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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Srilanka Newspapers Wednesday 04/04/2012

Srilanka Newspapers Wednesday 04/04/2012

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1Srilanka Newspapers Wednesday 04/04/2012 Empty Srilanka Newspapers Wednesday 04/04/2012 Tue Apr 03, 2012 10:33 pm


Global Moderator

Ceylinco Life declares Rs 1,866mn annual, cash bonuses

More than 348,000 policyholders of Ceylinco Life will receive bonuses totalling a record Rs 1.866 billion in April 2012, as the life insurance leader despatches its annual bonus certificates and rewards long-standing customers with cash bonuses, the insurer said in a statement.

Of these recipients, 339,368 policyholders will receive Rs 1.834 billion in the form of bonus certificates which will be mailed by Ceylinco Life from 2nd April onwards. Another 9,088 policyholders, who complete 10, 15 and 20 years with the company will receive Rs 31.9 million in cash bonuses before the Sinhala and Tamil New Year, the company said.

The annual bonuses are in respect of the surplus generated by Ceylinco Life’s Life Fund in FY 2011, while the ‘Avurudu’ cash bonuses represent a practice begun by the company in 2004 to reward loyalty.

"As usual, April will be a month of extra celebration for policyholders of Ceylinco Life," the company’s Director/Deputy CEO Thushara Ranasinghe said. "We had an exceptionally successful 2011, and this will be reflected in the bonus payout, which once again exceeds our promise to policyholders."

This year’s annual bonus declaration exceeds that of 2011 by Rs 244 million or 15.3 per cent, while the number of recipients has increased by 29,368, Mr. Ranasinghe disclosed.

The company’s policy of declaring bonuses from the very first year of issue of a policy, enables even a policyholder who obtained a policy in December 2011 to receive a bonus allotment as at 31st December of the same year.

Meanwhile, Ceylinco Life’s cash bonuses, in the form of immediately encashable cheques, will be home delivered to eligible policyholders between 7th and 10th April, the company announced.

Policyholders who had completed 20 years as at 31st December 2011 are eligible to receive a cash bonus computed at Rs 75 per Rs 1,000 sum assured. Cash bonuses for those who have completed 15 years are computed at Rs 50 per Rs 1000 sum assured while those who completed 10 years will receive Rs 25 per Rs 1000 sum assured.

Accordingly, a participating policy with a sum assured of Rs. 1 million will be entitled to a cash bonus of Rs 25,000 on completion of 10 years, Rs 50,000 on completion of 15 years and Rs 75,000 on completion of 20 years.

Ceylinco Life ended 2011 with a record Gross Written Premium Income of Rs 9.816 billion and total income of Rs 13.698 billion. The Company’s Life Fund grew by 19.9 per cent to Rs 38.2 billion as at 31st December 2011. Independently rated as one of the country’s most valuable brands, Ceylinco Life operates more than 180 branches, the largest branch network among local life insurance companies, and has won multiple international and local awards for its commitment to the community and success in brand equity building.

The company’s solvency margin, which illustrates its financial strength and ability to honour all claims, stood at eight times the minimum statutory requirement at the end of the 2011 financial year.


Global Moderator

*Top official says Hong Kong, Singapore and US investors too join to create port city at H’tota
The Ministry of Industry and Commerce issuing a statement yesterday gave out more details on the proposed US$ 50 billion investment planned for the development of Hambantota, with a top official saying it was no misnomer.

As Sri Lanka-China trade topped US$ 2.2 billion in 2011, an international port city in Hambantota region to compete with Singapore, is proposed by a Beijing based private investment group with no less than US$50 billion as envisaged project value. "We are looking at a 10 year timeline for the US$ 50 billion Hambantota Trade City Project on the Public Private Partnership model. We are planning to implement it with the support of international investment and financial institutions" said Ms Song Jianhua, Chairperson of Sino-Sri Lanka Rich Investment (SSLRI) yesterday, as quoted by the ministry.

Ms Song Jianhua led the 13 member Chinese Business delegation that arrived in Colombo as part of the overall 150 Chinese business delegation for the Sri Lanka Expo 2012 organised by the Export Development Board under the Ministry of Industry and Commerce. Her delegation comprised of powerful, state-of-art technology players in fertilizer, port development, energy, petro-chemistry, cement, and machinery.

Clarifying about the US$50 billion project value, which is seen by some analysts as almost equal to Sri Lanka’s annual GDP, the resourceful Ms Jianhua responded: "The US$ 50 billion value is no misnomer. This is a private public partnership at our end and we envisage an overall investment value of US$ 50 billion over 10-15 year period and we will proceed upon approval by the government of Sri Lanka. I am happy to inform you that this is not a sole Chinese entry-in fact it is a multinational effort in which investors from Singapore, Hong Kong and US are also joining the Chinese investors as lead investors. The main Chinese investors represent manufacturing and logistic sectors. But I should stress that the project timeline will also depend on the speed of approval."

Ms Jianhua added: "There will be other investments from us after the port city is established. Members of my delegation are also keen on real estate, black tea and jewellery once we process the port city. We also have the support of international investment and financial institutions. Most importantly, I believe that our efforts will boost Sri Lanka – China trade cooperation significantly" she added.

According to the Department of Commerce of Sri Lanka under the Ministry of Industry and Commerce, the total trade between Sri Lanka and China is on an upward trend. In 2011, the total bilateral trade value topped US$ 2239.43 million with the balance of trade in favour of China. Sri Lanka’s exports to China, although still at a lower level, have increased from US$ 10.9 million in 2002 to US$ 104.06 million in 2011 which is an achievement considering the fact that only 8 Countries in Asia including Sri Lanka were able to maintain a positive Export growth to China compared with 2008.

"It is too early to give specific details of the venture at the moment since we are in the initial stages" Ms Jianhua said and added: "We had a good experience during this visit to Sri Lanka and believe the country has investment promise. We are committed to creating jobs and promote economic growth in Sri Lanka with our financial strength."


Global Moderator

*Bourse edges down but turnover tops billion
*SEC re-imposes restrictions on warrants

Six crossings yesterday in the voting shares of Commercial Bank involving a total of 8.5 million shares at a price of Rs. 100 per share helped boost turnover on the Colombo bourse to Rs. 1.53 billion, up from the previous day’s Rs. 694.6 million, though both indices were marginally down - the All Share by 13.33 points (0.25%) and the Milanka by 2.78 points (0.06%) with 65 gainers trailing 127 losers.

The Com Bank crossings contributed Rs. 850 million to the day’s turnover, and with a crossing of nearly 0.4 million JKH at Rs. 210 generating a turnover of Rs. 83.3 million, yielded most of the day’s business volume.

Brokers said that the Japanese bank which acquired the Com Bank stake sold by the DFCC Bank on a regulatory direction was the seller. This investor who is estimated to have some 1.5 million Com Bank shares left has been selling at the Rs. 100 price recently. There was no word on the buyer/s.

Apart from the Com Bank crossings, over 0.3 million shares of this counter were done on the trading floor, closing 70 cents up at Rs. 100.

Swarnamahal Financial Services was the second biggest business generator yesterday with retail activity evident in the counter where 9.8 million shares, were traded closing 10 cents up at Rs. 9 contributing Rs. 89.6 million to turnover.

JKH also saw nearly 0.3 million traded on the floor closing 60 cents up at Rs. 209 contributing Rs. 53.3 million to turnover.

Cargills with 0.1 million shares transacted closed Rs. 3.70 up at Rs. 175 while Keells Hotels, with a block of 1.9 million shares crossed at 12.70 and nearly 0.8 million done on the floor, closed 10 cents up also at 12.70.

The SEC announced re-imposition of restrictions on extending trading periods on warrants saying this had been done after considering the impact on investors in the secondary market due to actions taken by some listed companies relating to warrants.

Under the listing rules of the CSE, a listed company is required to announce to the market terms and conditions of warrants at the time of their issue, the SEC announcement said.

"The terms and tenure of a warrant is determined by the risk attached to such financial instrument," it explained. "Thus the warrant holders should not be allowed to transfer the risk attached to the terms of such warrants after the risk event has occurred, by extending the cut-off date."

4Srilanka Newspapers Wednesday 04/04/2012 Empty Rupee appreciates on low importer demand Tue Apr 03, 2012 10:39 pm


Global Moderator

*Benchmark T-bill yields flat

After two days of falling, the rupee once again strengthened against the greenback with import demand slacking, currency dealers said.

"The rupee started the day at Rs. 127.90/128.20 against the dollar and appreciated with little demand from importers. The rupee gained to as much as Rs. 125.30 but closed the day at Rs. 126.15/30," a currency dealer said.

Dealers said exporters were seen converting their dollar holdings as well.

Meanwhile, benchmark Treasury bill yields were virtually flat at yesterday’s auction. The Public Debt Department of the Central Bank had offered maturing bills amounting to Rs. 10 billion for which bids amounted to Rs. 24 billion with only Rs. 7.3 billion of these accepted.

Overnight interbank borrowing rates closed flat as well yesterday with the Central Bank mopping up excess liquidity amounting to Rs. 5 billion to prevent credit generation feeding into import demand, dealers said.

5Srilanka Newspapers Wednesday 04/04/2012 Empty IMF surprised but happy Tue Apr 03, 2012 10:41 pm


Global Moderator

*Happy Sri Lanka is taking BOP issue seriously with range of flexible policy geared towards sustainable growth
*Surprised by vehicle import duty increase; more supportive of monetary policy tightening

IMF Resident Representative in Sri Lanka Dr. Koshy Mathai said the IMF was happy that authorities have begun to take the ‘balance of payments issue’ more seriously with a package of flexible policy measures, but was surprised by the recent steep increase in vehicle import duties.

"We had nothing to do with the government’s decision to increase vehicle import duties. We never discussed it. In fact, we were surprised by this move. But we were happy to see that it showed the government was seriously looking at the balance of payments issue," Dr. Mathai told journalists in Colombo yesterday.

When asked whether the IMF was favourable towards such trade protectionist methods, Dr. Mathai said increasing import duties were not always productive.

"We would prefer a more generalised approach using broader tools, such as monetary policy," he said.

"We are very happy about the policy package introduced by the authorities and their commitment that there would be flexibility. Now is the time to be happy about the sustainability of the economy. Six months ago there was a problem with the policy left unchanged. But now, the policy mix is right and is now beginning to shape into a consistent policy regime" he said.

Early February, the Central Bank floated the exchange rate and slapped a ceiling on private sector credit growth. The government has revised domestic fuel prices to reflect global prices and electricity tariffs and import duties on vehicles, alcohol and cigarettes have been increased.

Dr. Mathia said it was too early to comment on the effectiveness of these measures and that the IMF, nor the Central Bank, could predict where the exchange rate would be in the future.

He said the policy measures would slowdown economic growth to around 7 to 7.5 percent, but the economy would be on a sustainable trajectory.

"I personally prefer to have a 7 percent growth rate with stability, rather than a higher growth rate with reserves under pressure," he said.

Dr. Mathia said foreign direct investment would take time to mobilise and suggested post-conflict expectations were too high.

The budget deficit would slightly exceed the 6.8 percent of GDP target for 2011, but Dr. Mathai said the IMF was more concerned about how the deficit was financed, with end December targets being met.

Inflation would remain at the higher single digit levels during the year, and the economy was not showing signs of overheating.


Global Moderator

* State capitalist economy incapable of bridging investment gap
by Zacki Jabbar

Despite various predictions by the government, the trade deficit would widen by the end of this year, financial analyst and deleted Parliamenterian Eran Wickremeratne predicted yesterday.

He told The Island that as at the end of 2011, the trade deficit was nearly US$ 10 billion and it would appreciate by around 30 percent by the end of this year.

Exports will take some time to pick up, tea prices will drop, imports would cost more and oil prices are bound to increase further by December, the MP observed.

Wickremeratne said that even if remittances and revenue from tourism were to increase by a total of 70 percent and Foreign Direct Investments was to double to US$ 2 billion in comparison to last year, the Rajapaksa regime would be nowhere close to bridging the trade deficit.

Asked how the rupee would perform in the medium to long term against the US dollar, he said that it will appreciate slightly in the short term, but by the end of the year it would have depreciated way beyond current levels.

The rupee had picked up slightly in the last few days, because it was common knowledge that the IMF’s next loan instalment to Sri Lanka had been approved for disbursement. The monetary authorities would be able to prop up the rupee for some time, but will not be able to sustain it for too long, the MP said.

Asked what should be done to give a turbo boost to the economy in the post war era, Wickremeratne said that the government should restore international confidence in Sri Lanka. This would require implementing the rule of law and resolving the political issues that have stemmed from the recently concluded UNHRC sessions.

The State Capitalist Economy, that was in force, was not capable of bridging the gap in investments. The private sector has to be invited to invest in key sectors and given all the necessary incentives if there was to be meaningful economic development that filters down to the poorest of the poor, he added.



Janashakthi Insurance-linked entity buys 20% stake in First Alliance
Orient Capital Ltd. has recently entered into a joint venture with First Alliance Money Brokers Ltd., one of the key providers of inter-bank money and foreign exchange broking services to the finance industry in Sri Lanka.
By acquiring 20% equity stake in First Alliance, Orient Capital will be creating a new window of access to the banks and financial institutes – especially large scale; and in turn provide further strength and stability to the operations of First Alliance as well.

The joint venture between Orient Capital and First Alliance was signed last week with the view to consolidating their varied strengths to provide a wider range of opportunities for the finance sector in Sri Lanka.

Orient Capital Ltd., formerly the venture capital company known as People’s Venture Investment Company Ltd. and owned by Peoples Bank, was transformed into an investment bank backed by the insurance giant Janashakthi Insurance Company Plc – a leading corporate entity in Sri Lanka.

Orient Capital is currently in the process of integrating various types of finance related companies to form the Orient Capital Group.

Since the companies in the finance industry are interdependent, Orient Capital will be in an advantageous position to benefit from the group synergies arising from its member companies as Orient Capital intends to meet their clients’ financial and investment demands under one roof with reliability – and this joint venture with First Alliance is a firm step towards achieving that objective. Orient Capital is also expected to list in Colombo Stock Exchange by June 2012 through an IPO with an objective of financing its strategic investments.

First Alliance Money Brokers Ltd., (FAMB) formerly known as Capital Alliance Money Brokers (CAMB) has been an inter-bank money and foreign exchange broker for over a decade with a mission to be the ‘preferred partner in capital markets.’

First Alliance offers inter-bank money and foreign exchange services through fixed income instruments, foreign exchange and money market services to the leading banks and financial institutions in Sri Lanka.

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