Sri Lanka Equity Forum
Dear Reader,

Registration with the Sri Lanka Equity Forum would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
Sri Lanka Equity Forum

Discussion Forum for Stock Market Investors in Sri Lanka

සිංහල පරිවර්තනය
Contribute
Submit Post

Submit Post

Latest topics

» නුදුරු ආර්තික අවපාතයට මුහුන දීම සදහා වඩාත් උචිත වන්නේ මේ අතරින් කුමක්ද? පහදා දෙන්න.
by kadik Today at 11:08 pm

» EPF attack plans by Cabraal
by MoneyLover Today at 8:50 pm

» SEC to take measures to support the stock market
by Quibit Today at 8:21 pm

» CSE should be closed temporarily
by God Father Today at 8:04 pm

» Summary of Rules and Guidelines for Corrective Waves Zigzag
by evapattern Today at 7:38 pm

» Sri Lankan Economy - "Post-Covid19"
by God Father Today at 7:23 pm

» Price band for individual stock at CSE
by MoneyLover Today at 7:00 pm

» කොරෝනා නසන ‘අවිගන්’ ඔසුව පැය 48ක් තුල ලංකාවට.. ඇණැවුම් කර අවසන්.. අතහිත චීනයෙන්…
by Teller Today at 5:42 pm

» Why are Sri Lankans continuously loose money in the stock market
by Quibit Today at 1:28 pm

» Sri Lanka Economy
by Quibit Today at 10:53 am

» Sri Lanka Rupee Exchange Rate
by Quibit Today at 10:45 am

» SAMPATH BANK has postponed ANNUAL GENERAL MEETING. What will happen to the XD date?
by bhanu Today at 8:15 am

» MINIMUM rate of return you expect from the CSE equity portfolio
by Optimus Prime Today at 5:02 am

» What will happen tomorrow?
by bhanu Yesterday at 8:19 pm

» Govt to Refund 20% of EPF Contribution to Members
by God Father Yesterday at 5:01 pm

» ඩොලරයේ විකුණුම් මිල රු. 189 ඉක්මවයි
by God Father Yesterday at 8:25 am

» Are you subscribing to Kapruka IPO?
by Teller Fri Mar 27, 2020 10:41 pm

» dow seems loosing the 6% gained now 3% lost
by fastandeasygrowth Fri Mar 27, 2020 10:00 pm

» CORONA VIRUS: Latest Updates
by Teller Thu Mar 26, 2020 9:11 pm

» WORLD WAR 111...
by Yahapalanaya Thu Mar 26, 2020 8:24 am

» Sri Lanka economy: A plan for aftermath of Corona
by anges Thu Mar 26, 2020 4:57 am

» Economy of Sri Lanka
by anges Thu Mar 26, 2020 4:54 am

» Globle Cooling
by roshan1039 Wed Mar 25, 2020 3:11 pm

» LATEST NEWS-GLOBAL STOCK MARKETS SURGE!
by samaritan Wed Mar 25, 2020 11:15 am

POPULAR COMPANIES
A

ABANS ELECTRICALS PLC

ACCESS ENGINEERING PLC Hot

ACL CABLES PLC

ACL PLASTICS PLC

ACME PRINTING & PACKAGING PLC

AGSTAR PLC

AITKEN SPENCE HOTEL HOLDINGS PLC

AITKEN SPENCE PLC

ANILANA HOTELS AND PROPERTIES PLC

ARPICO INSURANCE PLC

ASIA ASSET FINANCE PLC

ASIA CAPITAL PLC

B

BAIRAHA FARMS PLC

BALANGODA PLANTATIONS PLC

BIMPUTH FINANCE PLC

BLUE DIAMONDS JEWELLERY WORLDWIDE PLC

B P P L HOLDINGS PLC

BROWNS BEACH HOTELS PLC

BROWNS INVESTMENTS PLC

C

CARGO BOAT DEVELOPMENT COMPANY PLC

CENTRAL INDUSTRIES PLC

CEYLON COLD STORES PLC

CEYLON GRAIN ELEVATORS PLC Hot

CEYLON TEA BROKERS PLC

CEYLON TOBACCO COMPANY PLC

CHEVRON LUBRICANTS LANKA PLC

COLOMBO FORT LAND & BUILDING PLC

COMMERCIAL BANK OF CEYLON PLC

CITRUS LEISURE PLC Hot

COMMERCIAL CREDIT AND FINANCE PLC

D

DANKOTUWA PORCELAIN PLC

DFCC BANK PLC

DIALOG AXIATA PLC

DIALOG FINANCE PLC

DIPPED PRODUCTS PLC

DISTILLERIES COMPANY OF SRI LANKA PLC

DUNAMIS CAPITAL PLC

E

EAST WEST PROPERTIES PLC Hot

EASTERN MERCHANTS PLC

EXPOLANKA HOLDINGS PLC

E-CHANNELLING PLC

F

FIRST CAPITAL HOLDINGS PLC

G

GALADARI HOTELS (LANKA) PLC

GUARDIAN CAPITAL PARTNERS PLC

H

HATTON NATIONAL BANK PLC

HAYLEYS PLC

HAYLEYS FABRIC PLC

HAYLEYS FIBRE PLC Hot

HEMAS HOLDINGS PLC

HIKKADUWA BEACH RESORT PLC

HNB ASSURANCE PLC

HVA FOODS PLC

J

JANASHAKTHI INSURANCE COMPANY PLC

JOHN KEELLS HOLDINGS PLC Hot

JOHN KEELLS HOTELS PLC

L

LANKA ASHOK LEYLAND PLC

LANKA IOC PLC

LANKEM CEYLON PLC

LANKEM DEVELOPMENTS PLC

LAUGFS GAS PLC

LAUGFS POWER LIMITED

LOLC FINANCE PLC

LOLC HOLDINGS PLC

LUCKY LANKA MILK PROCESSING COMPANY PLC

M

MELSTACORP PLC

N

NATIONAL DEVELOPMENT BANK PLC

NATION LANKA FINANCE PLC

NESTLE LANKA PLC

O

ORIENT FINANCE PLC

OVERSEAS REALTY (CEYLON) PLC

P

PANASIAN POWER PLC

PEOPLE'S LEASING & FINANCE PLC

PIRAMAL GLASS CEYLON PLC

PRIME FINANCE PLC

R

RAIGAM WAYAMBA SALTERNS PLC

RENUKA AGRI FOODS PLC

RENUKA CAPITAL PLC

RENUKA HOLDINGS PLC

RICHARD PIERIS AND COMPANY PLC

RICHARD PIERIS EXPORTS PLC Hot

ROYAL CERAMICS PLC

S

SAMPATH BANK PLC

SEYLAN BANK PLC

SIERRA CABLES PLC

SINGHE HOSPITALS PLC Hot

SMB LEASING PLC

SOFTLOGIC HOLDINGS PLC

SOFTLOGIC LIFE INSURANCE PLC

SRI LANKA TELECOM PLC

SWISSTEK (CEYLON) PLC Hot

T

TEEJAY LANKA PLC

TESS AGRO PLC

THREE ACRE FARMS PLC

TOKYO CEMENT COMPANY (LANKA) PLC Hot

U

UNION BANK OF COLOMBO PLC

V

VALLIBEL FINANCE PLC

VALLIBEL ONE PLC Hot

VALLIBEL POWER ERATHNA PLC

W

WASKADUWA BEACH RESORT PLC

Advertise

You are not connected. Please login or register

Sri Lanka Equity Forum » Stock Market Talk » Stock Market Research » Policy Rates on hold on the road to recovery

Policy Rates on hold on the road to recovery

Go down  Message [Page 1 of 1]

1Policy Rates on hold on the road to recovery Empty Policy Rates on hold on the road to recovery on Thu Feb 20, 2020 12:48 pm

Quibit

Quibit
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
CBSL to keep policy rates steady amid signs of recovery
Previous Pre-Policy report; CBSL maintains its policy rates
➢In the last policy meeting held in Dec 2019, CBSL maintained its accommodative monetary policy stance at current levels immediately following the tax revisions with the belief that it would support higher economic growth in the short term. Considering the recently provided tax revisions and other benefits, we were of the view that continuation of policy rates were appropriate at that economic juncture. However, we also assigned a 50% probability for a rate cut in Dec 2019 considering the urgency to improve the lending and the economic growth.

Domestic economic activities show signs of recovery
❑ Sri Lanka’s economy grew by 2.7% in the 3Q2019, higher than our expectation of 2.2%, indicating a gradual recovery relative to 2Q2019 growth of 1.6%. Private sector credit growth also recorded an increase of LKR 47.1Bn in Nov 2019, illustrating a positive credit growth for the 4th consecutive month with Jan-Nov 2019 growth at 3.5%, closing in, on our credit growth target of 5% for 2019E. Going forward, a steady revival of economic activity is envisaged, supported by potentially further improved political stability after the General election in 2020 and inline with the measures taken to stimulate the economy such as SME and extended tourism moratorium, tax benefits and Capital Adequacy relaxation on banks.

Extended giveaways!!!
❑ As an extension to the stimulus package previously granted, Govt. took measures to remove DRL imposed on banks and NBFIs and revise downwards the corporate tax rates across all sectors. We expect the additional support given with the above measures to further enhance the growth in the economy. However, government’s ability to bridge the revenue loss due to the recent tax revisions will be a concern leading to a risk in 2020. The stimulus package may potentially lead to fiscal slippage, reducing the possibility of further monetary easing in the near term.

Foreign inflows despite outlook downgrading for SL
❑ Following a similar path to Fitch, S&P recently revised its rating outlook on the Sri Lanka sovereign credit to negative from stable on the view that larger- than-expected fiscal deficit and concerns over indebtedness. Despite the negative rating outlook revision, in line with our expectations, SL’s government securities market witnessed a net inflow since the beginning of the year 2020 amounting to nearly LKR 5.5Bn and is expected to gradually improve during the 1Q2020 with the settling of the political uncertainty to a certain extent.

CBSL to keep policy rates steady amid signs of recovery
Inflation to remain at low single digit levels and stabilise within 4-6% while market lending rates are expected to reduce further
❑ Inflation, as measured by CCPI accelerated in December 2019 to 4.8%YoY driven by the food inflation. However, we expect a gradual acceleration in inflation to continue in the first half primarily driven by the supply side shortage relating to food due to the floods in November. However, the inflation is only likely to rise to around 6% mark as tax cuts are expected to partially offset the food inflation. Moreover, market lending rates are expected to continue to adjust downwards in response to monetary and regulatory measures taken by CBSL.

Expectation
Considering the recent major Fiscal and Monetary policy changes, First Capital Research believes that current accommodative monetary policy stance is appropriate, and that there is ample space for market lending rates to reduce without further adjustment in policy rates. Already announced tax relief, and proposed moratorium on capital repayments of bank loans for the SME sector are likely to provide further impetus to the economy. Accordingly, we assign a 80% probability for no change in policy rates in the upcoming policy announcement and expect policy rates to hold in the 1Q2020. However, we assign a lower probability of 20% for a rate cut in Jan 2020 with the urgency to boost the revival of economic activities. We continue to maintain that SRR is likely to be remained at the current level.

https://www.firstcapital.lk/wp-content/uploads/2020/01/Pre-Policy-Analysis-22-Jan-2020.pdf

Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum