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Finance minister’s Rs. 229 billion economic relief package buoys stock market

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By Hiran H.Senewiratne

The Colombo Stock Exchange (CSE), which kicked off with a bullish momentum on the previous day continued the same momentum yesterday with both indices sharply rising, recording a turnover of more than Rs. 10 billion.

The All Share Price Index surged by 174.72 points to close at a record all time high of 12,800.53, stock market analysts said.”The two days of trading saw net foreign buying of Rs. 13 million against a net annual outflow of over Rs. 50 billion in 2021 and 2020. The reason for the CSE to be more positive throughout the day was because it would be  the best investment option with the increase of money supply into the economy with the Minister of Finance Basil Rajapaksa’s economic relief package that was announced on Monday, worth 10 percent of projected 2022 revenues.

The total handout of  Rs 229 billion is about 1.2 percent of gross domestic product. It is 10 percent of the Rs 2,274 billion  revenues for 2022 already described as ‘ambitious’ by analysts and rating agencies.

Amid those developments both indices were positive. All Share Price Index up by 174.7 points and S and P SL20 up by 51.5 points. Although the first one and half hours indicated some profit takings, the market most of the time was positive, driven by LOLC group counters and other blue chip counters, stock market analysts said. Those companies were LOLC Holdings 67 points, LOLC Finance 39 points LOLC Development Finance 19.2 points contributed to the All Share Price Index.

Turnover stood at Rs 10.8 billion with four crossings. Those crossings were reported in NDB, which crossed 7.3 million shares to the tune of Rs 125.6 million and its share price traded at Rs 72, Sampath Bank one million shares crossed for Rs 52 million and its share price traded at Rs 52, Asia Siyaka Commodities ten million shares crossed for Rs 34 million and  its share price traded at Rs 3.40 and Renula Holdings 1.2 million shares crossed for Rs 25.2 million and its share price traded at Rs 21.

In the retail market top seven companies that mainly contributed to the turnover were LOLC Finance Rs 1.7 billion (60 million shares traded), Browns Investments Rs 788 million (45 million shares traded), Prime Lands Residencies Rs 621 million (46.2 million shares traded), Sunshine Holdings Rs 449 million (8.3 million shares traded), LOLC Holdings Rs 390 million (314,000 shares traded),  Expolanka Holdings Rs 341 million (893,000 shares traded) and Overseas Realities Rs 250 million (10.5 million shares traded). During the day 806 million share volumes changed hands in 76000 transactions.

Watawala Plantations, which is the market leader in palm oil in Sri Lanka share price appreciated by 16 percent or Rs 21.75. The reason being in the international market the palm oil price has gone up considerably. Therefore, its share price shot upto Rs 160 from Rs 138.25. The parent company of Watawala Plantations Sunshine Holdings share price also appreciated by 18 percent or Rs 8.80. Its share price shot upto Rs 57.80 from Rs 49.   The share price of LOLC General Insurance recorded a gain of Rs. 1.20 (5.85 percent) to close at Rs. 21.70. The share price of Expolanka Holdings appreciated by Rs. 11.50 (3.06 percent ) to close at Rs. 386.75.



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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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