By Hiran H. Senewiratne
CSE trading activities were positive yesterday mainly due to the announcement of an Indian relief package, on an urgent basis to Sri Lanka, following Finance Minister Basil Rajapaksa’s New Delhi visit that focused on measures to tide over the current economic crisis that Sri Lanka is facing, market analysts said.
Indian media reported that India is expected to extend a food & health security package to Sri Lanka along with an energy security package and currency swap. It also plans to push Indian investments. It was agreed during Rajapaksa’s visit that the procedures to realize these objectives would be finalized early, within a mutually agreed time, stock market analysts said.
Next January Sri Lanka has to pay US $ 500 million worth of international sovereign bonds. If the government defaults, its economic repercussions would be very serious and Sri Lanka could be branded as a high- risk economy. Therefore, by January Sri Lanka would be left with US $ 1.5 billion, stock market analysts said.
Amid those developments notable buying interest was witnessed in most companies, including blue chip companies. Price appreciation was reported mostly in LOLC Group counters and Hayleys Group counters. LOLC Holdings, contributed 202 points to the All- Share Price Index and its share price moved up by Rs 190 or 19 points. Its share prices shot up to Rs 1187 from Rs 997. Brown and Company share prices appreciated by 15 per cent or Rs 48.50. Its share price appreciated to Rs 369.25 from Rs 320.75. Hayleys share price rose by Rs 4.50 or four per cent. Its share price shot up to Rs 115.2 from Rs 110, at the end of the day’s trading. Further, poultry sector counters also moved up yesterday. Main appreciation was noted in Bahirah Farm, which increased by 13 per cent or Rs 36.50. Its shares started trading at Rs 273.25 at the end of the day they moved to Rs. 315.
Consequently, both indices moved upwards. The All-Share Price Index went up by 286 points and S and P SL20 rose by 125 points or three per cent. Turnover stood at Rs 8.1 billion with five crossings. Those crossings were reported in Brown and Company, where 400,000 shares crossed for Rs. 130 million and its shares traded at Rs 328, JKH 250,000 shares crossed for Rs 36 million, its shares traded at Rs 144, Royal Ceramic 300,000 shares crossed for Rs 22.2 million, its shares fetched Rs 74, Hemas Holdings, 300,000 shares crossed for Rs 21 million, its shares traded at Rs 70 and Sampath Bank 387,000 shares crossed for Rs 20.7 million and its shares fetched Rs 53.50.
In the retail market top seven companies that mainly contributed to the turnover were, Expolanka Rs 1.6 billion (4.5 million shares traded), LOLC Holdings Rs 617 million (543,000 shares traded), Browns Investments Rs 565 million (39 million shares traded), Brown and Company Rs 370 million (one million shares traded), Hayleys PLC Rs 290 million (2.5 million shares traded), Sampath Bank Rs 281 million (5.2 million shares traded) and SMB Leasing Rs 246 million (135 million shares traded). During the day 9.9 million shares volumes changed hands in 54000 transactions.
Yesterday, the US dollar was quoted at Rs 201.83, which is the Central Bank controlled price. It is close to Rs 250 in normal circumstances. However, the rupee will likely stabilize if the US $ one billion dollar currency swap comes into play, market analysts said.
Seven factors of concern at upcoming Monetary Policy Review
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.
Sri Lanka’s dash brand enters international markets
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”,
Janaka Abeysinghe appointed SLT CEO
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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