Sri Lanka Newspapers Saturday 03/03/2012

Brokers blame ATS-7 for turnover slump on CSE
*Bourse closes week with indices down

The Colombo bourse slumped yesterday posting a disappointing turnover of Rs.403.16 million, down from the previous day’s Rs.2.6 billion, with brokers attributing the downturn to problems with the new trading system installed the previous week.

Both indices too were down – the All Share by 9.49 points (0.17%) and the Milanka by 18 points (0.38%) with 112 losers outpacing 74 gainers.

The CSE has called a meeting of CEOs of broking firms and brokers on Tuesday to identify the problems they are facing and possible solutions.

"The market was very dull right through the day," a broker said. "The new ATS (Automatic Trading System Version 7) is giving unbelievable trouble."

JKH was yesterday’s most traded stock with over 0.2 million shares done closing 60 cents up at Rs.178.50 followed by Ceylinco Insurance, down Rs.29 to Rs.???? on 25,252 shares and Commercial Bank up 20 cents to close at Rs.100 on nearly 0.2 million shares.

Lion Brewery closed Rs.5 up at Rs.203 on 65,095 shares.

J.L. Morison Son & Jones announced an interim dividend of Rs.1.50 per share for both voting and non-voting shares for 2011/12 XD from March 14 and payment on March 23 while Ceylinco Insurance announced a first and final dividend of Rs.6.50 per share for both voting and non-voting shares following shareholder approval at a March 30 AGM. The share will trade XD from April 2 with payment on April 11.

Colombo Dockyard announced capitalization of reserves with one new ordinary share issued for every existing twenty shares held, XC from March 23 with allotment on March 22. Slightly over 3.4 million new shares will be issued in this connection with reserves capitalized at the rate of Rs.10 for a new share.

Both Access Engineering, which earlier this week bought control of Sathosa Motors, and Distilleries subsidiary Melstacorp, making a mandatory offer for Aitken Spence, disclosed in stock exchange filings that they have been adding to the big blocks already acquired with small purchases on the CSE trading floor.

These purchases were at the same price paid for the big blocks.
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Sampath Leasing and Factoring Ltd, a fully owned subsidiary of Sampath Bank PLC has completed yet another successful year recording Pre Tax Profit of Rs 232.20 million for the financial year ended 31st December, 2011. The reported Profit after Tax (PAT) for the same period was Rs 192.39 million. This represents an increase of 51% in the PAT from the previous year. The increase in absolute profits demonstrates the company’s ability to sustain its momentum of growth achieved last year, the company announced recently.

The reported profit of the company for the 12 months ended 31st December, 2011 is the highest in its six year history. Arthur Senanayake, Chairman commenting on the progress stated that "leasing industry has seen unprecedented growth levels in an economic landscape boosted by a driving economy, which have created increased demand for commercial vehicles. This would create opportunities for the Company to make further inroads into the leasing market through revolutionary innovations to the leasing industry. The Company’s strategic focus is to build its market share in a profitable niche market with its synergistic alliance with Sampath Bank".

The Company closely aligns itself with its parent Company, Sampath Bank PLC which is the Bank with a very large regional presence. Taking cognizance of this expanding reach Aravinda Perera, Managing Director of Sampath Bank PLC highlighted that leasing services from Sampath Leasing and Factoring Ltd could be availed from its window offices located regionally. He further commented that SLFL has now reached out to with a wider foot print by housing window offices within the Sampath Bank branch network of over 200 branches located island wide.

Commenting on the growth of the Company, Group Financial Officer and Executive Director of Sampath Bank PLC, Ranjith Samaranayake, commented that the "success of the Company has been augmented by the significant increase in its loan book supplemented by the decline in the non-performing advances. This signifies the Company’s continued emphasis on qualitative lending". Elaborating further on the key financial performance indicators he noted that the Company had increased its Return on Capital Employed and Return on Equity significantly. He further commented that operational efficiencies have been attained judging by the low Cost to Income ratio.

Recognizing the need for an integrated information system the Company has developed an in house solution for its leasing applications, through its own group Company Sampath IT Solutions Ltd. This is recognized as a sustainable critical success factor of the Company in its strategy of growth and expansion. This would enable the Company to improve its service levels significantly whilst expanding its geographical reach.

The size and quality of the company’s lending portfolio also improved significantly judging by the overall increase in the lending portfolio by 167% during the year and the improvement in the non- performing advances ratio, which closed at 2.40% as at 31st December, 2011. The NPL ratio achieved is also well below the reported industry average of 3.28% for specialized leasing companies.
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China will be alert to threats posed by the trade task force in the United States to investigate and crack down on what it claims are unfair practices by Washington’s trading partners, officials from the Chinese Ministry of Commerce warned yesterday.

US President Barack Obama signed an Executive Order on Tuesday establishing the Interagency Trade Enforcement Center to see whether trade partners, including China, "play by the rules".

"China is not the only target but we cannot ignore the negative impact it will exert on China and Chinese exports in the long term," an official from the ministry’s bureau of fair trade for imports and exports, who requested anonymity, told China Daily.

"We have to closely watch what cases the agency might launch and prepare for possible countermeasures."

Trade relations must benefit both parties, a Foreign Ministry spokesman said.

"The essence of China-US trade should be mutually beneficial," said Hong Lei, Foreign Ministry spokesman, in response to the US move.

Both parties should be able to discuss and resolve the causes of any friction, he said.

Obama announced the creation of the centre in his State of the Union address in January. The Executive Order marks its official launch.

The center will "bring the full resources of the federal government to bear to investigate and counter unfair trade practices around the world, including by countries like China", Obama said.

Although China is not the only nation that will be investigated by the centre, experts believe it will probably be the main focus.

"I am sure that China will be the major target," Zhou Shijian, a senior trade expert from Tsinghua University, said.

There are growing fears that anti-China rhetoric will increase as the presidential election campaign heats up.

Republican presidential hopeful Mitt Romney has criticised Obama for what he described as being soft on China.

"The election campaign will lead to growing trade friction between China and the US," Zhou said, but dismissed the likelihood of a full-blown trade war.

The centre will be up and running in a few months.

"In a matter of just 90 days, we will hire leadership and core staff ... and we will put them to work on the toughest cases," US Commerce Secretary John Bryson said.

Zhang Yansheng, secretary-general of Academy Commission of the National Development and Reform Commission, said that the "goal of the move is obviously connected to the US election and targets China. The US fears China will challenge its global position."

The establishment of the centre was welcomed in the US.
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ATSL International (Pvt) Ltd, a subsidiary of the Access Group of Companies has secured an order from Eltel Networks TE AB (Sweden) to manufacture and supply concrete poles. This order fulfills Eltel’s obligations for concrete poles to be supplied under the Rural Electrification project secured from Ceylon Electricity Board.

The order which is in excess of US$ 15 million is one of the largest consignments of concrete poles requirement under the numerous Rural Electrification Projects in progress across the country.

ATSL International has established a modern large scale facility in the North Central province to enable the production of over 100,000 poles which are scheduled for delivery in less than eighteen months.

"This is a strategic step in our diversification as well as consolidation of our business," said Mahendra Kumarasinghe, the Chief Operating Officer of ATSL. "This multi million dollar investment will enhance our capability in supporting the Electrical Distribution Network expansions, Telecommunication fibre network and other related infrastructure projects that are expected in the future."
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"The market was very dull right through the day," a broker said. "The new ATS (Automatic Trading System Version 7) is giving unbelievable trouble."

Immediate solution needed or otherwise the current trend and the system introduced both will hurt everyone.