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‘CSE likely to prove attractive throughout 2022 as well’

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By Hiran H.Senewiratne

A top CSE official said that 2021 has been a significant year for the CSE and its stakeholders in many respects, including capital- raising.

” Low interest rate and the high inflation level in the country had made the stock market attractive, which will likely continue as the trend this year as well, CSE’s Head of Marketing Niroshan Wijesundera told The Island Financial Review.

He said that investing in the stock market is the best option when the country has high inflation and low bank interest rates. Because the return on investments is very high with the booming of the stock market.

Amid those developments the market remained negative at the beginning dampening investor hopes of a turnaround due to profit- takings; however, it bounced back during the latter part of the day, dragging the All- Share Price Index to a positive note yesterday. The All- Share Price Index went up by 43.3 points and S and P SL20 declined by 21.7 points. Turnover, however, was a healthy at Rs. 7.7 billion involving 317 million shares with two crossings.

Those crossings were reported in LOLC Finance, which crossed 54.3 million shares to the tune of Rs 1.5 billion and its shares traded at Rs 28.10 and Dialog 4.5 million shares crossed for Rs 49.9 million, its shares traded at Rs 11.10.

In the retail market, the top seven companies that mainly contributed to the turnover were, LOLC Finance Rs 720 million (24.5 million shares traded), Browns Investments Rs 472 million (27.7 million shares traded), Expolanka Holdings Rs 452 million (1.2 million shares traded), Softlogic Holdings Rs 291 million (24.4 million shares traded), Softlogic Capital Rs 291 million (24.4 million shares traded), Softlogic Life Insurance Rs 264 million (2.6 million shares traded), Access Engineering Rs 205 million (5.9 million shares traded) and Richard Pieris Rs 194 million (seven million shares traded). During the day 317 million share volumes changed hands in 57000 transactions.

The Index witnessed massive volatility shortly into the market opening as it see-sawed from the red to green zone alternatively as investors gave away to a selling spree. However, the index moved on a gradual recovery but failed to uphold the momentum as it declined during the latter part of the session.

It is said high net worth and institutional investor participation was noted in LOLC Finance, JKH and Hayleys. Mixed interest was observed in Expolanka Holdings, Sunshine Holdings and Vallibel One, while retail interest was noted in Softlogic Capital and Softlogic Life Insurance, Browns Investments and Softlogic Capital.

It said the Diversified Financials sector was the top contributor to the market turnover due to Lanka LOLC Finance, while the sector index- gained. LOLC Finance contributed approximately 30 per cent to yesterday’s turnover.

Hela Clothing IPO which opened yesterday had been oversubscribed.

Yesterday, the US dollar rate was quoted at Rs 200.97, which was the Central Bank controlled price. However, with the heavy printing of Sri Lankan rupees, the inflation rate will move up exponentially. Currently, the actual dollar rate in the market would be Rs 250, market sources said.



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Business

Seven factors of concern at upcoming Monetary Policy Review

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by Sanath Nanayakkare

The Central Bank of Sri Lanka (CBSL) is scheduled to announce its latest monetary policy review on 20th January 2022, with all eyes on dwindling foreign reserves and foreign currency exchange in the country.

In this context, First Capital Research has named 7 factors of concern that could be taken into account at the upcoming monetary policy review. They are as follows.

* Foreign Reserves USD 3.1 billion – Dec 2021

* Inflation CCPI 12.1% – Dec 2021

* GDP Growth -1.5% – 3Q2021

* Private Credit LKR 60.5 billion – Nov 2021

* 03M T-Bill rate 8.38% as at 12.01.22

Liquidity and CBSL Holdings LKR -364.0 billion and LKR 1.42 trillion

Balance of Trade (BOT) and Balance of Payment (BOP) USD -6.5 billion and USD -3.3 billion for Jan-Oct 21

First Capital Research’s Policy Rate Forecast – Jan 2022-Apr 2022 notes that they believe the CBSL may highly consider tightening the monetary policy rates in this policy review but given the concerns over economic growth, there is a probability of 40% for CBSL to maintain its policy stance at current levels.

“With high frequent indicators improving in line with expectations, we have eliminated any probability of a rate cut. We expect a continued increase in probability for a rate hike in order to prevent overheating of the economy amidst the given fiscal and monetary stimulus,” they said.

As per First Capital’s view, CBSL either can choose to hike policy rates by 50bps or 100bps or hold policy rates steady, while a rate cut is off the table due to the high debt repayment and the high domestic borrowing requirement.

First Capital believes that there is a 60% probability for a rate hike due to the remedial actions required in achieving external stability.

However, there is also a 40% probability to maintain the policy rates at its current level in order to further improve the high frequency indicators.30%, they noted.

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Sri Lanka’s dash brand enters international markets

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Multichemi International Ltd, which manufactures and distributes a wide range of products under dash, one of Sri Lanka’s leading detergent and household care brands, has begun exporting its products to several international markets in Asia and Oceania, with plans also to enter Africa. The dash brand includes a wide range of products in car care, household care, home fragrances and laundry care sectors. Multichemi International Ltd, which has been awarded ISO 9001:2015 certification, is a Sri Lankan pioneer in environment-friendly cleaning products, having launched the country’s first biodegradable, safe cleaning products over 28 years ago.

Amila Wijesinghe, General Manager of the Company said,”Having conquered the domestic market, we are now ready to capture the international market. We are confident that our products which are of high quality will receive a good demand overseas as well. The feedback we have received so far from our overseas customers is extremely encouraging. We are dedicated to taking our products to the international market, to bring in foreign currency to the country and help uplift the economy”,

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Janaka Abeysinghe appointed SLT CEO

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Sri Lanka Telecom PLC has announced the appointment of Janaka Abeysinghe as its Chief Executive Officer (CEO) with effect from February 1, 2022.

The incumbent CEO Kiththi Perera will be overseas on leave for a period of two years to pursue higher studies, according to a stock market filing by the company.

Abeysinghe joined SLT in 1991. In his present role, he leads the enterprise and wholesale business of SLT that provides integrated voice and data solutions to enterprises, government institutions, domestic telco operators and global wholesale carriers.

In his career at SLT spanning 29 years, he has held a number of senior positions, including general manager Enterprise and International Sales and has extensive experience in the areas of Enterprise Digital Services, Enterprise Communications Solutions, Data Communications, Business Development, Domestic and International Switching Operations and Global Wholesale Voice & Data Business.

He holds a Master’s Degree in Electrical and Computer Engineering from the University of Kansas, USA and a BSc degree in Electronics and Telecommunications Engineering with a First Class Honours from the University of Moratuwa.

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