamic Indian IT BPO companies. MphasiS, a leading IT services provider will expand its global talent footprint, with the establishment of a global delivery centre in Colombo. The centre will join MphasiS' network of global delivery centres providing Applications, BPO and ITO services to clients worldwide.

MphasiS is the seventh largest IT services company in India having a presence across India, Singapore, China, Japan, Europe, North America and Australia.

Employees at the Sri Lanka centre will be part of MphasiS Global Talent Pool and groomed as a part of MphasiS Talent Development Program.

MphasiS is a leading applications services, remote infrastructure services and business process outsourcing services provider.

The company delivers real improvements in business performance for clients through a combination of technology know-how, domain and process expertise.

MphasiS will work towards developing and nurturing local talent. MphasiS is expected to work closely with the Government and academia in Sri Lanka, to focus on creating an industry ready talent pool. BOI has been actively working to promote the knowledge sector, IT/BPO/KPO to make use of Sri Lanka's high literacy rate in South Asia and to complement the growing IT BPO sector in India.

MphasiS Lanka Limited Director M. G. Raghuraman, signed the agreement on behalf of the company.

MphasiS' Head HR Leader, New Locations Learning (Technical and Domain) Usha Subramanian was present at the occasion.

Executive Director Duminda Ariyasinghe, Senior Deputy Director A.W.M. Faizal Executive Assistant Kosala Harischandra and MphasiS Sri Lanka Consultant Nishendra Manathunga were also present.

BOI Chairman/Director General Dhammika Perera (right) handing over the agreement to MphasiS Lanka Pvt Ltd Director M.G. Raghuraman.

Sri Lanka Trade and Investment Promotion Mission to Benelux Countries in May

08th April 2010, www.dailynews.lk

The Sri Lanka - Benelux Business Council of Ceylon Chamber of Commerce will be organizing a trade and investment promotion mission to Netherlands (Amsterdam and Hague), Belgium (Brussels) and Luxembourg from May 24 to 29.

The main objective of the mission is to strengthen trade ties, source suitable business partners for trade, investments, joint ventures, technology transfer and services. It is hoped that this mission would assist in expanding existing business contacts.

The Sri Lanka Embassies in Netherlands and Belgium will be organizing business forums and business match making events in association with Amsterdam, Rotterdam, Hague, Brussels and Luxembourg Chambers of Commerce. The potential products and services identified for promotion are; tourism, gems and jewellery, garments, coir products, rubber products, tea, horticulture, information technology , fish (tuna), wooden and soft toys and stationery and imports such as sugar and pharmaceuticals.

Sri Lanka Plans to Cut Deficit by Half as Economic Expansion after War Boosts Revenue

07th April 2010, www.bloomberg.com, By Anusha Ondaatjie

Sri Lanka plans to nearly halve its fiscal deficit in three years as the end of the island’s 26-year civil war spurs economic growth and boosts revenue, Treasury Secretary P.B. Jayasundera said.

The budget shortfall is targeted to narrow to 5 percent of gross domestic product by 2012, from 9.7 percent last year and 7.5 percent in 2010, Jayasundera said in an interview at his Colombo office yesterday.

“We will not compromise on public investment but revenue will be raised,” he said. “As the deficit falls, borrowing from banking sources will disappear.”

The International Monetary Fund said Feb. 25 it may consider changing a $2.6 billion loan package to Sri Lanka after government spending to rebuild areas destroyed when ethnic Tamil rebels were routed last year caused the deficit to exceed the lender’s target. The Central Bank of Sri Lanka has forecast economic growth of 6.5 percent this year, 7.5 percent in 2011 and 8 percent in 2012.

President Mahinda Rajapaksa, whose government faces parliamentary elections tomorrow, has pledged to spend $1 billion a year to build new roads, ports and power plants.

Under the IMF loan approved in July, Sri Lanka is expected to cut its deficit to 6 percent of GDP in 2010, from 7 percent last year, and to reduce it to 5 percent by 2011. Fitch Ratings said last month that Sri Lanka’s credit rating may be lowered if the island nation fails to narrow its budget deficit.

2010 Budget

The IMF has said it will decide whether to grant Sri Lanka a third loan tranche of about $330 million after completing a review of the $42 billion economy once the government presents its 2010 budget.

Sri Lanka’s foreign-exchange reserves are at a record $6 billion, after dipping to $1.27 billion before the IMF bailout package.

“The IMF targets will have to be revised,” Jayasundera said. “Now that stabilization is over, the program needs to be more of a buffer to help create growth in the medium-term.”

The government’s delayed 2010 budget is likely to be presented in June, following consultations with the newly elected government, Jayasundera said.

“It will be a policy budget, with a new tax regime and growth momentum for the private sector while rationalizing public spending,” he said. “Defense and interest expenditure has stabilized.”

Central bank Governor Nivard Cabraal left interest rates unchanged in March for a fourth straight month, holding the reverse repurchase rate at 9.75 percent, its lowest level since November 2004.

Sri Lanka, which usually presents its budget for the calendar year the preceding November, tabled spending estimates for the first four months of 2010 due to the elections.

To contact the reporter on this story: Anusha Ondaatjie in Colombo at anushao@bloomberg.net

Tourists from Middle East to Sri Lanka Doubled in January 2010. Strongest Growth from Qatar, then UAE, Saudi Arabia and Kuwait

08th April 2010, firstlanka.com

The sources of the Sri Lanka Tourism Development Authority show that the number of tourists from the Middle East to Sri Lanka doubled in January 2010, when compared to the same month in the previous year.
The strongest growth has been registered from Qatar, which was up 171 percent, followed by the UAE (164 percent), Saudi Arabia (127 percent), and Kuwait (135 percent).

Heba Al Ghais Al Mansoori, Middle East Director of the Sri Lanka Tourism Promotion Bureau said that early indications pointed to double-digit growth” for the number of visitors from the region holidaying on this South Asian island this year.

“Sri Lanka is ideally positioned as a destination to attract more regional travellers despite the credit crunch as stability has finally dawned on Sri Lanka with the war coming to an end and the destination offers very good value for money,” Al Mansoori further stated.

Sri Lanka Leisure Sector Attracts more FDI. Telecoms and Power to Get only 40%

08th April 2010, www.lankabusinessonline.com

Telecom and power sectors which accounted for 65 percent of foreign direct investment to Sri Lanka in recent years will play a less dominant role as cash pours into leisure with an upturn in tourism, an official said.

In the first quarter of this year around 250 million US dollars have come as foreign direct investments (FDI) compared to 602 million for the whole of last year, Board of Investment chief Dammika Perera said.

"In the past telecoms and power sector contributed around 60 percent of FDI, while 40 percent came from other sectors," Perera told reporters in Colombo.

"In the future the telecoms and power sectors will come down to around 40 percent."

With a pick up in tourism after a 30-year war ended last year, more cash is expected to pour into the sector.

Leisure firm have started to expand to increase capacity and about 200 million dollars in investment commitments are expected soon, Perera said.

Private power plants supplying the state-run Ceylon Electricity Board have invested 73.6 billion rupees through and generate about 40 percent of the country's power need, BOI deputy director general A M C Kulasekera said.

There are 18 telecommunication service providers that have invested 194.6 billion rupees, Kulasekera said.

Sri Lankan Stocks Record New High. Turnover Rs 2.77bn

07th April 2010, www.lankabusinessonline.com

Sri Lankan stocks hit a record high and passed 3,900 points Wednesday as institutional and high net-worth investors bought index-heavy, high-value shares, brokers said. Colombo's All Share Price Index (ASPI) closed at 3,909.61, up 39.26 points, while the Milanka index of more liquid shares gained 1.26 percent (56.12 points) to close at 4,497.24.

Turnover was 2.77 billion rupees, according to stock exchange provisional figures.

Price increases in index heavy stocks pushed the market up, brokers said.

The ASPI passed 3,900 points for the first time, brokers said.

John Keells Holdings closed at 190.00 rupees, up 4.00 with almost 5.3 million shares traded. Aitken Spence closed at 425.00 rupees, up 5.00, Hayleys closed at 239.75 rupees, up 3.00 and Hemas Holdings closed at 118.75 rupees, down 1.25.

Distilleries Company of Sri Lanka closed at 123.25 rupees, up 1.25 with 3.27 million shares changing hands, brokers said.

Commercial Bank of Ceylon closed at 225.00 rupees, down 2.00, Hatton National Bank close at 212.25 rupees, up 7.25, Sampath Bank closed at 234.75 rupees, up 5.00 and Seylan Bank closed at 50.00 rupees, up 50 cents.

Institutional investors also bought selected mid-cap stocks, brokers said.

Asia Capital, an investment bank controlled by Vijayeswaran Vijayaratnam, closed at 15.25 rupees, up 1.50 with 1.37 million shares traded, brokers said.

Aitken Spence Hotel Holdings closed at 425.00 rupees, up 5.00, John Keells Hotels closed at 19.50 rupees, up 75 cents, Renuka City Hotel closed at 240.00 rupees, up 15.00 and Cinnamon Lakeside Hotel, formerly known as Trans Asia Hotel closed at 183.50, up 5.25.

Ceylon Tobacco Company, a unit of British American Tobacco closed at 254.25 rupees, up 4.00, and Nestle Lanka, a unit of Swiss based food company Nestle, closed at 509.00 rupees, up 9.00.

Environmental Resources Investments ordinary voting shares closed at 110.00 rupees, down 2.75. Its 0000 warrants closed at 77.50 rupees, down 2.50, and 0001 warrants closed at 77.00 rupees, down 2.00.

Sri Lanka's Colombo Dockyard Delivers First of Four Multipurpose Platform Supply Vessels to Singapore

07th April 2010, www.lankabusinessonline.com

Sri Lanka's Colombo Dockyard, a listed ship builder, said it was getting ready to deliver the first of a series of four Multipurpose Platform Supply Vessels for a Singaporean client.

The yard, which is majority owned by Japan's Onomichi Dockyard, said in a statement it is building four 78-metre Multipurpose Platform Supply Vessels for Greatship Global Offshore Services of Singapore.

The vessel is to support offshore oil and gas fields on a twenty-four hours a day basis and has an endurance of about 35 days and a cruising range of about 9200 nautical miles.

"The vessel is capable of multi-purpose roles such as transportation of pipes, fresh water, diesel oil, bulk cement, stores, equipment, moving men, materials between platforms and shore, and also fire fighting."

The vessel was designed by ship design firm Seatech Solutions International (S) of Singapore in consultation with the owner and the builder, Colombo Dockyard.

"Over the past few years, Colombo Dockyard has accumulated a wealth of experience in building vessels for the offshore sector requirement," the statement said.

"(It) is now well geared to meet any kind of requirement that may arise in the offshore oil exploration activities being carried out in the Sri Lankan waters and offer its expert assistance in marine engineering."

Colombo Dockyard is set to deliver six vessels this year, including the Multi Purpose Platform Supply Vessels and a passenger vessel for the Indian government for use in its Lakshadweep island territories.

Sri Lanka Offers More Blocks for Offshore Oil Exploration in North and South

06th April 2010, www.news.lk

Sri Lanka is to broaden its search for offshore oil and offer more exploration blocks in the Cauvery Basin in the island's north as well as the south, the Central Bank said.

These will be in addition to blocks in the Mannar Basin off the north-west coast where Cairn India is searching for oil. The Ministry of Petroleum and Petroleum Resources Development plans to conduct the second licensing round for oil exploration in the near future, the Central Bank said in its annual report.

"A few blocks from the Mannar Basin as well as some blocks from the more prospective Cauvery Basin and the southern offshore basin, would be available for competitive bidding."

Prospects for finding oil and gas deposits are considered good because India has found oil on her side of the Mannar and Cauvery basins.

Cairn India has completed three dimensional seismic surveys of its block in the Mannar Basin and is interpreting the data to find the best sites for test wells.

Cairn India was awarded the contract for oil exploration in block No.2 of the Mannar Basin and has signed a petroleum resources agreement with the government of Sri Lanka.

The company's Sri Lankan subsidiary Cairn Lanka has also called for bids to hire drilling rigs and logistic services to start exploratory drilling in early 2011.

Sri Lanka's Largest Power Plant, $650mn, 1000MW LNG Power Plant by Lanka Aloka Ltd to be Finalised

04th April 2010, www.nation.lk

In a bid to jumpstart Sri Lanka’s largest power plant - the 1,000 MegaWatt (MW) Liquified Natural Gas (LNG) private power project at Kerawalapitiya, the Lanka Aloka AB Pvt Ltd., has bade farewell to its lead developer of the project - Australia based Arc Development International, opting for an alternate funding source. The study on LNG’s feasibility is yet to be completed.

“There will be some groundbreaking developments with regards to the LNG plant in the very near future. The government hopes to expedite the project as energy security is vital for the country’s economic growth. Hopefully, it will be finalised by May,” a highly placed official of the Ministry of Power and Energy told The Nation Economist.

“As lead developer, Arc Development International had been unable to muster the necessary finances and was making too many demands from its local partner - Lanka Aloka. Accordingly, the Australian directors would be asked to step down while a new investor had expressed willingness to fund the project. This is not the first time Arc has created a problem,” a source close to the project said.

Earlier, in March 2009, Arc Developments International said it had been ‘forced to withdraw’ subsequent to ‘an irretrievable breakdown in relations with the project developer (Lanka Aloka AB).’

Arc said it was not possible to attract funds for the project as ‘the present project parameters have rendered attracting international investment and borrowings unachievable’ and that as such it was breaking off contact with Lanka Aloka.

Commenting on its withdrawal and comeback, Founder Director of Arc Development International, Tim Duignan, in an earlier interview with The Nation Economist, said that at the time his company withdrew they did not believe that the transaction expectations of the local project developer could be financed on the international market.

“Following our withdrawal the local partner (Lanka Aloka AB) reconsidered his position and invited us back in to the project and we were able to structure the transaction in a manner that we now feel can be financed through international investors and banks.”

Asked about the company’s relationship with Ceylon Electricity Board (CEB), Duignan said that the ‘CEB is supportive of the project and we are progressing well with them at present.’

Arc Development International said that Power Purchasing Agreement (PPA) negotiations commenced by May 2009 and although they hoped to close the deal by July 2009, the project never went through. With both parties unable to forge ahead even after a lapse of nearly one year, Lanka Aloka is speculated to have asked Arc International to step down recently.

However, raising the colossal Rs. 74,750 mn. (US $ 650mn) needed for the project would be a nightmare although the authorities are optimistic that the new lead developer would be capable of doing so.

Meanwhile, three independent studies by USAID, 2002, the World Bank, 2004, Japan International Cooperation Agency (JICA), 2006 found that LNG was not an economical source for power generation for Sri Lanka which was confirmed by research conducted by CEB.

Furthermore, the Ministry of Power and Energy opined that no merchant plant (such as the LNG plant) can proceed without the approval of the country’s utility watchdog - the Public Utilities Commission of Sri Lanka (PUCSL) as per the new Sri Lanka Electricity Act enacted in 2009 March, and sought the Attorney General’s opinion on it. However, with the Attorney General giving an opinion to the contrary, the project was given the green light.

The plant which is Sri Lanka’s largest power plant so far planned, would add a generation capacity of 500 MW under Phase One by 2011 while the remaining 500 MW would be added to the grid by 2012 under Phase Two.

Directors of Lanka Aloka AB Pvt. Ltd., are Former Navy Commander Daya Sandagiri, H. M. Nawarathne and Rathnasena Katawalage.

However, The Nation Economist learns that a feasibility study conducted by a Japanese technical expert on behalf of CEB is yet to be concluded.