Sri Lanka Newspapers 22/01/2012

SEC to remove price bands after trading system upgrade

The Securities and Exchange Commission (SEC) will remove price bands once the Colombo Stock Exchange (CSE) goes online with its Automated Trading System (ATS) upgrade with ATS Version 7 next month, SEC officials said.

"We will replace this with circuit breakers," an SEC official said. The CSE postponed the ATS upgrade amidst some resistance from the stock brokers, early this month. "This has to be done as the hardware in our system is outdated. We cannot afford another system crash like last year," a CSE source said, adding that last year on September 19 the system went out of control and was not reflecting the actual prices of some shares after it started functioning.

He said the regulator cannot remove price bands (which was also a recent request from the brokers till the Colombo stock Exchange's (CSE) trading platform is upgraded.
http://sundaytimes.lk/120122/BusinessTimes/bt05.html

By Elton P. Ebert
Stockmarket Review
Trading activities commenced on Tuesday after the Thai Pongal holiday with the relaxation of restrictions on brokers credit setting trading at a blistering pace. Within an hour the ASI had gained over 100 points, passing the 6000 mark, but surprising this proved to be a temporary bubble and the market closed for the day even lower than the previous day.

Most investors expected the market to stage a revival the next day but on the contrary it reverted to the old losing style. It continued to fall for most of the week with the ASI slipping to 5782 and the Milanka just above the 4900 mark on reasonable turnover.

Some attribute the paranoia in the market to the fact that the SEC has resumed its investigations while sending letters a few brokers and investors as the main factor among many others. The only bright spark in this depressed and weak situation was the extraordinary and unbelievable enthusiasm for Asia Asset Finance which extended the hyperactivity of last week. It escalated to Rs. 8.90 on Wednesday and retreated gradually but had a host of buyers for the whole of the week. This stock experienced a new wave of activity on Friday when another 23 million shares were sold, peaking to Rs.8.70, before closing for the week at Rs.6.20.

This is very much in contrast to IPOs like Expolanka, Free Lanka Capital and Textured Jersey which dropped deep into the mire this week. Expolanka was exposed to its lowest level of Rs.8 and Textured Jersey slumped to Rs.9. Softlogic Holdings which is now moving into the leisure sector as stated below, Browns Investments and People’s Leasing are a cause of heartburn for many at present. PC Pharma also created an interesting plateau when it raced to Rs 89 on debut. Fair activity was seen in this share and it closed for the week at Rs. 52.

Commercial Bank and Environmental Resources Investments were transacted in large quantities like in the previous week. Ceylon Tobacco which reached Rs.500 per share also helped to bloat the weekly turnover.

Of late there have many strategic expansionary deals inked. Ceylon Leather Products now under Environmental Resources Investments acquired a 60% stake in Palla & Co (Pvt) Ltd, one of the leading footwear exporters for Rs 418 million. Meanwhile an agreement was worked out for a joint venture between JK Holdings and Brandix from the apparel industry for a domestic aviation project. Targetting the leisure industry, Softlogic Holdings entered into a shareholders agreement with UAE-based Ominga International (Pvt) Ltd for the construction of a luxury resort with 40 rooms and 20 luxury villas in Pasikudah. Renuka Agrifoods which enjoys fair market demand at the bourse, is expected to assume a 76% stake in Richlife Dairies Ltd, manufacturers of dairy and fruit based consumer products. Blue Diamonds Jewellery PLC in which there is heavy dealing and fair fluctuation, together with ECL Soft (Pvt) Ltd, a subsidiary of e.Channelling PLC has incorporated a subsidiary in Singapore to carry out retail business including Internet sales in addition to supplying key buyers. However the price of Blue Diamonds remained at previous levels.

AgStar Fertilizer Ltd, is arranging for a listing by way of an introduction on the Diri Savi board of 307,526,310 ordinary voting shares and 17,473,690 non-voting shares. Changes in directorates: Hatton National Bank – Harry Jayawardena vacated his office as director after completion his term of office effective 31st December 201; Mercantile Investments - Ms Mignonne Bernadette Assauw resigned from the board of directors effective 13th January 2012 while Ms Punyakanthi Tikiri Kumari Navaratne was appointed an independent Non Executive Director on 17th January 2012; Senkadagala Finance - Chandra Lal De Alwis was appointed Chairman and director on 1st January 2012; Sinhaputra Finance - S C Imbuldeniya, A M G Weerakoon and Ms C M Balalle resigned from the board of Directors on 29th December 2011 while K H K Wijayadasa resigned as Chairman on 29th December 2011; Nihal Nissanka Ratnayake was appoointed Chairman on 29th December 2011 while Dr. Amal Randhir Karunaratna and Ekanayake Athukoralage Don Premalal Ekanayake were appointed Directors on 29th December 2011: e.Channelling PLC - A R Karunaratne resigned as Chief Executive Officer on 6th January 2012, and was appointed Executive Director on 6th January 2012.

Turnover for the 4-day week was encouraging at Rs 4.4 billion against Rs.3.7 billion last week. Both indices were down, the All Share Price Index losing 146.94 or 3% to end at 5782.47, while the Milanka was also lower by 130.17 points or 2.5% to close at 4915.92.
http://sundaytimes.lk/120122/BusinessTimes/bt37.html

By Duruthu Edirimuni Chandrasekera
The Securities and Exchange Commission (SEC) is stepping up the demutualisation of the Colombo Stock Exchange (CSE) and targeting six months to complete the job, according to SEC officials.
Demutualization is the process through which a member-owned company becomes shareholder-owned; frequently this is a step toward the initial public offering (IPO) of a company, according to stock market sources.

"The large part of this process will be completed by April and the rest will take about three more months," a SEC official told the Business Times. He added that the demutualisation will be completed within six months.

He said the Qatar Holdings, which owns around 20% in the London Stock Exchange is interested in a stake in the CSE and will do a feasibility study of the local exchange in a bid to invest in a 'sizeable' stake. "But before that the CSE has to be demutualised and made into a public limited company which is now being fast-tracked," he said.

He also noted that the present SEC Act was introduced in 1987 and though there were three amendments thereafter, an overall review of the provisions to align it to the global market trends has not been done.

He said the SEC Act will be amended to incorporate provisions that would regulate demutualised exchanges, to effectively regulate a Central Counter Party/ Depositories, to introduce civil sanctions and administrative sanctions to deal with capital market offenders and the introduction of provisions that will provide for restitution for investors, to licence and regulate derivative exchanges including a Commodities Exchange, incorporating legal duties on Auditors in respect of capital market offences and other relevant measures that will enhance protection to investors.

The SEC is trying to introduce a risk management system, which is a precursor to bringing in demutualization and dematerialization of the Colombo Stock Exchange and establishing the Central Counter Party (CCP) system, according to the official. "The market participants need risk management models to manage the risks involved especially at a time like now when the regulators are trying to bring in the CCP. Now the financial integrity of the stock exchange is at stake and by bringing in appropriate margining and risk containment the market will be ready for CCP," he added.

According to the SEC, effective risk management practices render stability to the financial markets and its participants by ensuring proper and timely settlement of the trades. "It also prevents market manipulations and other abnormal price behaviour. It is imperative for any participant in any market to have a thoroughly well tested and reliable risk management system to shield it from any future rude shocks," he added.
http://sundaytimes.lk/120122/BusinessTimes/bt19.html

Imagine you're walking along Galle Road. You see a person staring at the sky, what do you do? What happens if there are five people - all staring at the sky? The answer to these questions formed the basis of one of the first psychological studies on herding effects in humans carried out by Stanley Milgram (famed for his research on obedience to authority) way back in 1968.

Milgram set up on a busy New York City street. He used crowds of hired help of varying size to stare at the sky, and then recorded the number of passers who looked up or indeed stopped and joined the crowd. When there was just one person standing looking up around 5% of passers by stopped and joined them, and almost 40% of passers by looked up. By the time the crowd had grown to 15 people standing staring at the space, 40% of passers by were stopping and joining them, and over 80% of passers by were looking skywards!

This is an excellent example of herding. Of course, herding can be perfectly rational. For instance, in the savannahs of Africa zebras herd together to avoid being eaten by lions. The membership of the herd reduces the probability that each individual will be eaten, conferring a clear survival advantage to the herd.

From an evolutionary perspective, imitation and herding may well have benefited mankind. After all, if you look around and see all your fellow cavemen thriving by doing something that you aren't doing, the chances are you will either start doing it or perish.

Herding is an extension of a larger set of behaviours that shape identity, which is a crucial driver of individual success and failure. According to Nobel laureate economist George Akerlof, who together with Rachel Kanton have written an interesting book on the subject, "As an example, neither gender nor racial discrimination arises from purely personal preferences. Instead, they reflect social codes that tell people how they are supposed to think of themselves and how they are supposed to interact with each other. People take such codes seriously. For example, in the case of gender, those who identify as men also want to behave as men are supposed to behave; those who identify as women want to behave as women are supposed to behave."

When we examine people's decisions from the perspective of their identities and social norms, we get new answers to many different economic questions. Who people are and how they think of themselves is fundamental to decisions that they make. Their identities and norms are basic motivations.
As an individual, "identity" can and should be monetized - identity is the ultimate "intangible" value, only it is actually very tangible. Research shows that those with a true understanding of their identity tend to move higher-up in their chosen careers and lead more fulfilling lives. Identity becomes more pointed in a fast evolving world and for those whose lives are increasingly internationalised. New migrants provide a great subject for research on this topic. It's too early to make definitive comments (and we may never be able to), identity explains why certain immigrant groups like to stick together and live in proximate neighbourhoods. Identity (or lack of) also explains the inconsistent outcomes of many migrants.

For some, success comes from "sticking to their own kind" and finding opportunities through networks within their own communities. Others find that "switching identities" is a more fruitful path and chose to embrace their adopted societies more closely. Neither guarantees success, but switching carries the risk of isolation (stuck-in-the-middle in strategy parlance) and the butt jokes of society (the white English-speaking people of the world referring derogatorily to second generation South Asians as coconuts).
The bigger point though is around the ability of identity to explain the divergence of pay for migrants. The most financially successful migrants are not only highly and uniquely skilled, but exhibit an aura of confidence which allows them to navigate trough a web of prejudice. Confidence is often linked to higher scores of Emotional Intelligence, but most importantly to a very high mastery of soft-skills. Identity helps to anchor an individual, while they acquire the skills needed to move through society.

These soft-skills then transfer to much higher wages.
No strength of identity or soft-skills can rid the world of entrenched discrimination (what economist Kenneth Arrow described as statistical discrimination where most whites assume all other races to be less skilled than them) or a nasty boss who refuses to grant a pay hike. Identity gives individuals a frame of reference to address an otherwise intractable problem of being highly educated and skilled, yet not being rewarded or recognisedfor their work.

(Kajanga is an Investment Specialist based in Sydney, Australia. You can write to him at kajangak@gmail.com).
http://sundaytimes.lk/120122/BusinessTimes/bt16.html

By Mangala Perera, Chief Operating Officer,C.W. Mackie PLC -Scan Products

The food and beverage industry in Sri Lanka has become a thriving sector in the economy propelled by the post war optimism and reaping maximum benefits from peace dividends since May 2009. Contribution to the Gross Domestic Product (GDP) by the food and beverages industry was recorded at 7.9 % of GDP by end of 3rd quarter 2011.

The food and beverage sector industries listed in the Colombo Stock Exchange (CSE) witnessed a staggering growth of 42 % subsequent to the cessation of the 3-decades-long internal conflict. The private sector took full advantage of the end of the prolonged war by entering into untapped markets in the North and East provinces. Private sector firms in the food and beverage industry penetrated the North and East provinces in a massive wave increasing firm level earnings by two to three folds. Post conflict buoyancy in the tourism industry also facilitated in expanding the food and beverage industry on a substantial scale.

On a macroeconomic level, the country's economic fundamentals have considerably improved, facilitating enhanced participation by the private sector. Among these - stable and low inflation rate coupled with low inflation expectation by both consumers and investors, persistently low interest rate encouraging more and more private sector credit growth, healthy external reserve position and improving foreign inflows facilitating a stable exchange rate, gradually narrowing fiscal deficit are of significance. All these positive macroeconomic developments have considerably helped in creating an extremely positive atmosphere in the country in its path towards achieving over 8 % economic growth continuously for two years in 2010 and 2011. Consolidating on peace and enhanced security condition coupled with integrating the North and East provinces with the rest of the country, greatly assisted private sector firms to freely move goods, services, capital and people across the entire country thus enhancing their profits and earnings.

Among the many industries, the food and beverage industry, was among the fastest growing sectors in the economy and has the potential to grow even further in the short to medium term. During 2010, this industry grew by 6.8 % with the growth in the first half 2011 being 7.2%. Therefore, the growth rate in 2011 could be projected at a comfortable 8.0 to 8.5%.

Trend dynamics
Major firms within the industry are carrying out capacity expansion activity on a massive scale to cater to the ever expanding demand in the market. With the resettlement of internally displaced persons (IDPs) in the North and East provinces reaching a conclusion and livelihood of IDPs settling to a normal level, it could be envisaged that demand for the food and beverage industry from these regions would further expand. Furthermore, increasing per capita income of the consumers, increasing standards of living of the rural population, narrowing urban-rural divide in the country, rapid growth in consumer spending, expanding middle income segment in the economy, massive influx of tourists into the country will also boost the demand for the food and beverage sector in the short to medium term, contributing to further growth in this sector. The strategic plan of the Export Development Board (EDB) for 2011 -2015 has identified the F&B industry as one of the seven key priority sectors and has set a target of US$1 billion in export earnings by 2015. All these factors reflect the growth potential of the F&B sector of the economy. Furthermore, numerous fiscal incentives granted through the Budget 2011 and Budget 2012, in the form of zero tax concessions for processed food items, imposing a CESS on unprocessed and semi processed items as well as VAT exemption on machinery and equipment for F & B industry, will further support the growth in this sector.

Fastest growing FMCG market in the Asia- Pacific Region According to market research findings published by AC Nielsen based on their retail audit, for the period January - September 2011, Sri Lanka recorded the highest nominal growth of 21 % and a volumegrowth of 11.7 % in the FMCG category within the Asia - Pacific region. The research findings further elaborate that the major contribution for this growth is from the F&B sector.


The corporate earnings of entities listed in the Colombo Stock Exchange
(CSE) under the food and beverage sector witnessed a considerable growth from June 2009 onwards. The year on year growth in earnings in this sector recorded an impressive growth of 46 % during the 3rd quarter 2011, and it is projected to grow at a similar rate during 2012 as well. Furthermore, this sector remained as one of the highest contributors to the total market's earnings and it is expected that this high level of earnings will remain in the medium term with increased levels of consumer spending by both domestic consumers and foreign tourists.

Conclusive Note
The outlook, thus, for the food and beverage industry is highly optimistic given the country's stable macroeconomic environment and the government's commitment towards maintaining a high growth path in the medium term. The growth prospects for the corporate sector in the economy are improving continuously and considerable opportunities are available for further capacity expansion to take place. Therefore, industry players in the F&B sector must grab hold of this vast opportunity before them and obtain maximum benefits from the favourable economic environment.

As Sri Lanka enters into a high growth trajectory coupled with a targeted US$ 4,000 per capita income by 2015, consumer preference is also taking a new shape where the value added branding culture is becoming more and more prominent. Influence by Social media networks, expansion in IT sector, telecommunication and mobile services also play a major role in consumer behaviour and their spending patterns. This trend in consumer buying behaviour will transform the Sri Lankan society into a new dimension by creating more and more opportunities especially in branded F&B category and will continue to grow further resulting from life style changes and social value changes of consumers.
http://sundaytimes.lk/120122/BusinessTimes/bt10.html

Thanks a lot for your posts which is too early.

By Duruthu Edirimuni Chandrasekera
The recent credit concessions by the Securities and Exchange Commission (SEC) came in a tad too late and it won't do much to the stock market which is now in a precarious position, analysts say.
Indices snap.

The indices snapped sharply on Tuesday despite the SEC announcing a relaxation of the credit rules where brokers are now allowed to lend up to three times their net capital. "Credit is mainly used by short term traders to leverage and capitalize on the positive market trends. Allowing credit on a negative market sentiment would only pave the way for the sellers to bail-out easily capitalizing on any positive price movements," an analyst pointed out. He added that investments expected in a discounted market are with a medium to long term perspective and such long-term investments are rarely leveraged and only invested strategically.

However others say that allowing brokers to let credit facilities under set limits is welcome by the industry as it will call off the force-selling that adds to the fall of the market. "The credit allowance will come handy when the market settles and adjusts to its proper levels," Thakshila Hulangamwa, Director Asha Phillips told the Business Times.

Tuesday saw the indices strike within the first 10 minutes, with the benchmark All Share Index (ASI) reaching a peak of 6,040 (+1.8%) while the more liquid Milanka touched 5,170 (+2.4%). The upturn was short-lived as the indices from that point saw a gradual decline with activity heavily centered on the speculative counters driven by high level of retail participation. "The credit concessions will do very little- as evident by Tuesday's activity. The retailers who were stuck with high cost junk shares were waiting for an opportunity to load them onto an unsuspecting third party with access to broker credit. The market fell when the rest of the retailers realized this," another analyst noted.

No bubble
While many don't forecast a bubble, they say that the market needs a lot more confidence. "A bubble can be expected in an over enthusiastic market where investors get over shadowed by sentiment. It is not necessarily supported by credit alone. Credit is only an option for the intended speculator and it's based on risk appetite of the investor," Mr. Hulangamwa noted.

He added that in the past 18 months the market was purely a local retail driven market where a significant exposure was done by the retail traders on low cap counters. "Since we are a small market and we have no way of capturing such counters separately on a selected criteria the ASI was boosted unexpectedly that drove all market indicators to overheated range. If you look at it counter-wise none of the fundamentally stable counters was in a bubble state," he pointed out. He said that during the correction of the market which came along with a little bit of negative macro conditions, there was some foreign selling that weakened blue chips alongside the over boosted counters. "A rally can be expected once the market settles on it cracks but time for a bubble is not in the picture in the present context."

Tough on manipulators
Analysts stress that what is imperative is the foreign investor confidence. "We need Foreign investor confidence, a strong SEC which is hard on blatant manipulation, added liquidity and lower interest rates, improved corporate performance and more educated investors who make rational decisions and calculated risks," a second analyst stressed.

He also said that the SEC needs to be tough on the market manipulators. "As long as the big players continue to manipulate the rest of the market- confidence levels will stay low." The second analyst noted that the SEC should also push for higher corporate governance and disclosure levels. "CSE still is in stages of infancy. Even most of the blue chips have pitiful disclosure," he noted. He also noted that a system to track low cap companies separately on a different index would be the best solution to avoid volatility of the market.
http://sundaytimes.lk/120122/BusinessTimes/bt02.html

By R.M.B Senanayake

The Central Bank is engaged in protecting the Exchange Rate peg since the demand for foreign exchange now exceeds the supply in the market. The Bank had to sell US$ 600 million from its Official Reserve of foreign exchange since the 3% devaluation in the budget. The Bank anticipates foreign capital inflows within the next two months to relieve the downward pressure. Given the amounts repayable annually on foreign loans and the trade deficit, is the current account deficit a temporary phenomenon and is it sustainable? Does it only have to be financed and not corrected?

We have had current account deficits since 1978 but they were hitherto financed without any strain as they were comparatively low and there were no large foreign debt repayments. The strain on the balance of payments in 2008 and 2009 was due to large capital outflows rather than current account deficits. But the sustainability of our current account deficits in the long run given the larger and larger capital repayments that will arise with more and more foreign borrowings is worth examining. We would need continual increases in capital inflows to meet ever increasing current account deficits coupled with larger foreign loan repayments.

It is not considered prudent to depend on short term private capital inflows since they could easily flow out in a crisis, internally or externally induced. We need larger foreign direct investments and long term bilateral loans at a concessional rate. Since we are now a middle income country, we cannot expect concessional loans from the multilateral agencies. Should any loans raised be tied to projects, we must contend with the reality that the need will be to have free exchange to be utilized for any purpose including debt repayment.

CB open market

operations leads to

monetary expansion

There is another dimension to the protection of the peg through Central Bank intervention in the market. Each time the Central Bank (CB) sells dollars to the market to support the rupee it sells dollars and withdraws rupees creating a liquidity shortage in the money market. To make good this shortage, it then buys government securities from the market to release rupees to increase liquidity back to its earlier level. If it doesn’t do so, the liquidity shortage will push up interest rates in the short term market. But it also increases the CB’s holdings of government securities. Presently the CB holdings amount to Rs 176 billion. It also increases the Reserve Money which is the base for banks lending to the private sector.

Fortunately our banks are carrying excess Reserves, above the Statutory Reserve requirement. Why they do so is because they do not wish to use them in lending to the private sector owing to perceived risks. So the banks use the extra liquidity released to the market by the Central Bank to invest in government securities in the primary market. They do so and also seek to increase the interest rates in the primary market for Treasury securities. The banks here are operating in a cartel and do not compete on price but only on service. So they generally are of one mind in seeking higher rates of interest in the primary market by offering larger discounts in the primary issue auction.

But the CB rejects the larger discount offers and prefers to allot the issue largely to the captive sources like the EPF and NSB who do not make offers or such offers are not market based. But as the demand for Treasury securities increase the CB may be reluctantly compelled to accept bids with larger discounts from the market. The secondary market yield curve continues to rise although the primary yield curve plummeted last week. The banks possess market power in the loan market as well as the primary market for Treasury securities if the issue of Treasury securities keeps on rising.

The CB can keep the primary yields down only by creating more and more liquidity. The commercial banks do not take the Central Bank’s benchmark rate of interest (the policy rates) as the base for their lending rates but instead set interest rates more linked to the call money rates that are rising. The Treasury bill rate is the risk free rate of return which should form the basis for their lending interest rates.

Normally economic theory states that when there is a large current account deficit, the money supply should shrink to restore equilibrium. During the regime of the Currency Board the money supply automatically shrank with the deficit in the balance of payments. Such shrinking promoted a better balance since it reduced the money in circulation. Now this correcting force is not there. Fortunately our banks don’t expand their lending to the private sector merely because they have more reserves. But it is ironic that in emerging countries like ours where there is a large percentage of farmers and small businesses who are excluded from credit, the banking sector can hold asset portfolios of government securities that are unproductive.

But there is a risk that over time the banks will lend at least part of their expanding excess reserves to speculators and importers who would then increase imports of goods worsening the balance of payments deficit. What is important is perhaps for the Central Bank to decide how much money the macro-economy needs in order to promote sustainable growth but growth without inflation. The CB missed its target for broad money supply for the year 2011. The target was 14.5% but the actual as at end October 2011 was 19.8%, up from 15.8% in 2010. The Reserve money growth was above the growth in money supply. It was 22.1% whereas the growth in broad money was 19.8. The target for 2012 is around 15%.

It is necessary that this target is achieved despite the replenishing of liquidity after the draining of liquidity due to dollar sales by the CB. Fortunately our banks carry excess reserves and the money multiplier has come down in 2011. " If there was always sufficient liquidity in the economy—enough but not too much—then you could trust the market system to do its job. If not, you got the Great Depression, or hyperinflation" Milton Friedmann

Lack of long term interest rate benchmark hampers development of Corporate Bond Market

Although the CB can determine short term interest rates (rates up to one year) it cannot determine the long term rates of interest. Market forces (supply and demand) determine the equilibrium pricing for long term bonds which set the long term interest rates. In practice there are few long term savers. They prefer to roll-over their savings and capture the benefit of any upward movement in such rates of interest. But this eliminates the market for long term lending. The Finance Companies use their fixed deposits to fund long term loans. This lack of a long term market for savings creates a mismatch for such finance companies which borrow short and lend long, hoping that the short term depositors will roll over their deposits.

But there is a risk that they may not do so if there is financial turbulence either related to a particular company or to the industry as a whole. We saw the crisis the Ceylinco Group faced in 2008/2009. Restructuring these finance companies may not be enough unless this mismatch is taken care of as well. Non-financial companies too are borrowing short term even to fund longer term investments. The short term outlook of investors in the stock market and their reluctance to hold shares for the long haul is also due to the lack of a long term bench mark interest rate. A market for long term savings is necessary and this requires higher interest rates at least on long term savings, a rate largely determined by the long term bonds. The CB could perhaps buy long term bonds when it carries out open market operations to replenish liquidity drained by sale of foreign exchange. Presently these are held until maturity instead of being traded for capital gains or to cut capital losses.

Indirect monetary policy measures

With the financial liberalization that took place in the developing countries after the 1980s, the trend in policy has been to use indirect monetary policy measures rather than direct controls such as interest rate repression and credit allocations to priority sectors. But the reform agenda has ignored the way private profit-maximizing banks in a cartel will behave after market liberalization. The oligopoly of banks will use their market power to mark-up the loan rate and other rates while accumulating excess reserves which will be used to feed the Treasury’s need for finance which is not, in comparative terms, a productive use of credit.

The repression of interest rates over a long period distorts the allocation of capital and promotes short term speculative investments which cause asset bubbles as we saw in the stock market.

That changes in interest rates affect returns from fixed-income investment avenues is obvious. Equally, changes in interest rates have profound impact on the direction of the stock market. In fact, interest rates are a key driver of the stock market. Lowering of interest rates has a bullish effect while raising interest rates have dampening effect on the stock market. So what happens to interest rates will have a bearing on economic growth and investment.
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=43658

The SEC’s relaxation of broker credit rules had failed to stimulate markets with investors choosing to remain on the sidelines amidst selling pressure, Acuity Stockbrokers said in a market report.

"Turnover levels nevertheless remained relatively robust, hovering over Rs.1 billion for two consecutive days before declining just below billion rupees on Friday," the report said.

"We expect markets to regain lost ground in the weeks ahead as the existing liquidity shortage is addressed to some extent by brokers’ ability to increase lending," Acuity said.

"Markets are also likely to be buoyed by Q4 earnings which had just begun to trickle in and which are likely to be robust once again this quarter.’’

The market report noted that the bourse had once again closed in the red with the ASPI losing 148.21 points (2.50%) and the Milanka 129.20 points (2.56%).

Trading during the week was dominated by Asia Asset Finance, PC Pharma and ERI.

Turnover last week increased 18.9% to Rs.4.5 billion from the previous week’s Rs.3.8 billion with the average daily turnover at slightly over Rs.1.1 billion against the previous week’s average of Rs.756.6 million.

But market capitalization was down 2.42% to Rs.2,116.05 billion.

Foreigners remained net sellers during the week but less so than during the previous week.

John Keells Stockbrokers reported that the indices had dipped sharply last week before concluding on a positive note amid moderate activity levels with speculative trades centre round Asia Asset Finance and ERI as well as PC Pharma which opened trading during the week.

Large trades on Commercial Bank dominated the weekly turnover, the report noted.

JKSB said that foreign activity was subdued during the week resulting in a net outflow of Rs.58.6 million.
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=43673

By Ravi Laduwahetty

The president’s two elder sons, Namal and Yoshitha, are listed among the top 20 shareholders of Ascot Holdings PLC according to the company’s interim financial statements.

According to this list, Mr. Y.K. (Yoshitha) Rajapaksa owns 100,000 shares and Mr. L.N. Rajapaksa (Namal) 92,000 shares as at Sept. 30, 2011.

Although in the top 20 list, in percentage terms their shareholding is a modest 1.25% and 1.15% though they are the 12th and 13th largest shareholders in the company which is fairly closely held.

Previously Asian Cotton Mills Ltd., the Jayewardene family had interests in the company founded in the middle sixties to spin cotton yarn. It had extensive property at Ratmalana but was in difficulty for many years due to a number of factors, many of them outside the company’s control.

Mr. A.Y.S. Gnanam, the well known tycoon, ran Ascot for a number of years but could not turn it around. Later control passed to the Kuwaiti investor, Al Nakib. Thereafter a group led by Mr. Rohan Iriyagolle took control, sold off machinery and land and invested the proceeds in a Colombo property development project at T.B. Jayah Mawatha (Darley Road).

The company now operates mainly on the rental income of this property.

Mr. deleted Perera, financial advisor to Mr. Dhammika Perera and on the boards of companies controlled by him, is also in Ascot’s Top Twenty list with 269,200 (3.37%)and is ranked the sixth largest shareholder.

Axis Financial Services (Pvt) Ltd. with 3 million shares (37.57%) and Boston Capital Pvt. Ltd with 649,500 shares (8.13%) are the two largest shareholders of Ascot with these shares held through two banks. Their individual accounts follow with Axis having a further 358,092 shares (4.48%) and Boston 314,864 shares (3.94%).

Some directors of Ascot are believed to have beneficial interests in shares held by holding companies.

The Ascot share traded at a high of Rs. 207.70 and a low of Rs. 99 in the Sept. quarter 2011 against Rs. 80 and Rs. 47 a year earlier. It closed at Rs. 151.80 on the CSE last Friday.

Total assets as at Sept. were Rs. 1.25 billion and liabilities approx. Rs. 600 million.

The group posted a small loss of Rs. 5.9 million in the period ended Sept. 30, 2011, translating to a loss of Rs. 0.73 per share.

The directors of the company are Messrs. V.P. Malalasekera, Chairman, Rohan Iriyagolle, N.D. Gunaratne, N.A. de Mel, Chanaka de Silva and Deleted. Gunaratne.
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=43669

Equity researcher places USD 750 mn. price tag on investment

John Keells Holdings (JKH) is currently planning a mega development encompassing land at its Glennie Street headquarters as well as adjoining Ceylon Cold Stores property, a research report from IIFL Institutional Equities said.

"JKH is currently exploring possibilities of a mega integrated development at an estimated US$ 750 million on its Glennie Street headquarters land," the report said.

It went on to say that this project would comprise two five-star hotels, malls, residential towers, conference centers and office complex spanning over an estimated 3.8 million sq. ft.

"The group’s vast real estate portfolio with large contiguous blocks of land in the heart of Colombo provides an ideal opportunity for such projects," the report said.

JKH itself was tight lipped about its plans on this mega development with senior company officials merely saying that they are examining various possibilities and working in parallel on matters including designs, approvals and numerous other formalities that must precede a development of this nature.

"The intention is there but delivery is another matter," a senior company official said yesterday. "We are making no formal announcement until everything is in place and we will do so when we are in a position to definitely state that we will go ahead with such a project," he explained.

The company declined to place any timeframe for the commencement and completion of the project if it takes off.

The IIFL report says that JKH is "the largest non-government land owner in Colombo" with 25 acres of Colombo land at prime locations in the city.

A significant portion of this city land portfolio is currently unutilized and presents immense potential for unlocking value, it said.

It noted that Shangri-La recently set a new benchmark for property prices in Colombo paying US$ 125 million for 10 acres at Galle Face and at that benchmark, JKH’s Colombo land value will almost equal a fourth of the conglomerate’s current market capitalization.

The report further noted that JKH also has 120 acres outside Colombo excluding hotel lands and these can be utilized to develop further leisure assets.

Although the JKH share has been falling in recent weeks and closed at Rs. 163.30 on Friday. The IIFL report gives a strong ‘buy’ recommendation on the counter saying that "the stock offers 39% upside" in a 12-month horizon. It has placed a target price of Rs.239 for the share one year down the road.

The report says that JKH is an "ideal play" for Sri Lanka’s economic revival given its presence in port operations, leisure, consumer food and retail and property.

"A track record of competent management and a strong balance sheet would help JKH sustain and strengthen its leadership position across sectors,’’ the report said noting that it was the largest and among the most liquid stock quoted on the Colombo Stock Exchange.

It also said that JKH has a cash chest of Rs.53 million "to exploit emerging opportunities."
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=43668

Good work CSE.SAS, posting tomorrow's newspapers bussiness news mainly from Island and Sunday Times so early.
Really appreciate your efforts.
Keep it up.

Tomorrows Sunday papers today. I saw this happen first time. thanks keep it up.

cseguide wrote:Tomorrows Sunday papers today. I saw this happen first time. thanks keep it up.

Last week also same
http://forum.srilankaequity.com/t14956-sri-lanka-newspapers-15-01-2012

CSE.SAS How you get early this news realy very good.

Poultry cartel hits smallholders

By Gamini WARUSHAMANA

A cartel of large scale poultry producers is emerging while smallholders who account over 40 percent of the poultry industry are struggling to survive due to the sharp increase in cost of production, the, All Island poultry Farmers Association said.

The Chairman of the association, Dr.D.D.Wanasinghe said that policymakers have ignored the voice of the small scale poultry farmer, who is represented by the Association, when policy decisions were taken in the recent past.

Only a few large scale poultry producers have been consulted to seek the views of the industry when formulating budget proposals and as a result important issues relating to the industry have been ignored, he said.

The poultry industry is suffering due to increased maize prices as a result of insufficient domestic production and import control. Today maize prices have increased to Rs.49/ Kg while 52 percent tariff is imposed on maize imports.

As a result the cost of poultry feed has increased sharply and the cost of production is higher and the profit margin is not attractive as there is a price sealing of Rs.350/kg for chicken. Only four large scale poultry producers attended pre budget discussions with Treasury officials and they have not pointed out the issues faced by small scale poultry farmers.

They have obtained a two-year tax exemption for import of closed house equipment, accessories, spare parts, freezer trucks and cold rooms which are used by them.

These are important for the development of the industry as a whole but not relevant to smallholders. The burning issues faced by small holders are different and if policy makers ignore their issues it would ruin the small poultry farm sector creating a cartel of large producers, he said. Dr.Wanasinghe said that last November at a discussion with Treasury officials, it was agreed to waive off import duties for maize for limited amounts, to bridge the supply gap. However, it was not implemented. Policy decisions should be taken for the benefits of maize and poultry farmers, because both industries are interdependent, he said.

http://www.sundayobserver.lk/2012/01/22/fin01.asp

Fixed rate low cost financing from USA


The launch of the International Executive Service Corps (IESC) AmCham partnership for the facilitation of Overseas Private Investment Corporation (OPIC) Financing is scheduled to take place on February 1 at Hilton Colombo. The event will be graced by Charles Conconi, Vice President of IESC.The Overseas Private Investment Corporation (OPIC) is the US Government’s primary development finance institution.

It mobilises private capital to help solve critical world challenges through supporting private investments abroad by providing finances to small and medium enterprises.The International Executive Service Corps (IESC) is an Enterprise Development Network (EDN) “Loan Originator” certified by OPIC to provide advisory services to enterprises seeking long-term loans from OPIC

http://www.sundayobserver.lk/2012/01/22/fin02.asp.

Bleak global economic indicators threaten emerging economies


by Sunil KARUNANAYAKE

Despite strong statements issued by leading global institutions such as Fitch, Moody Standard and Poor, the Central Bank has firmly defended their stance that the country’s economy is stable.

The Central Bank states that with low inflation, a steady eight percent growth and unemployment at 4 percent, Sri Lanka is well ahead of most of their European counterparts whose debt ridden status is once again threatening global economic stability.

The US is reported to be targeting a 2 percent growth with recovery in employment and housing. Housing is a catalyst to rejuvenate an economy due to its multiplier effect.“ Emerging economies are less dependent on debt, less vulnerable to volatile investment sentiment and are rethinking the role of capital flows” (IMF). Emerging economies which managed to survive the global financial crisis in 2007/2008 appear stronger and seem capable of meeting the threats of volatile capital flow. Emerging economies now view international capital flow as an irritable episode that could cause imbalance in their economies.

The Central Bank has managed to keep interest rates down, thus the business sector would not be adversely affected.

The Central Bank has continuously urged Banks and large conglomerates to seek credit facilities from overseas sources to keep the cost of capital low. Records indicate that many businesses have made use of this facility in keeping with Central Bank guidelines.

The initiatives taken by the government to help the agricultural sector by giving them the facility of the fertiliser subsidy has paid rich dividends thus increasing supplies and lowering prices, similarly paddy production too has benefitted. The rapid development of the road network including rural roads too benefited the farming community.

These factors clearly demonstrate that the country's economic status is stable and that there was no immediate reason for caution.

One of the major negative factors affecting the economy are the loss-making state institutions that have to be supported by the tax payer.

This grave situation needs to be brought under control with tough measures.

While the Central Bank consistently advocated that the Sri Lanka Rupee is stable and the currency export sector vehemently argued for a flexible exchange rate to boost exports and the government effected a 2 percent devaluation in the 2012 Budget. These mechanisms have been used even by the South Asians by boosting exports and building strong economies.

External trade continued to remain resilient in October 2011.

Reflecting the high base of exports in October 2010 and contraction in exports of tea, rubber and minor agricultural crops, earnings from exports declined by 4.9 percent to $ 882 million in October 2011. However, during

the first ten months of 2011, the cumulative earnings from exports increased by 23.4 percent to $ 8,702 million compared with the same period of 2010.

At the same time, expenditure on imports, driven by high growth in investment and intermediate goods, increased by 41.4 percent to $ 1,751 million in October 2011 compared with the same month in 2010.

The cumulative expenditure on imports for the first ten months of 2011 increased by 50.7 percent to $ 16,436 million,compared with the corresponding period in 2010.

As a result, the trade deficit for the first 10 months in 2011 stood at $ 7,734 million, a significant portion of which was on account of infrastructure imports for related projects of the government that have been funded mainly by foreign loans.

In that context, the total inflow to the government, including the proceeds of the International Sovereign Bond issue, amounted to $3,507 million, during the first ten months of 2011. (Central Bank of Sri Lanka)

Meanwhile, the World Bank has stated that the effects of post war recovery now on the wane and Sri Lanka is vulnerable to risks associated with declining export prices and worker remittances. Consequently, growth is expected to decline to 6.8percent.

These outcomes are associated with the financial turmoil that’s placed Europe in a difficult situation. Sri Lanka’s tea and rubber export prices that moved to record highs in the good part of early 2011 i.e.: The Colombo Auction average moving up to $4 and rubber too moving up to similar levels.

As at present these price levels have come down sharply and losses are incurred by plantation companies as well as small holders which may become an issue to Bankers too with mounting debts.

Textiles and apparels however continue to perform well with good demand, but Industry sources state their biggest issue is acute labour shortage and the high turnover.

Meanwhile, the US government recently restored the GSP facility.

This is an industry that has fared extremely well to weather many storms.

It is believed that South Asia is somewhat protected from International financial market turbulence, however the region is likely to be under pressure and the repercussions could be adverse.

http://www.sundayobserver.lk/2012/01/22/fin03.asp

Demand for exports from Asia declines- Dr. Parakrama DISSANAYAKE

Though freight rates on the East –West trades increased by about 28% in the first week of January 2012 it is expected to be shortlived with more capacity going on stream, said past Chairman of the Chartered Institute of Logistics and Transport Dr. Parakrama Dissanayake.

The World Container Index benchmark rate between Shanghai and Rotterdam increased by 41% during the first two weeks of January to $ 1335 per Teu.This was primarily due to buoyant volumes on account of Chinese New Year factory closures. This pre Chinese New year spot rate increase isexpected to decline to December 2011 levels unless action is taken by carriers to reduce surplus capacity from the trade.As monitored by China Containerised Freight Index, freight rates to NorthEurope from Asia in December 2011 as against December 2010 declined by 40% and to North America East coast and West coast in December 2011 as against December 2010 contracted by 16 -10% respectively.The Container ship charter prices in December 2011 as against 2010 for ships ranging from 725 Teu to 3500 Teus also declined from 17% to 55%.

Therefore, shipping industry will need a great deal of resilience to meet the challenges in 2012. As reported “The global fleet of 8200 Teu will grow by 25% in 2012 and this will be a severe challenge for the industry to absorb given that we

foresee demand growth only in emerging markets of Latin America, Indian sub Continent, Africa and intra Asia where 8000 Teu ships operate.

Overall global demand for 2012 is forecasted at 5.4%”. According to Drewry, the current supply/demand fundamentals on the key east/west trades are not strong enough for carriers to push through any sustained revenue increases and we already know that some shippers contracts have been signed on the Asia /Europe trade this year for around US$ 1100/- per 40ft. all in – levels that are below breakeven”.

Dr. Dissanayake further said that unless a substantial amount of tonnage is laid up the implications can be severe. He said that idle container vessel tonnage may reach around 7% of the global fleet during the latter

part of this year which may be equivalent to approx. 1.1 million Teus of shipboard capacity. On Air cargo, carriers are looking at cutting services with demand for exports out of Asia declining. Cargoitalia and Jade Cargo grounded operations though there was an indication that Jade Cargo would resume.

As reported. Air India shelved its plans to commence dedicated freighter

services from Asia. Overall as per the Association of Asia Pacific Airlines, carriers saw a traffic decline of 6.5% in November year on year.

In the year 2011 as against 2010 on the Asia Pacific sector traffic contracted by about 5%. The slump Dr. Dissanayake said was primarily due to European Union debt crisis, not so stable USA economy and Japan having to recover.

As per figures released by Hong Kong Air Cargo terminals for December 2011, volumes were down 4.3% year on year and exports declined by 4.9%.

http://www.sundayobserver.lk/2012/01/22/fin04.asp

Semondu launched at Old Dutch Hospital

"Refreshing to dine and relax in buildings of a bygone era" Colombo city is regaining its lost glory and is becoming a place for the public to relax and enjoy during the day and night. The heart of the city, Colombo Fort is developing fast with the establishment of high-end shopping complexes, hotels and restaurants that are filled with people and is opened until late night.

The Old Dutch Hospital premises in Colombo Fort, which has been turned to a luxury shopping complex, has dramatically changed business in the city. The dilapidated building belonged to the Dutch era and has been renovated by the UDA reflecting old world charm.

The building was used during Dutch rule in Ceylon, from 1658 A.D as a hospital by the Dutch East India

Company being a convenient location for patients from ships coming into the Colombo port.

Sri Lankan Catering, a fully -owned subsidiary of the national carrier, SriLankan airlines recently opened its first restaurant,“Semondu” which is derived from the word “Simoundou” an ancient name for Sri Lanka given by Ptolomy, the famous Roman mathematician, astronomer, geographer, astrologer, and poet. “The city of Colombo and its outskirts are developing fast, with international property developers vying for prime locations to set up multi- storied hotels and apartment complexes.In this concrete jungle, these buildings which have been proposed will even encroach into the ocean. "It is refreshing to walk into architecture of a bygone era and lunch or dine in total comfort and privacy while you watch the world go by,” Chairman, SriLankan Airlines, Nishantha Wickramasinghe said.

CEO of the Sri Lankan catering, Sarath Fernando said that “Semondu” offers the best cuisine in town fro the kitchens of SriLankan Airlines.

“Semondu's team of Chefs dish out an array of fusion cuisine, blending flavours, mixing and matching Asian and European cuisine, with an oriental touch, served by a highly skilled and professional service staff in the restaurant, which opens for lunch from 12:00 pm to 02.30 pm and dinner from 07.00 pm to 11.00 pm.

“We take pride in establishing an ideal location in the city to enjoy fusion cuisine, while also contributing to the efforts of the Government to make Colombo a vibrant city and promote tourism. Our theme at Semondu is fusion; fusion of cuisine, blending East and West and fusion of ambience, from colonial charm to modern magic.

http://www.sundayobserver.lk/2012/01/22/fin05.asp

Huge potential in agri businesses
by Lalin FERNANDOPULLE

CIC Agribusinesses (CICAB) will set up a dairy sector in the eastern province and increase egg, fruit, and vegetable production this year. 'We will also introduce seed coating technology for the first time in Sri Lanka' said CICAB Managing Director/CEO, Keerthi B. Kotagama. He said the technology will provide benefits to farmers by protecting seedling from pests and diseases at the early stages, thus giving rise to healthy plants and more yields." We will also focus on more rice exports as there will be an excess production this year.

CICAB exports to Australia, Canada, USA and is currently exploring the possibilities to commence exports to Europe.

CICAB will invest on value addition to agri- based products such as rice,flour, packed foods, milk products, fruit and vegetable and grain storage to support farmers.

"We have commenced jojnt ventures with Bangladesh, Qatar and UAE for agricultural production which will focus expanding overseas agri-business.We have already set up four agri extension services centres in Thirunvelli, Kilinochchi, Vavuniya and Vellankulam in the North and two in the East.

We have also initiated a red onion seed production program with outgrower farmers.

We have commenced a maize production program in the North with 1000 farmers and seed paddy production with100 farmers", Kotagama said.

"CICAB will set up a storage and purchasing centre for rice and grain in the North next year. We have initiated a vegetable seed production program in the Vellankulam farm and provided employment.to over 150 people.

The company plans to set up a grape vineyard on a 100- acre land in Kilinocchi to start a Vinery in 2 014. Sri Lanka has resources that are needed for agriculture such as soil, water and human capital but still far behind the productivity levels that of other Asian countries and the world due to the lack of innovative technologies and professional management. Seventy percent of our population live in rural areas where 90 percent of them are dependent on agriculture for a livelihood", he said.

Agriculture development is a must to alleviate rural poverty and the development of other sectors such as industrial and service sectors is also vital.

It also provides food security as the world is experiencing a food scarcity due to the increasing population and climatic calamities.

http://www.sundayobserver.lk/2012/01/22/fin06.asp

Dutch TV firm Endemol has deal with most creditors
THE HAGUE Jan 19, 2012 Dutch TV producer Endemol, creator of "Big Brother" and other hits, said it had outlined an agreement with most of its creditors to restructure debts of more than two billion euros.

"A significant majority, representing more than two-thirds of lenders, have reached agreement in principle regarding a restructuring of the Group's capital structure," said a company statement.

"In the coming weeks, the company and its lenders will continue discussions and work towards finalising documents for the legal implementation of a successful restructuring," the statement added.

The Amsterdam-based company has been in talks with its banks for several months to restructure its more than two billion euro ($2.5 billion) debt Endemol is controlled by Mediaset, Wall Street giant Goldman Sachs and Cyrte Investments, an investment fund belonging to Endemol's founder John De Mol.

http://www.sundayobserver.lk/2012/01/22/fin07.asp

Vavuniya: Best in poverty at 2.3 percent
by Rohantha ATHUKORALA

It's true that there are many ways in which poverty can be calculated and each one has its own merits and disadvantages. However, going by the last Department of Census and Statistics Household Income and Expenditure survey report released on August 3, 2011 on poverty, the best performing district is Vavuniya at 2.3% on head count and 2.0% on the attribute poor households.


Rohantha Athukorala

The data amazed me as it beat Colombo which is reporting a headcount of 3.6 percent and Gampaha at 3.9 percent

Sri Lanka
Panning out on Sri Lanka's performance last year, the economy closing on $60 billion and the Brand Sri Lanka being valued by Brand Finance at $23 billion was interesting, especially when the country is registering an eight percent plus GDP growth. Incidentally this is the fourth best performing economy globally on growth.

Coming from a multinational brand marketing background, my bosses always warned me not to paint a pretty picture as people love attacking a perfect situation but I guess when facts are being highlighted, it's time that we as a nation must be proud of our performance.

We must not forget that over seventy-five percent of our economy is led by the private sector and these same sentiments must be mirrored in their P&L. If not, the script can be under attack.

Vavuniya even though the best in poverty levels, the average income is only Rs.33,063 as against Colombo at 51,070

http://www.sundayobserver.lk/2012/01/22/fin20.asp

Developing world should prepare for shocks - WB
The World Bank has warned developing countries they need to be prepared for shocks as global economic growth slows.

The organisation has slashed its growth forecasts, and is now predicting a 0.3 percent contraction for the eurozone in 2012.

"Developing countries need to evaluate their vulnerabilities and prepare for further shocks, while there is still time," said World Bank chief economist Justin Yifu Lin.

"Escalation of the crisis would spare no-one," the report's author warned.

Referring to the eurozone crisis and its potential to impact growth in rich and poor countries, Andrew Burns said: "Developed and developing-country growth rates could fall by as much or more than in 2008/09. "The importance of contingency planning cannot be stressed enough." The World Bank is predicting growth of 5.4 percent for developing countries in 2012 and 1.4 percent for high income countries, down from its forecasts of 6.2 percent and 2.7 percent in June.

The World Bank's Global Economics Prospects report says that slower growth is already visible in global trade and commodity prices.

It said that declining commodity prices were better news for the developing world, although food security for the poorest countries was still a major concern.

Food prices are down about 14 percent from their peak in February 2011.

The World Bank has a warning for the developing world: prepare for the worst. In its Global Economic Prospects, the bank does forecast continued growth, but warns there is a risk of a worse outcome: of another crisis as bad as what followed Lehman in 2008. So could the developing countries cope? After all, they weathered the previous global recession relatively well.

The Bank's view is that they, for the most part, are in better in shape than the rich nations.

Some have scope to boost government spending and should identify now what would most help development and the poor. But others don't have that room for manoeuvre and will need to make cuts if there is a prolonged downturn.

Andrew Burns, manager of global macroeconomics at the World Bank, told the BBC there was a danger that the downturn could be longer lasting than the one which followed the collapse of Lehman Brothers in 2008.

"This time, going in, [developing countries] will be in much better condition than high income countries, but that said, we are concerned," he said.

"They are going to be operating in a situation where high income countries aren't going to to offer the same type of counter fiscal policy and the same type of support to the financial system as they did in 2008/9."

BBC

http://www.sundayobserver.lk/2012/01/22/fin21.asp

GISM offers degree programs
by Gayan KANCHANA

The first batch of students from the Graduate Institute of Science and Management (GISM) completed their final year of the degree in New Zealand. The annual awards ceremony was held last week.

This is the first time that students have been transferred to a New Zealand University as part of an articulation program conducted with a Sri Lankan Education Provider.

The Assistant Vice Chancellor and a high ranking panel of Professors from New Zealand's premier Massey University were also present.

Founder and President of GISM Campus Prof. G.G. Senaratne said, "The GISM campus, which is situated away from the city, seeks to provide excellence in academic standards by adopting state-of-the-art teaching techniques.

Prof. Senaratne said, "GISM offers degree programs in Engineering, Business, Science and Languages.

Students will be able to complete the first year of the degree in Sri Lanka before going to New Zealand to complete the remaining second and third years of their degrees.

http://www.sundayobserver.lk/2012/01/22/fin22.asp