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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » EPF’s equity exposure exposed

EPF’s equity exposure exposed

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1EPF’s equity exposure exposed Empty EPF’s equity exposure exposed Mon Feb 11, 2013 12:20 am

sriranga

sriranga
Co-Admin
AG says as of 15 January 2013, pension fund’s stock market portfolio of Rs. 74 b had lost Rs. 12 b in value
Investment in The Finance comes under spotlight at COPA

By Dharisha Bastians

The Rs. 1 trillion-rich Employees Provident Fund’s (EPF) listed equity investment portfolio worth Rs. 74 billion has lost Rs. 12 billion in value it has been revealed.

In a report on the EPF’s present situation and operational activities to the Committee on Public Accounts (COPA) last week, the Auditor General’s Department has said that as of 15 January 2013, Rs. 54 billion worth of EPF investments in relation to 57 listed companies had lost Rs. 11.7 billion of their value.

The EPF had invested in 76 listed companies at a total value of Rs. 63.16 billion as at 15 January 2013, the special report said.

Officials of the Central Bank overseeing the EPF which is a State-controlled pension fund of private citizens appeared before the COPA in Parliament last week. The AG Department report makes several observations about Rs. 74 billion worth of total long and short term investments the EPF had made in 78 companies listed in the Colombo Stock Exchange as of 31 December 2011. The investment of Rs. 205.4 million to buy over five million shares in 2011 without considering the fact that the Company’s last published accounts revealed it had incurred a loss of Rs. 4.2 billion was also raised by the Auditor General’s Department during a parliamentary oversight committee on public finances.

The shares had subsequently lost 40.5% of its value in the stock market by 31 July 2012 and the fund had received no return since the date of investment, according to the Auditor General.

The committee is chaired by Deputy Finance Minister Sarath Amunugama and includes 10 Government MPs and four opposition MPs.

“In July 2010 Rs. 500 million was spent to purchase 1,863,676 shares of an airline company. Up to 30 June 2012, no income has been earned since the date of investment,” the report states.

Addressing a media briefing last week UNP MP R. Yogarajan said that although the Auditor General’s report does not indicate the name of the finance company, the EPF divulged it was a transaction pertaining to The Finance when COPA queried the officials.

“At the time the decision to invest in these shares was made it had not been taken into consideration that the last published accounts of the company had revealed a loss of Rs. 4.28 billion. In the preceding year as well the company had incurred a loss of Rs. 3.83 billion. A share had been purchased at the price of Rs. 40.36 whereas as of 31 July 2012, the value of one of these shares at the Stock Exchange was Rs. 24. From the date this investment was made no income has been earned for the fund,” the Auditor General’s Department Report to COPA says.

Yogarajan said that while COPA was questioning Central Bank Governor Ajith Nivard Cabraal about the The Finance share purchase, Minister Amunugama abruptly called off the proceedings at 5:45 p.m. claiming the Parliament staff had to leave.

However, UNP National List MP Dr. Harsha De Silva told the Daily FT that the Chamber sat on Wednesday until 7:10 p.m. He said Wednesday’s meeting had been crucial because this was the first time the EPF’s investments had ever been audited.

According to The Finance Company’s latest annual report, the company had been found to be in violation of regulations of the Finance Business Act, De Silva told the Daily FT.

The Rs. 500 million investment in SriLankan Airlines and other such investments in Galadari Hotels and LAUGFS will also be queried when the officials are summoned before COPA again, Dr. De Silva told the Daily FT.

“The EPF is a private citizens’ pension fund,” he said, adding that the EPF’s role was not to bail out loss-making Government companies.

The National List MP alleged that the Central Bank was using the EPF to buy leverage in certain private banks and companies, in order to wrest control of the financial system.

The Monetary Board of the Central Bank controls the fund’s Rs. 1 trillion plus portfolio of investments. The Monetary Board is chaired by the Central Bank Governor Cabraal, while its Secretary is the Treasury Secretary Dr. P.B. Jayasundera.
http://www.ft.lk/2013/02/11/epfs-equity-exposure-exposed/

http://sharemarket-srilanka.blogspot.co.uk/

2EPF’s equity exposure exposed Empty Re: EPF’s equity exposure exposed Mon Feb 11, 2013 8:54 am

Chinwi

Chinwi
Associate Director - Equity Analytics
Associate Director - Equity Analytics
Apart from the individual cases highlighted,
the situation is excellent ! ( compared to us !)

Out of 1000 billion, they invested only 74 in CSE and the value is down only by 12 !

3EPF’s equity exposure exposed Empty Re: EPF’s equity exposure exposed Mon Feb 11, 2013 12:42 pm

kukumarx


Manager - Equity Analytics
Manager - Equity Analytics
This is a major scandal. But like most scandals in the country it will just blow over. And things will go back to being the same.

Things will change only when good governance comes in. I cant see that happening anytime in the near future!

4EPF’s equity exposure exposed Empty Re: EPF’s equity exposure exposed Mon Feb 11, 2013 7:19 pm

econ

econ
Global Moderator
what Kabral say to this?

5EPF’s equity exposure exposed Empty Re: EPF’s equity exposure exposed Mon Feb 11, 2013 8:14 pm

WildBear


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@Chinwi wrote:Apart from the individual cases highlighted,
the situation is excellent ! ( compared to us !)

Out of 1000 billion, they invested only 74 in CSE and the value is down only by 12 !



significant portion of the 74 billion invested prior to 2009, which they still hold with large unrealized gain. But our point was few shady deals occur without following fair valuations. We should point to those ugly deals rather than generalized performance.

6EPF’s equity exposure exposed Empty Re: EPF’s equity exposure exposed Mon Feb 11, 2013 10:07 pm

FortuneMaker


Stock Analytic
Stock Analytic
People like Harsha De Silva are shedding crocodile tears, pretending to care about the loss of Rs. 12 billion in a 1000 billion fund. What is that percentage ?
Just 1 %. They will recover that and make a profit as soon as the market turns. Prior to the crash in 2011, the EPF made more than 12 billion in profit.
Why not talk of the net gain ? Rather than a loss during a specific period ?
Now please compare that 1 % loss against what the average investor lost in this country. The people who contribute to the EPF like you and me are not so bothered, as we know its just a matter of time. The Bull run is very close, and these people, who criticize, will all be silenced when the EPF starts to make billions.

7EPF’s equity exposure exposed Empty Re: EPF’s equity exposure exposed Mon Feb 11, 2013 11:42 pm

Kosinna


Equity Analytic
Equity Analytic
@FortuneMaker wrote:People like Harsha De Silva are shedding crocodile tears, pretending to care about the loss of Rs. 12 billion in a 1000 billion fund. What is that percentage ?
Just 1 %. They will recover that and make a profit as soon as the market turns. Prior to the crash in 2011, the EPF made more than 12 billion in profit.
Why not talk of the net gain ? Rather than a loss during a specific period ?
Now please compare that 1 % loss against what the average investor lost in this country. The people who contribute to the EPF like you and me are not so bothered, as we know its just a matter of time. The Bull run is very close, and these people, who criticize, will all be silenced when the EPF starts to make billions.

You are incorrect. Rs.12b loss from Rs.74b investment. Fortunately, all others are invested treasury bills.

8EPF’s equity exposure exposed Empty Re: EPF’s equity exposure exposed Tue Feb 12, 2013 9:02 am

kukumarx


Manager - Equity Analytics
Manager - Equity Analytics
The EPF fund went into banks in 2009 just before and after the war ended. They have huge capital gains on those shares. The huge gains on their portfolio has been converted to a net loss because they subsequently bought a lot of dud shares.

Look at it this way. Imagine if you were a fund manager who entered the market in early 2009. If by 2012 you had a loss of 12 billion of a portfolio of 74 billion what would that make you?

Unfortunately we only have the net picture and not annual snapshots. The annual picture will give the extent of the red ink due to poor investments.

9EPF’s equity exposure exposed Empty Re: EPF’s equity exposure exposed Tue Feb 12, 2013 7:18 pm

FortuneMaker


Stock Analytic
Stock Analytic
@Kosinna wrote:
@FortuneMaker wrote:People like Harsha De Silva are shedding crocodile tears, pretending to care about the loss of Rs. 12 billion in a 1000 billion fund. What is that percentage ?
Just 1 %. They will recover that and make a profit as soon as the market turns. Prior to the crash in 2011, the EPF made more than 12 billion in profit.
Why not talk of the net gain ? Rather than a loss during a specific period ?
Now please compare that 1 % loss against what the average investor lost in this country. The people who contribute to the EPF like you and me are not so bothered, as we know its just a matter of time. The Bull run is very close, and these people, who criticize, will all be silenced when the EPF starts to make billions.

You are incorrect. Rs.12b loss from Rs.74b investment. Fortunately, all others are invested treasury bills.

Yes, If you take the loss of 12 billion in a 74 billion fund, its substantial. But this fund has 1000 billion. Therefore,
its not the end of the world. If the professional managers who decide to invest EPF funds in CSE, were to really get in
now and buy shares like SAMP, COMB, CTC, NESTLE etc they will surely recover their losses in a year. However, they need to invest 200 billion, and a 10% annual growth gives them 20 billion, more than sufficient to cover their losses.

10EPF’s equity exposure exposed Empty Re: EPF’s equity exposure exposed Tue Feb 12, 2013 7:45 pm

Whitebull


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@FortuneMaker wrote:
@Kosinna wrote:
@FortuneMaker wrote:People like Harsha De Silva are shedding crocodile tears, pretending to care about the loss of Rs. 12 billion in a 1000 billion fund. What is that percentage ?
Just 1 %. They will recover that and make a profit as soon as the market turns. Prior to the crash in 2011, the EPF made more than 12 billion in profit.
Why not talk of the net gain ? Rather than a loss during a specific period ?
Now please compare that 1 % loss against what the average investor lost in this country. The people who contribute to the EPF like you and me are not so bothered, as we know its just a matter of time. The Bull run is very close, and these people, who criticize, will all be silenced when the EPF starts to make billions.

You are incorrect. Rs.12b loss from Rs.74b investment. Fortunately, all others are invested treasury bills.

Yes, If you take the loss of 12 billion in a 74 billion fund, its substantial. But this fund has 1000 billion. Therefore,
its not the end of the world. If the professional managers who decide to invest EPF funds in CSE, were to really get in
now and buy shares like SAMP, COMB, CTC, NESTLE etc they will surely recover their losses in a year. However, they need to invest 200 billion, and a 10% annual growth gives them 20 billion, more than sufficient to cover their losses.
Actualy what bothers here is not the amount or percentage of lost. Of course they will recover with it in time...
IT IS SOME OF CONTROVERSIAL DEALS.....HAVE THEY USED PUBLIC FUND FOR A FEW PEOPLE'S BENEFIT ? THAT SHOULD BE INVESTIGATED.

11EPF’s equity exposure exposed Empty Re: EPF’s equity exposure exposed Tue Feb 12, 2013 9:40 pm

D.G.Dayaratne


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Independent investigation is necessary to check weather they have followed general guide line when investing public funds. in the stock market

Using of % to give explanation can be considered as misuse of statistics
to hide facts

I agree with Whitebull

12EPF’s equity exposure exposed Empty Re: EPF’s equity exposure exposed Tue Feb 12, 2013 10:17 pm

Chinwi

Chinwi
Associate Director - Equity Analytics
Associate Director - Equity Analytics
He he this topic is coming again and again.

Actually we talked about it very clearly when they were doing these transactions 2 years ago. ( may be in a previous forum ? )

No one in the Govt. or in the opposition had enough knowledge or interest to stop those high priced buying at that time.

They always stir at the wrong time.
Now they should ask "why EPF is Not buying the good shares at low levels? " before it is too late.

13EPF’s equity exposure exposed Empty Re: EPF’s equity exposure exposed Tue Feb 12, 2013 11:14 pm

klpfernando


Manager - Equity Analytics
Manager - Equity Analytics


They always stir at the wrong time.
Now they should ask "why EPF is Not buying the good shares at low levels? " before it is too late. [/quote]

politician like Harsha de silva who really care about EPF should ask this question now.Why is he not doing it? we need to find the answer for that.

14EPF’s equity exposure exposed Empty Re: EPF’s equity exposure exposed Wed Feb 13, 2013 9:19 am

D.G.Dayaratne


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
If EPF loss 12 million who gain it.What about the loss of other public funds
such as ETF and GOVT BANKS.

Most of retailers also lost.

But few people benefited Who are those people?

They are the people who manipulate the stock market

IF YOU ANALYST STATISTICS OF CDS you can easily get these information
I think even Dr Harsha Silva will not seriously request this type of Investigation
Behavior of main media institutions is also same.

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