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Stock market recovers in second session and reaches 98 point level

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By Hiran H.Senewiratne

The first half session of the CSE yesterday indicated a highly volatile market due to the country’s Covid 19 deaths rise, while during the second half session the stock market showed some recovery and reached the 98 point level. Buying interest was noted especially in investor favorite counters, stock market analysts said.

Despite the latest LMD-Nielsen IQ Business Confidence Index (BCI) survey indicating that sentiment surrounding the economy continued to regress in July, as 59 percent of respondents said that economic conditions are likely to deteriorate in the coming 12 months, still for all the market was able to retain a healthy turnover level, market analysts said.

Meanwhile, 10 percent of those polled feel that conditions are likely to improve during this period while another 31 percent say the economy will ‘stay the same’. According to the survey sample, long-term prospects for business are likely to improve. More than half (56 percent) of those consulted by Nielsen IQ anticipate an increase in sales volumes in the next 12 months.

The outlook for the short term has also improved slightly with 16 percent of respondents expecting an increase in sales over the next three months. On the other hand, a majority (61 percent) of executives believe that sales will ‘stay the same’ in the coming three months.

Where the investment climate is concerned, 6 percent (compared to 3 percent the previous month) describe conditions as ‘good’ while 16 percent say it is ‘fair.’ However, a majority (78 percent) do not consider this to be a good time to invest in Sri Lanka.

Amid those developments both indices moved upwards. All Share Price Index went up by 87.18 points and S and P SL20 rose by 23.72 points. Turnover stood at Rs. 4.07 billion with three crossings. Those crossings were reported in Melstacorp, where 14.75 million shares crossed to the tune of Rs. 14.75 million, its shares traded at Rs. 49.50, Ambeon Holdings 3.65 million shares crossed for Rs. 122.2 million, and its shares traded at Rs. 33.50 and Hayleys Fabrics one million shares crossed for Rs. 23.2 million, its shares trading at Rs. 23.20.

In the retail market, companies that mainly contributed to the turnover were, Expolanka Rs. 706.5 million (9.4 million shares traded), Browns Investments Rs. 386 million (58.4 million shares traded), LOLC Holdings Rs. 240 million (528,000 shares traded), Dipped Products Rs. 235 million (4.2 million shares traded) and Hayleys Fabrics Rs. 179 million (7.5 million shares traded).

Meanwhile, state-owned Bank of Ceylon’s (BOC) subsidiary, Merchant Bank of Sri Lanka and Finance PLC (MBSL) plans to raise Rs. 2.24 billion in fresh capital via a right issue.

The main purpose of the issue is to comply with the minimum capital rules of the Central Bank of Sri Lanka (CBSL). Approval for the capital raising had been obtained from the Board of MBSL, its majority owner BoC and the regulator, Central Bank of Sri Lanka (CBSL). Exhibiting full confidence in the capital raising effort and in the management of their majority-owned subsidiary and thereby guaranteeing a successful outcome to the capital raising effort, BoC with a near 75% direct ownership stake in MBSL will be subscribing to its entire entitlement in full. The issue will be on the basis of nine new shares for four held, resulting in the issuance of 373.2 million new shares at Rs. 6 each. The stated capital of MBSL at present is Rs. 2.12 billion. During the day 182.2 million share volumes changed hands in 25546 transactions.



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Business

SLT-MOBITEL donates fourth PCR machine to Matara District Hospital

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Group Chairman of SLT-MOBITEL Rohan Fernando handing over the donation to Deputy Director of Matara District Hospital Upali Ratnayake accompanied by Dr.Thushara Vidanapathirana, Dr.Deepika Priyanthi and Group CEO of SLT-MOBITEL Lalith Seneviratne.

Recognising the importance to enhance Sri Lanka’s PCR testing capacity to curtail the spread of COVID-19 and to protect citizens, SLT-MOBITEL continues its support by donating yet another vital PCR machine to the District General Hospital in Matara recently.

The donation of the PCR machine valued at over Rs. 5.7 million is part of SLT-MOBITEL’s ‘Sabandiyawe Sathakaraya’ CSR initiative in further strengthening the nation’s healthcare systems and assisting communities in need.

The equipment was handed over to the Deputy Director of the Matara Hospital Doctor Upali Rathnayaka in the presence of Rohan Fernando, Group Chairman, SLT-MOBITEL; Lalith Seneviratne, Group Chief Executive Officer, SLT-MOBITEL; Kiththi Perera, CEO, SLT; Shashika Senarath, CMO, Mobitel along with Regional GM, SLT; Regional Head – Mobitel and Hospital Staff.

Previously, PCR machines were donated to the Base Hospital, Karawanella, District General Hospital, Matale and the University Hospital of the Kotelawala Defense University. SLT-MOBITEL appreciates the support received from all Sri Lankans towards ‘Daana Paaramitha’ which was conceptualized as a platform to further increase community involvement in carrying out relief efforts to support families affected by the pandemic.

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Extension of lockdown negatively impacts CSE

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By Hiran H. Senewiratne

CSE trading activities commenced yesterday in a lacklustre manner with little share-buying interest and later on became negative following the government’s announcement on the lockdown extension until October 1, stock market analysts said.

The Colombo International Financial Centre (CIFC) at the Port City was set to commence this month and has been delayed until December owing to the current Covid 19 situation. This also affected CSE trading activities yesterday, analysts said.

Consequently, the stock market lost steam yesterday, closing on a negative note as investor sentiment remained erratic due to internal and external environmental factors. Both indices moved downwards or to negative territory despite healthy turnover in the market. The All Share Price Index went down by 46.09 points and S and P SL20 declined by 17.93 points. Turnover stood at Rs. 3.8 billion with two crossings. Those crossings were reported in Expolanka, where 600,000 shares crossed for Rs. 101.1 million, its shares trading at Rs. 158.50 and Sampath Bank one million shares crossed for Rs. 49.5 million, its shares traded at Rs. 49.50.

In the retail market, some companies that mainly contributed to the turnover were; Expolanka Holdings Rs. 1.2 billion (7.4 million shares traded), JKH Rs. 604 million (4.6 million shares traded), Browns Investments Rs. 540 million (58.3 million shares traded) and Hayleys Rs. 204 million (2 million shares traded).

It is said that following two sessions of gains, the indices closed in the red due to price declines in large-cap stocks as investors opted to book modest returns after the recent sharp rally. Stocks such as Expo, LOLC, and JKH, which saw sharp gains in the past two sessions witnessed profit-taking at higher levels and weighed on the momentum throughout the session.

Further, high net worth and institutional investor participation was noted in Sampath Bank. Mixed interest was observed in Expolanka Holdings, Tokyo Cement Company and LOLC Holdings, while retail interest was noted in Browns Investments, Lanka Orix Finance and Industrial Asphalts. During the day 153 million share volumes changed hands in 24000 transactions.

As of yesterday, the current exchange rate of 1 US dollar was equal to 199.607 Sri Lankan rupees. This is an increase of 7.856656 percent (or +14.5401 LKR) compared with the same time last year (17 September 2020), when 1 US dollar equaled 185.067 Sri Lankan rupees.

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Lockdown takes toll on Sri Lanka’s manufacturing sector activities

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The resurgence of the COVID-19 pandemic in August 2021 has slowed down the manufacturing activities in the country. Accordingly, the manufacturing PMI recorded an index value of 45.1 in August 2021 with a fall of 12.7 index points from the previous month, mainly driven by the decrease in New Orders, Production, Employment, and Stock of Purchases sub-indices. The decline in New Orders and Production, especially in the manufacture of food & beverages, furniture, and textiles & wearing apparel sectors, have mainly contributed to the overall decrease of the manufacturing PMI. Many respondents in those sectors highlighted that their local orders and distribution channels were affected due to the lockdown imposed as a measure of containing the pandemic. Further, many of them also emphasised that factory operations were disrupted due to the spread of the COVID-19 virus among employees. Employment sub-index also declined in line with these developments.

The decrease of Stock of Purchases was in line with the decline in New Orders and Production. Further, the difficulties encountered in placing purchase orders and in settling foreign payments also adversely affected the supply chain of raw materials and production schedules. Many respondents stressed that the continuous increase in the cost of imported raw materials adversely affected their profit margins. Meanwhile, Suppliers’ Delivery Time lengthened at a slower rate in August 2021. The manufacturers cautioned that the uncertainty over the COVID-19 pandemic would continuously hinder the prospects of the manufacturing sector, yet, overall expectations for manufacturing activities for the next three months remained above the neutral threshold.

Services PMI dropped to an index value of 46.2 in August 2021 with the restrictions imposed to contain the further spread of the COVID-19. New Businesses, Business Activity, Employment and Expectations for Activity sub-indices recorded declines. New Businesses decreased in August compared to the previous month mainly with the declines observed in wholesale and retail trade, insurance, real estate, and education sub-sectors. Business Activities across most of the sub-sectors such as, wholesale and retail trade, real estate, insurance and other personal activities reported considerable declines indicating the adverse effects of travel restrictions on their business operations. Nevertheless, transportation sub-sector recorded some improvements solely due to the growth in freight volumes. Moreover, financial services sub-sector also indicated improvements despite the disturbances from travel restrictions. Employment continued to fall at a higher pace as retirements and voluntary resignations exceeded the number of recruitments carried out during the month. Backlogs of Work increased at a higher pace in August along with the reduction in staff availability amid travel restrictions and growing COVID-19 infections of staff. (CBSL)

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