Speculation!

Okay this was on a message I received last night! But it's highly unreliable, FYI only and please don't make decisions based on this.

It says,

Today Central bank would write a 3 page latter Moody's etc clarifying that assets which were never with the Gov. will never be taken over to the gov.
Gov institutions will also buy tomorrow onwards and Gov will meet brokers & investors on Friday.

To stop national crisis in stock market many experienced pro-govt investors appeal with following solutions,
-Raj bros to make clarification that no nationalization with major local & foreign publicity campaign tomorrow itself as large foreign sell orders have come & new buying interest withdrawn.
- To clarify why listed & profitable Pelawatta owned by listed DIST and others were taken over by Gov.
- Remove SEC directives issued after Aug 2010 regarding credit and allow 2 times leverage of net capital as per 2010 computation.
-Lending against shares to increase from 5% to 7.5% of loan portfolio of banks



Dude, This is like mad and a message from some one who has been day dreaming! May be, or may be not!


Anyways this is FYI only, and just read and forget em and see if they are going to happen in real life!

Cheers!

Anyway there is something is going on when we look at the market.

Sri Lanka central bank pours oil on troubled waters
Nov 17, 2011 (LBO) - Sri Lanka's central bank said there may be room for former owners of seized assets to negotiate with competent authorities appointed by the state, after rating agencies raised fears of deteriorating property rights in the island.

The government expropriated land in 36 enterprises and ordinary shares of listed Hotel Developers, where Colombo Hilton is operated through a law which lawmakers said was deeply flawed and trespassed on a constitutional separation of powers.
Some of the lands related to defunct firms, but most concern had been raised relating to Sevenagala Sugar, an unlisted firm and Pelwatte Sugar a listed firm both of which produce sugar and spirits and are profitable.

"In the case of the two sugar plantations it is noted that the total extent of land cultivated by the respective operators has been only a fraction of the total extent that was entrusted to them," the Central Bank said in a statement.

"Further, it was noted that the operators were focusing on subsidiary objectives instead of concentrating on the primary objective of producing sugar which was the purpose for which the land was provided to them."


Pelwatte Sugar had diversified into dairying. Sevenagala had been charged by critics in the ruling administration of producing too much spirits, a higher value product than sugar.
Sevenagala Sugar, which is the island's East had also diversified into a dehydrated fruit export project under a US Aid initiative to get large businesses involved in connecting small farmers in former war-torn areas to the global market.

"In addition, it should be noted that the process as set out in the new law, would not deprive the existing operator or company from reaching an understanding or agreement with the Competent Authority to operate the asset or enterprise in keeping with the original purpose of the Agreement," the Central Bank said.

"In such an event, there may not even be a change in the operator, but only a change in the mode of operation, with the existing operator being provided with the opportunity to ensure that the original intention of the agreement is fulfilled."

The Central Bank said because it was former state land there was no expropriation of private assets.

Many firms which had agreements with the state investment promotion agency the Board of Investment and were included in the law were defunct.

In the case of Ceylinco Leisure Properties, there was a half-built structure which was deteriorating daily, the Central Bank said.

Also included in the law was a convention centre run by a Singaporean firm, Pico, which had a 25 year build operated transfer agreement with the state and was on lakefront property.

Sri Lanka's central bank is expecting the economy to grow 8.3 percent in 2010 and authorities are expecting more private investment. The central bank has also kept inflation low, though there is some debate about temporary conflicts in interest and exchange rate policies.

The secretly hatched law, which was passed an 'urgent bill' took many analysts and observers by surprise raising concerns about policy stability in the island.

Both Moody's and Fitch Ratings have raised concerns, saying the law could hurt future investment and growth. Similar warnings have been given by trade chambers and rights activists.

The administration insists that the legislation is one-off and will not be repeated.

http://www.lbo.lk/fullstory.php?nid=2046607599

Hmmm...

godswen wrote:Okay this was on a message I received last night! But it's highly unreliable, FYI only and please don't make decisions based on this.

It says,

Today Central bank would write a 3 page latter Moody's etc clarifying that assets which were never with the Gov. will never be taken over to the gov.
Gov institutions will also buy tomorrow onwards and Gov will meet brokers & investors on Friday.

To stop national crisis in stock market many experienced pro-govt investors appeal with following solutions,
-Raj bros to make clarification that no nationalization with major local & foreign publicity campaign tomorrow itself as large foreign sell orders have come & new buying interest withdrawn.
- To clarify why listed & profitable Pelawatta owned by listed DIST and others were taken over by Gov.
- Remove SEC directives issued after Aug 2010 regarding credit and allow 2 times leverage of net capital as per 2010 computation.
-Lending against shares to increase from 5% to 7.5% of loan portfolio of banks



Dude, This is like mad and a message from some one who has been day dreaming! May be, or may be not!


Anyways this is FYI only, and just read and forget em and see if they are going to happen in real life!

Cheers!

All these are possibilities and cannot consider as utter crap. Let hope atleast some of them is true.

The Expropriation bill ofcourse was not invester friendly move. Helped to make CSE sentiments even more negative. High time they come out and give clear and official statement

What ever said, already damage has been done. Major concern is why it has been passed in the parliment as an "urgent bill"

Monster wrote:What ever said, already damage has been done. Major concern is why it has been passed in the parliment as an "urgent bill"

simple ...........it is because before ppl file petions of human rights to the courts ........if that happend court matter cant be discussed in the parliment ......so thats why they are so much in a hurry........

http://www.adaderana.lk/news.php?nid=15774

ACT ONLY ACQUIRES ASSETS ON STATE LAND - CBNovember 17, 2011 11:01 am The Central Bank today in a release stated that it is important to emphasize that the assets specified in the RUEUA Act do not refer to private lands, but to lands which have been provided to private operators for specified purposes, while the ownership of the land continued to remain with the Government or a Government Agency.


It further added that the main purpose of the Revival of Underperforming Enterprises and Underutilized Assets Act is to revive thirty seven (37) identified underperforming enterprises or underutilized assets where the land belongs to the Government or a Government Agency.


It is applicable only to those 37 named enterprises, and not to any other enterprises whatsoever, the Central Bank specified.


Full release;


Revival of Underperforming Enterprises
and Underutilized Assets Act


The main purpose of the Revival of Underperforming Enterprises and Underutilized Assets Act is to revive thirty seven (37) identified underperforming enterprises or underutilized assets where the land belongs to the Government or a Government Agency. It is applicable only to those 37 named enterprises, and not to any other enterprises whatsoever.



The Act provides for the appointment of a Competent Authority which will control, administer and manage the enterprise or asset so as to ensure the revival of the named enterprise or asset, through means such as restructuring or entering into a management contract. Accordingly, the Revival of Underperforming Enterprises and Underutilized Assets Act does not, in any way, constitute the nationalization or the expropriation of private assets, but instead, is designed to ensure the productive use of assets that have hitherto been lying abandoned or have been seriously underutilized.


It is important to emphasize that the assets specified in the Act do not refer to private lands, but to lands which have been provided to private operators for specified purposes, while the ownership of the land continued to remain with the Government or a Government Agency. In such context, it would be fair and reasonable to expect the operator or user of the land or asset to utilize the land or asset for the specified purpose for which the land or asset was initially entrusted to them. And, if not so done for a lengthy period of time, it would also be fair and reasonable for such land or asset to be placed under the control of a Competent Authority who will ensure that the identified land or asset is utilized for the purpose it was originally provided.


It should also be noted that several enterprises specified in the Act are situated in Free-Trade Zones, where agreements have been entered into between such enterprises and the Board of Investment (BOI), and where the agreements have specified conditions such as the minimum investment to be made, the number of jobs to be created, the minimum extent of land to be developed, etc. In exchange for the fulfillment of such conditions, generous tax concessions, and in some cases, even exemptions from the Exchange Control Act, have been granted. But unfortunately, in the case of many of the named enterprises, these agreements with the BOI have been breached and/or operations have ceased, leading to the operators abandoning their properties and allowing the assets to remain idle without being put to the intended use for several years.


In the case of the two sugar plantations (Pelwatte Sugar Industries PLC and Sevanagala Sugar Industries Ltd.), it is noted that the total extent of land cultivated by the respective operators has been only a fraction of the total extent that was entrusted to them. Further, it was noted that the operators were focusing on subsidiary objectives instead of concentrating on the
primary objective of producing sugar which was the purpose for which the land was provided to them.


Ceylinco Leisure Properties Ltd. had also been identified for revival, since it is a project that originally contemplated the construction of a mega 5 star hotel facility cum apartment complex, but which had been half built and abandoned for over two years. The project has been the subject of protracted litigation, which had crippled the project from progressing. The partly constructed building and the land is situated in the heart of Colombo, overlooking the Indian Ocean, and has been deteriorating daily, and hence there was an urgent need to recommence the project to avoid further financial losses and physical damage. In this regard, as provided for in the Act, the Competent Authority will be expected to undertake the task of reviving this project and ensuring that the purpose for which the land was entrusted to Ceylinco Leisure Properties Ltd. by the Urban Development Authority, would be duly and expeditiously accomplished.



From the above, it will be clear that there has been no expropriation or nationalization of private assets as has been suggested by some quarters, and that this new legislation will actually facilitate the recommencement of productive economic activity in hitherto abandoned or severely underutilized lands and assets. In addition, it should be noted that the process as set out in the new law, would not deprive the existing operator or company from reaching an understanding or agreement with the Competent Authority to operate the asset or enterprise in keeping with the original purpose of the Agreement. In such an event, there may not even be a change in the operator, but only a change in the mode of operation, with the existing operator being provided with the opportunity to ensure that the original intention of the agreement is fulfilled.

Those explanation should have been given before passing/introducing the bill.
අශ්වයා ගියාට පස්සේ ඉස්තාලේ වහලා වැඩක් නැහැ.

I heard that kind of news.

Looks like the government is trying its best to convince people that the Act only targets the mentioned businesses but it is not working.

The fear is not that more businesses will be taken for under performing in the near term. The fear is that if any business which does not toe the government line can be swiftly taken! Businesses are taking this as a warning like what the journalists are facing! It is like arrogance and power abuse!

The message is more like "If you don't listen to us, we know what to do!"
One of my friends abroad told me that every one who has alot of power does critical blunders and he see's this as a beginning to a series of blunders. That's how some foreigners think. Thats why they will not come.

Cheers!

Godswen,

This may be not a mad message which you heard or read. I have been hearing about relaxation of this credit issue aswell since other countries also allow credit trading in a less strict way.

Also foreign loans to be brought in by banks (approx $250m) and market at 14X trailing PER and 10-11X future FY12 PER. Possible favourable budget and possible cooling of the EURO crisis in the near term and hope of gradual stabilisation of the global economy. Money to come in to build Shangri-la, Sheraton and sale of underperforming assets in the near term. Exports will grow and imports will also grow but slower than this year i feel. Investment in the Hambantota port.

If this all happens in a series within a few weeks to months time over the next year then it can act as a positive trigger and improve investor sentiment. There is a lot of cash on the sidelines.

With the shares traded in this week, you can see that quality shares like JKH, RCL, CTC, LLUB, COMB, SAMP, etc were on the top of turnover list even though the volumes were low. Speculators don't buy these shares and only those who are intelligent medium to long term investors buy these stocks.

The worrying fact is large foreign sell orders. Also i feel government should not dabble with SEC like the cricket board and let it function independently with people who know what they are doing.

Good policy making with a long term view is the need of the hour!

Cheers!

wikum100 wrote:

Monster wrote:What ever said, already damage has been done. Major concern is why it has been passed in the parliment as an "urgent bill"

simple ...........it is because before ppl file petions of human rights to the courts ........if that happend court matter cant be discussed in the parliment ......so thats why they are so much in a hurry........

So why they were in very much hurry?? They already approved when their are four court cases against this bill was raised and matter was with court. so i am not agree with you.