Market continues to rise; sudden holidays cause for worry

High level of activity continued at the Colombo Stock Exchange in the week with turnover remaining high and the indices moving up. The week though saw shortened trading with the government abruptly declaring a Friday to be a holiday on account of Victory Day celebrations. This caused a few headaches within the investing community, with settlements for Friday needing to be managed along with other corporate actions that are price sensitive. While a holiday on an important day like this is important, at least two week notice has to be given as these corporate actions have been planned weeks ahead and any change in them has to be advised on a timely and proper fashion. The week saw the All Share Index of the 235 companies all move up by 46 points or 1% to end at 4,607. The Milanka Price Index, which tracks the movement of the 25 most liquid stocks, gained 89 points or 1.7% to close at 5,271. The week’s total turnover was Rs 7.8 billion with a daily average turnover of Rs 1.9 billion. The previous 5 day week’s average turnover was Rs 2.6 billion. The week’s total foreign inflow was Rs 755 million while outflow was Rs 1, 384 million, a net outflow of Rs 629 million. The previous week’s net outflow was Rs 1,032 million.
Interest continued to be seen in the banking and diversified sector which gained 1.4% and 0.2% respectively. Key stocks in the banking sector that gained in value were Commercial Bank voting which was up Rs 3.00 to Rs 283.00, DFCC Bank which was up Rs 4.75 to Rs 270.00, HNB which was up Rs1.25 to Rs 294.00. NDB Bank gained Rs 3.25 to Rs 250.25. Of the smaller cap banks, Nations Trust Bank gained Rs 2.00 to Rs 49.75 while Seylan Bank gained Rs 7.25 to Rs 76.00 . Of the diversified business, John Keells Holdings gained Rs 4.75 to Rs 20.5.00, while Richard Pieris gained Rs 16.00 to Rs 95.00. Ceylon Theatres lost Rs 9.75 for the week to end at Rs 97.00 while Carson Cumberbatch and Co lost Rs 38.50 to Rs 540.00. Aitken Spence was hardly changed at Rs 1,600.00 per share. The telecommunication sector which gained 3% for the week saw Dialog Telekom close up 50 cents to Rs 9.25 while Sri Lanka Telecom was unchanged at Rs 9.25. The hotels and leisure sector was hardly changed, but the motors sector changed by 2% with United Motors gaining Rs 3.50 to end at Rs 131.75. Dimo lost Rs 7.00 to end at RS 618.00.
In other corporate news, Dankotuwa Porcelain announced that it had signed an agreement with its union’s for a period of three years. This in turn will pave the way for the company to invite fresh infusion of capital. The parties involved and the terms and conditions are yet to be revealed but that didn’t stop the shares of DPL from taking off. It ended the week at Rs 20.50, a gain of 49% from last week’s closing. The share peaked at Rs 22.50 when the announcement of the agreement was published on Thursday. The newly renamed Dunamis Capital (previously known as Kshatriya Holdings) revealed that its subsidiary PVIC Management Company disposed of a 9% stake in listed entity First Capital Holdings, netting it a Rs 130 million capital gain. Dunamis is a word that means dynamic or dynamo. It also means potential. Both Dunamis Capital and First Capital Holdings are business entities owned and managed by the Schaffter family who also own Janashakthi Insurance. Dunamis and First Capital regularly go through shareholder changes and structural changes. The group also owns Kotmale Holdings another listed company while it also has a few unlisted companies in its portfolio of business. First Capital closed the week at Rs 20.00, while Dunamis Capital closed the week at Rs 11.50. Hemas Holdings controlled Serendib Hotels disposed of a 12.5% stake in Hotel Sigiriya in the market for a consideration of Rs 41 million. Hotel Sigiriya signed the week off at Rs 70.00 while Serendib Hotels did so at Rs 120.00. In other news, the government which last week took over the Emirates’ 40% stake in Sri Lankan Airlines indicated that it was looking at buying back the 51% stake that Shell had in Shell Gas Lanka. The government still owns 49% in Shell, which operates the cooking gas distribution in the country. No price and terms have been disclosed yet, while Bank of Ceylon has been appointed the advisors. While the government uses public money to acquire many businesses which it thinks are politically or strategically important, it is yet to pay Distilleries Company the Rs 6 billion for taking back Sri Lanka Insurance in June 2009.

-Stock Market Correspondent

No change in policy interest rates -CB

The Monetary Board of the Central Bank (CB) has decided to maintain the policy interest rates of the Central Bank unchanged.
Growth in the money supply continues to moderate while accommodating an expansion in credit to the private sector. Credit extended to the private sector by the commercial banks, which contracted during much of 2009, has recorded a positive growth since March 2010, stated the CB in its Monetary Policy Review - June 2010.
Expansion in credit obtained by the private sector indicates a gradual pick-up in economic activity, and this expansion is expected to gather momentum, particularly in view of the prevailing supportive monetary conditions.
Indicators of external sector performance point to encouraging developments. Exports have recorded a healthy growth for the first quarter of 2010. Imports have also increased in line with the recovery in economic activity, the CB further stated.
The recent relaxation of selected import tariff would provide additional impetus to the economic recovery underway. Workers’ remittances, which have recorded a growth of 14.1 per cent, year-on-year, for the first quarter of 2010, meanwhile, continue to cushion the current account. Further, the Central Bank continues to be a net buyer in the domestic foreign exchange market. Reflecting these trends, the foreign reserves of the country remain at comfortable levels.