Sri Lanka Newspapers 24/01/2012

Panic selling drives bourse to four-month low

Panic selling drove down both indices by more than two percent on Monday, brokers said.

The All Share Price Index (ASPI) fell 2.04 percent, down 118.04 points to close at 5,663.09 points while the Milanka Price Index of more liquid stocks fell 2.14 percent to 4,811.71 points, shedding 105.18 points yesterday (Jan. 23).

Share volume was a little over 61 million generating a turnover of Rs. 827.3 million. Twenty two (22) counters closed in positive territory against 192 counters that closed in the red.

Net foreign outflow amounted to Rs. 47.17 million.

"Both indices ended the day at their lowest level since August 2010 and brokers continued to ask; How can they cut it so low, why is the market falling so much and when will the selling stop?" Bartleet Religare Securities (BRS) said in its market report for Monday.

"Technically the ASPI is heading towards 5,400 after breaking the last support level of 5,850. The ASPI is currently hitting oversold levels and we could see a slight rebound coming into the markets. However we cannot recommend any risky strategies to clients going into tomorrow," BRS said.

"Broad based selling pressure dragged the indices down sharply amid low activity levels, centred on finance and diversified counters," John Keells Stockbrokers said.

The once-best performing stock exchange in the world fell 8 percent in 2011. So far this year, the exchange has fallen 6.77 percent year-to-date.

Swarnamahal Financial Services (SFS) contributed Rs. 82.13 million to the day’s turnover with the share appreciating 11.53 percent to close at Rs. 99.60.

A single crossing of more than 4.2 million Waskaduwa Beach Resort (CITW) shares took place at Rs. 13 each. The share settled at Rs. 11 after contributing Rs. 56.17 million to turnover.

Free Lanka Capital (FLCH) saw a crossing of 10.64 million shares at Rs. 2.80 and a parcel of 100,000 Ceylon Guardian Investment Trust (GUAR) shares changed hands for Rs. 240.
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*Interbank rates inch up, Central Bank pumps in Rs. 6.8 billion

The Central Bank has sold US$ 1,560.22 million in four months to keep the exchange rate stable amidst severe import demand.

According to data released by the Central Bank, the bank was a net seller of dollars amounting to US$ 416.99 million in July, US$ 197.6 million in August, US$ 514.05 million in September and US$ 431.58 million in October 2011.

An additional US$ 985 million was sold since the November 22 depreciation of the rupee and dealers said the Central Bank continues to sell dollars to defend the exchange rate at Rs. 113.89/90 against the dollar.

On top of high credit growth, this intervention is draining rupee liquidity in the banking system and interest rates are under pressure. The Central Bank is engaging in currency swaps and reverse repo auctions to pump in rupee liquidity in to the system.

As reported yesterday, commercial bank lending rates have grown by 237 basis points over the past year while fixed deposit rates grew by 45 basis points. Lending rates were just 1.07 percent higher than fixed deposit rates a year ago, but now the gap has more than doubled to 2.69 percent. (These indicative rates are the Average Weighted Prime Lending Rate, AWPR, and Average Weighted Fixed Deposit Rate, AWFDR, which are published by the Central Bank. Dealers say lending rates and fixed deposit rates are much higher than these indicative rates).

The defence of the exchange rate saw gross official reserves fall to US$ 6 billion in 2011 from US$ 6.6 billion as at end December 2010. Reserves had peaked to US$ 8 billion mid way through 2011.

Central Bank Governor Ajith Nivard Cabraal told The Island Financial Review that a significant portion of the expected US$ 25 billion inflow for this year would materialise within this quarter, thereby significantly easing pressures on the balance of payments.

Yesterday, interbank borrowing rates inched up further.

Call market interest rates for interbank borrowing without collateral inched up to 8.89 percent from 8.86 percent on Friday. For borrowings against security the rate inched up to 8.05 percent from 8 percent.

The Central Bank pumped in Rs. 4 billion in to the system at 8.15 percent via the reverse repo auction window while a further Rs. 2.8 billion was lent to commercial banks via the repurchase window at 8.50, as the Central Bank acted as the lender of the last resort.

The overnight Sri Lanka Inter Bank Offered Rate eased to 8.94 percent from 8.97 last Friday.
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*The first 93 of Citrus Leisure’s 600-room-promise to Sri Lanka

Planning to offer the very best in hospitality, Citrus Leisure PLC., launched Citrus Hikkaduwa -fulfilling the first 93 of Citrus Leisure’s 600-room-promise to Sri Lanka.

Citrus Leisure entered the tourism industry in 2011 with a single property, Reefcomber, which was listed in the Colombo Stock Exchange, and along with ambitious plans to add 600 luxury rooms to Sri Lanka’s room inventory over the next three years, has embarked on a programme to build and manage a chain of distinctive hotels and resorts which will in turn contribute towards the national economic growth of ,,the country via tourism. Benchmarked against the most coveted in the world, these properties dot Sri Lanka’s coastline in Hikkaduwa, Pasikudah, Kalpitiya and Waskaduwa; each of them as unique as their surroundings. What’s more, in its drive to be at the forefront of Sri Lanka’s tourism, the company’s growing portfolio now encompasses not just these four beach front properties, but also an inbound and outbound travel operator – Citrus Vacations and an aquatic recreation specialist – Citrus Aqua which initiative will fill the void of a long felt need to optimize the use of the great Indian ocean and plentiful water-bodies in Sri Lanka.

Citrus Hikkaduwa, the first of the Citrus leisure properties, expanded and refurbished in a record five months to harness the potential of the peak tourism season, is now a 93 roomed resort at the heart of the most exciting coastal town. The refurbishment has seen the hotel bolstered by an additional forty rooms and now offers 51 standard rooms, 40 deluxe rooms and 2 suites. Added to the eclectic mix are a brand new 190 pax banquet hall, a 140-capacity restaurant – Lemon Fish, a tranquil Spa Ceylon and an exclusive wine and cigar bar – Summer Salt.

Speaking at the launch Chairman of Citrus Leisure PLC, Prema Cooray stated, "We are delighted that we have been able to launch the hotel well on time. Considering the excellent feedback we have received from guests who have been occupying the rooms since the hotel’s soft launch in December last year, we are very confident that all our other properties will mirror this success and also be ready for occupation as per the scheduled time plan."

Mani Sugathapala, Director Marketing of Citrus Leisure also added that, "We are proud to have launched the first of several properties under the Citrus brand name. The entire team at Citrus is fully dedicated to deliver brand excellence and make a mark in Sri Lanka’s hospitality industry. Through our efforts we hope to attract many superior tourists to the exciting town of Hikkaduwa."

Citrus Hikkaduwa now also offers a new experience in aquatic sports through Citrus Aqua which includes deep water fishing, diving, surfing and jet skiing, among many other activities. Nilantha Rupasinghe will lead the team at the hotel aided by the Director Operations Hemantha Ratnayake both of whom are well recognized hoteliers.
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Alliance Finance Company PLC announced that its has reported excellent performance during the financial year 2010/11. Alliance Finance has increased its profit after tax by a phenomenal 406 percent during the six months ended September 2011, compared with September 2010. The company was able to mobilize its deposit mix base above its targets exceeding the Rs. 6 billion mark, which was a significant growth of 24 percent compared to 8.7 percent in the previous year, said AGM Deposits, Ms. Champa Nakandala. As a result, the current registered customer base has now grown to represent a diversified segment of the industry.

The company will continue to expand its current collection centres into a wide spread branch network, she commented. Currently, it operates in all provinces across the country with 66 service centers, fully fledged branches, collection centres, gold loan centres and window offices.

In keeping with its corporate expansion strategy, the company is expected to develop its deposit base further during the current financial year. The continuous and prompt payment method of due interest to deposit holders over the years has built tremendous confidence amongst its clients, Ms. Nakandala said.

As a testament to the company’s excellent performance, its core business of hire purchase and leasing, the ratio of non-performing loans (NPL) which stood at 4.24 percent in March 2011 has now been reduced to 3.86 percent in September 2011, she said.

The company recently won a Silver Award in the Specialized Banking & Financial Services Sector category, at the National Business Excellence Awards 2011, organized by the National Chamber of Commerce of Sri Lanka and the company also featured occupying the 61st position within the top 100 Most Valuable Brands of Sri Lanka compiled by an independent survey carried out by LMD and Brand Finance.
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