Stocks

Money Market Update

T'Bill Auction

Period [D] 91 182 364

Last Week 19.95 19.98 19.98

This Week 18.63 18.77 18.47

Change [1.32] [1.21] [1.51]

Call money market

During the week ended 08th March, the inter-bank money market rates remained in the range of 22% to 23 %, which is same as the previous week. The 1% reduction in the Central Bank's Open Market Rates helped the call money to settle lower. However, the liquidity shortfall in the money market remains at higher levels. The liquidity shortfall depicted further aggravation as it reached Rs. 34~35Bn mark. The weekly call money average plummeted by approximately 40 basis points to 22.60% from 23.00% of the previous week. The term money rates too remained unchanged and the one month money was quoted at 21~22% As the Central Bank Open Market rates remained same during the week, the market repo rate held between 21.75~22%. At the higher end most of the players reached Central Bank.

Open Market

Though the market was expecting a further reduction in the Central Bank's open market rates, no change was witnessed in the rates. Hence, the Central Bank's repo and reverse repo stood at 19% and 22% respectively. However, as the liquidity shortfall remained unimproved the reverse repo window of the Central Bank had to release Rs. 135 Bln, averaging Rs.32.9 Bln a day in order to keep the market squared. With the liquidity shortfall persisting, the Central Bank reverse repo window will continue to bridge the liquidity gap in the money market, while it will continue to guide the interest rate structure.

Treasury Bill

In the treasury bill auction held on Wednesday, the Central Bank offered Rs. 4240Mn worth of bills to the market. The stability in the exchange rate, raised the investor expectations for a further reduction in the Central Bank's Open Markets rates, which drives the interest rates structure.

With the renewed investor expectations, the investors rushed to get into government securities.

Hence, the auction was substantially over-subscribed. However, as most of the interest was for 364 days category, the 364 days yield was dropped lower 182 days yield. We expect this to be corrected in the future auctions. Given the renewed interest and the heavy subscription, the yield for all categories took a sharp beating for the second consecutive week.

The highest fall was recorded in the 364 days category. The renewed expectations may drive the treasury bill yields further down in the short run.

Treasury Bond

No bond auction was held during the week. However, with the renewed buying interest, the bond yields took a sharp beating in the secondary market. The two-year bond yield was reduced to 18.00%~18.50. We expect the demand for bonds to remain same in the week ahead too.

Dollar Movement

Despite the reduction in the interest rates in the money market, the rupee regained on the back of the increased selling pressure on the dollar.

The market spot rate tumbled to Rs. 85.55 on the closing day of the week. During the week the rupee gained by approximately 50 cents.

As the rupee strengthened, the rupee deprecation as at end of the week stood at 3.57.% as against the 3.97% of the previous week. The forward premiums too edged slightly with the lowering of the term interest rates. Three months forward was quoted at Rs. 88.75 to Rs.89.00, while six months forward was quoted at Rs. 92.65 to Rs. 92.95.

Stockmarket update

The budget didn't bring any cheer to the depressed Colombo market. On the other hand it was not possible for investors to react to the budget as it was presented after trading closed on Thursday while Friday was a Poya holiday.

During the week, healthy growth rates and attractive dividends by companies triggered some movement in the Colombo bourse, showing gains mainly in

Milanka index companies.

The National Development Bank sold a block of 7.7 million shares in Eden Hotels to an unnamed buyer, representing 16 percent of Eden's capital. Though Tuesday was a public holiday, the Colombo market was open with Asiri Hospitals being again in the news when a single buyer bought 77,000 shares at Rs. 55.

Some 20,000 shares of John Keells Holdings at Rs. 35, 40,000 shares of Distilleries Co. of Sri Lanka Ltd at Rs. 4 and 10,000 shares of Kahawatte Plantations Ltd at Rs. 5.25 were among the other trades which took place on Tuesday.

The tourism sector drew some interest when an individual buyer purchased 101,000 shares of Aitken Spence Holdings Ltd at Rs. 80-, with the price expected to rise. Mirama Beach Hotel, known as the Kosgoda Beach Hotel, managed to trade 185,000 shares at Rs.5 after a long spell. On Thursday, Sri Lanka Insurance Corporation ran a newspaper advertisement announcing the sale or lease of the prestigious Robinson Club at Bentota, in which the state insurer has a major stake.

James Finlay & Co. Ltd which was listed in the trading sector at the Colombo Stock Exchange was re-classified under the diversified sector. The company is engaged in tea exports, pest control, industrial & agro chemicals, plantation management, travel & tourism.

The Commercial Bank's announcement of a 42% rise in profits saw its share price jump by Rs 4 to trade at between Rs 91 and 95. At the end of the week's trading, the Colombo bourse still found resistance at the 440 & 680 levels of the benchmark indexes.

Aswin Hemmanthagama.

Company News

SLT to offer voice solutions

By Akhry Ameer

"Sri Lanka Telecom (SLT) is now equipped to offer comprehensive solutions to the corporate sector through SLT Data," said G.A.D. Silva, Head of SLT Corporate Marketing, at a media presentation recently. The media briefing was held to present case studies of successful telecom solutions provided by SLT Data.

Having identified growing business demands - efficient communication network solutions - along the lines of 'one wire for everything' concept, SLT Data has been making huge investments in infrastructure from about 1999 with selected corporate organizations as its customers.

Large corporates want telecom providers to offer them network solutions over large areas that can integrate data and voice, cope with multiple protocols (network communication rules) and be futuristic and expandable while reducing network costs. In this regard SLT through its investment in the latest copper and optical fibre mediums and equipment to handle various protocols is now able to offer high capacity, low delay networks that can support a mixture of data, voice and video connecting almost any part of the island.

Three of SLT's corporate clients, John Keells Holdings, Eagle Insurance and Aitken Spence who ventured into such services also presented to the media their network solutions developed through SLT's Data services.

John Keells Holdings' network integrates voice and data and connects its hotels, supermarket outlets, IT companies, stores, etc. through a frame relay network solution provided by SLT. Through this network JKH operates its own exchange as if it were, connecting all of its offices through phone extensions for voice connectivity. The numbering of such extensions is also maintained in a logical manner where the digits represent assigned areas in the island. The same network is also used by JKH to run its other network applications such as email messaging, internet access, e-business and e-commerce applications like online hotel reservations, centralised order management among the hotels and supermarket outlets and access to the Group's financial applications. Thus within the group, voice communication and data transmission is unlimited as the group pays for the rental of the communication infrastructure rather than the usage. According to its Network and Technical Support Manager, Mr. Naveen Weerasena, JKH has found new synergies within group companies by investing in such an infrastructure with flexibility and opportunity to innovate.

Eagle Insurance and Aitken Spence also presented similar case studies of network solutions that have been developed in their organizations. By providing enhanced services such as frame relay and internet protocols, high speed leased lines, ISDN connections, etc, corporate clients can work with one telecommunication solutions provider to connect various locations in the island with speeds ranging from 64kbps to multiples of 2Mbps for voice, data and video traffic.

Currently 300 customers from major business sectors are using 1800 SLT Data circuits for various telecommunication solutions. This is supported by 40 SLT central management locations in the island while another 40 locations are to be set up before the end of the year.

Delmege installs new editing system at ITN

Delmege Electronics (Pvt) Limited, the high-end broadcast solutions provider of the Delmege Group, has installed a sophisticated non-linear editing system for the Independent Television Network (ITN), the pioneer television station in Sri Lanka.

This new system will result in a quantum leap in ITN's programme production capabilities and will also enable the station to provide advertisers with state-of-the-art editing, compositing and special effects facilities in-house, the company said.

Sampath reports Rs26.3 mn profit

Sampath Bank, among Sri Lanka's top local banks, has reported consolidated net profit of Rs. 26.3 million in 2000, up 60.8% from 1999 but slightly below expectations, Asia Stockbrokers said in a report.

It said strong increase in net banking income following sharply higher interest spreads and only a marginal increase in loan loss provisioning drove the bank's earnings growth.

Sampath earnings in the last quarter of 2000 have also recovered to Rs. 55.8 million in contrast to a loss of Rs.9.1 million in the previous year. Asia said growth in Sampath's interest income has been driven primarily by higher lending rates, which have increased on the back of rising government treasury yields. During 2000, treasury yields rose by over 700 base points enabling the entire commercial banking sector to command higher lending rates.

Following slower growth in credit loss provisions, Sampath's pretax profit has increased by 56.6% to Rs. 602.1 million, but a slight increase in the effective tax rate (due to lower capital allowances) has resulted in post tax profit rising less sharply by 52.8% to Rs. 463.6 million, Asia said.

"Nevertheless, lower preference dividends on its property development subsidiary has enabled net profit to grow strongly by 60.8% to Rs. 426.4 million in 2000," the report said.

SLIM wins CIM quiz

The first ever quiz on marketing in Sri Lanka was conducted by the chartered Institute of Marketing (Sri Lanka) Branch and was won by the SLIM Business School. The team comprised Ms. Shameena Pallie, Ms. Dilini Jayasooriya, and Mr. Danushka Jayakody.

The CIM had invited all six accredited tuition centers for the quiz. Oxonia, ABS, and the SLIM Business School took part. The members of the SLIM team performed extremely well to take the CIM Challenge Shield at the quiz on February 21.

The SLIM team was coached by G.S. Sylvester, Prasanna Perera, Chrysanthus Miranda, Dusty Alahakoon, Nishan Nawaratne, and Taranga Gunasekara.

Why not SAARC?

Point of view

Information is always necessary for decision making in institutions and for the public. The Central Bank provides information on exchange rates, which are published in all daily newspapers. These are very useful. Yet, though we are members of SAARC, SAPTA and also recently launched the Indo-Sri Lanka Free Trade Agreement, the exchange rates of SAARC countries - especially India and Pakistan - are not provided by the authorities here.

I wonder why? There are thousands of Sri Lankans who visit India for pilgrimage to Buddha Gaya and Saranath daily and for business purposes while Indians and Pakistanis visit Sri Lanka as tourists and to promote international trade and investment. It is important that the exchange rates of these countries be included in the daily list of exchange rates. The exchange rates of Middle East countries that are given are also useful for dependants of Sri Lankan expatriates in those countries.

M. Farook Hamid
Moratuwa

Seminars

Free thinking, free float

A Seminar organised by the Federation of Chambers of Commerce and Industry of Sri Lanka which was scheduled for 20 Feb. but postponed due to unforeseen Circumstances will now held on 22 March at the Grand Oriental Hotel, Colombo 1.

The following will address the seminar.

Dr. Sirimal Abeyratne Senior Lecturer in Economics Colombo University,

Dr. R.N. Thennwara Chief Economist Central Bank, Dr. Neville Karunatilleke Retired Governor, Central Bank, Mangala Boyagoda Chief Executive officer Standard Charters Grindlays Bank, and Dula Weeratunga A.G.M. Treasury, Commercial Bank.

Competition policy and utility regulation

Sri Lanka's Law & Society Trust (LST), under its annual law and economy programme, is organizing a conference on "competition policy and utility regulation" on March 16 at the Galadari hotel.

LST said the workshop would look at the socio-economic transition taking place in Sri Lanka and the region following market-based reforms. The objective of the programme is to create a multi-disciplinary forum that could critically examine these linkages, disseminate information on such linkages and provide policy input.

The keynote address will be delivered by Ronnie de Mel, Minister of Ports development and Development of the South. The other speakers are Dr. Saman Kelegama, executive director at the Institute of Policy Studies (IPS), Priyantha Jayawardene, Mahinda Ramasundara, Dr. Thilak Siyamabalapitiya, Ms. Thushari de Zoysa and Shantha Fernando.

ILO-SIYB training

The DFCC has launched a series of training programmes for potential and existing entrepreneurs in Sri Lanka with a view to ensure that the business enterprises are run efficiently and profitably.

Under this scheme, Sri Lanka Business Development Center (SLBDC) conducted a "Start and Improve Your Business" training programme in collaboration with International Labour Organization (ILO) for the existing clients of DFCC Bank - Matara. The seminar was held in Matara on February 24.

In my opinion

Eventhough there are two ministries to handle Ports & Shipping, the shipping community is yet to see some positive results from the new Ministers.

Each and every government, is said have a clear vision to develop Ports & Shipping in the country but the recent act of the SLPA requesting the owners of LT Greet for US $7 Million in Cash for the damaged sustained to the Quay/Crane is a clear indication of bureaucracy and it certainly depicts a poor image of Sri Lanka said a spokesman for SLAVO. It is a known fact that the Port of Colombo is losing transshipment traffic and by this act of not accepting a P+I Club Guarantee by SLPA amounts to non-adherence of International Norms.

The Shipping Minister wanted to make Colombo the Shipping Hub but in my opinion Sri Lankan Entrepreneurs cannot expand shipping activities as our local banks does not accept a ship as a Collateral due to our banking regulations which I believe is outdated in comparison to other countries. This banking obstacle has to be amended if we are to make any progress in the Shipping Industry. The local entrepreneurs are at the mercy of foreign banks to raise much needed capital for shipping activities.

This is one area our new ministers need to address their minds and let's stop talking and it is time to deliver results so that quality of life of our people will be improved further within the next few years. - Gunapala Ranasinghe

ICS Sri Lanka annual Presentation

ICS Sri Lanka, one of the Member Associations of the organization of Professional Associations of Sri Lanka is scheduled to make an annual presentation.

The topic ICS intends discussing are about "Mega Hubs - Mega Ports and the status of Colombo" and will be delivered by Mr. Para-krama Dissanayake former Chairman of ICS Sri Lanka.

Mr. Maxwell de Silva current Chairman of ICS indicated that these topics are vital and look forward to public participation so that ideas could be disseminated for a policy to the government.

Big boost for Kien Hung Shipping

South Africa and South America trade specialist Kien Hung Shipping has seen its volumes almost double last year, boosted by a new Far East America's west coast service.

In the second half of 1999, Kien Hung started a service running from the Far East to Long Beach and then down the west coast of Mexico and South America.

The new service followed some 11 years on the Far East-South Africa-South America East Coast Trade, which was pioneered by Kien Hung.

Teddy Lin, junior vice president commercial department, said that the company had definitely made the right decision to start the service last year and it was making money.

The new service was contributing an estimated one third of the company's volumes and revenues. General trade recovery combined with the new service has helped to nearly double Kien Hung's volumes for the first half of 2000 when compared with 1999. Kien Hung deploys 1,500 teu capacity ships on both the east and west coast services. The new service, as with the Far East-South America east coast service, is operated independently.

Kein Hung had planned to join French carrier CNA CGM on the Asia- America east coast trade earlier this year. However this plan has since been dropped.

But co-operation with other lines in the future was not ruled out. "There are some shipping lines who come to use us because we are pretty successful,"Mr Lin said. "We will seek partners as long as they are good for the company."

Even excluding the new service, Kien Hung has seen strong business growth and Mr Lin estimated that growth in volumes was 45% even without the Far East Americas west coast service.

He said that volumes on the South Africa and South America route had been increasing and "intra-Asian business is pretty healthy."

With the success of its new service, Kien Hung is interested in possibly expanding the number of ships deployed. However, higher charted rates for contai-nerships would be a major concern.

"We could try to expand the service through charter but right now that is very expensive," Mr. Lin said.

Cruise the Mediterranean with seabourn Cruise Lines

Is there a better way to sightsee around the Mediterranean than on board a luxury Seabourn cruise liner? Just pack and unpack, once.

The three sleek, elegant mega-yachts, Seabourn Pride, Spirit and Legend, afford every comfort imaginable, and then some. They also share another advantage, their size, accommodating only 208 pampered guests. Each of these Seabourn ships are capable of slipping into many of the exclusive harbours and narrow canals dotted around the Mediterranean and Agean Seas.

For instance, Seabourn Spirit cruises safely through the spectacular, high-sided Corinth Canal near Turkey en route to Delphi in Greece. It then travels to ports in southern Italy like Sicily and Sorrento before heading to Rome and Florence as part of a seven night Mediterranean and French Riviera cruise. It departs from Istanbul on 23 August with fares starting from A$7,620.

On May 11 , Seabourn Pride begins a voyage to the world's glamour playgrounds of Cannes and St Tropez, then cruises around the Balearic Islands into Grenada in Spain. BEST price for the seven-night cruise is from A$5,940.

The gracious Seabourn Legend's Art of Italy, France and Spain 11 cruise departs on 21 October. This culturally oriented six-night cruise allows for time to browse through the museums in Florence, then cruising on to Barcelona. BEST fares start from A$4,879.

Taking the level of luxury on board to new heights to include full spa and gym, a golf school and simulator along with its many other first-class facilities, the 750 passenger Seabourn Sun is a luxury global cruiser and a perfect base from which to explore Portugal and Spain.

Departing 25 June from Barcelona, the first leg of its Iberia and Belgium cruises the Mediterranean, stopping in Malaga and Cadiz. The ship arrives in Lisbon six nights later. BEST price fare from A$4,545. Passengers can choose to continue their journey, spending another nine nights cruising the Atlantic with ports of call in France and Belgium, disembarking in Dover on July 9.

QE2's Mediterranean Pprogram cruises to Europe's sunniest harbours

'Sunny European Harbours' is the name of one of the three cruises through the Meterranean that the luxurious Queen Elizabeth 2 will undertake in the middle of the year and it seems to be a most apt description.

This particular cruise spans 12 days and calls into some of Europe's most interesting - and traditionally sunny - ports like Malaga in Spain, Naples in Italy and Villefranche in the south of France.

Another cruise travels further afield to the Iberian Peninsula with ports of call in Portugal, Spain, the Canary Islands and the Bordeaux region of France.

Cruises depart from Southampton with several sailings of 12 days duration on May 25 and June 1.

Each has been carefully structured to give guests time to enjoy the atmosphere on board the QE2 as well as ample time for sightseeing with the ship generally arriving at ports early in the morning and leaving at dusk.

Affordable prices from A$3,670 for Cunard's special BEST fare, offer considerable savings of up to 30% for those who book early.

Port and handling fees of A$360 are additional.

Advertorial

Seminar on competitiveness

The Colombo MBA Alumni Association has organized a seminar on the highly important subject of competitiveness on March 15, 2001 at Hotel Taj Samudra.

The objective of this seminar is to provide the participants with an insight into the key aspects of competitiveness and its relevance to business. The seminar will cover aspects of what is competitiveness, why is it important to business, who are the winners, when is it relevant, where is it practiced and by whom, and how it applies to your business.

Key speakers of this seminar will be Mr. David B Flood Resident Advisor USAID-Management consultant, JE Austin Associates, USA and Mr. Dave Ranasinghe, Joint Managing Director of Bodyline (Private) Limited.

David Flood will provide an overview covering aspects of theory, the cluster concept, state of competitiveness at global level, current best practices and outstanding examples of successes across the globe. He will also speak about organizing competitiveness in Sri Lanka and clustering of clusters.

Dave Ranasinghe will speak about the success story of MAS Holding Group of companies that will include competitiveness topics such as the technology strategy, strategic alliances, bench marking, upscale products manufacturing in a low cost markets etc. There will be one or two speakers addressing issues relating to the government initiatives.

The target audience will be Entrepreneurs, CEOs, Directors, Senior Managers involved in strategic planning and implementation.

The Colombo MBA Alumni Association was founded in 1997 with the primary objective of promoting closer interaction and CO-operation with the business community. The Executive committee of the association invites key players of the business community to make use of this opportunity, which will enable them to think differently about competitiveness and their businesses. reservation may be made through the Secretary by Tel-bookings on 594875/077-341547.

CIMA meets CIM

Ms. Kathy Grimshaw, Director Corporate Development of the Chartered Institute of Management Accountants (CIMA) UK recently visited the Chartered Institute of Marketing (CIM), Sri Lanka Branch. In the picture are Ms. Grimshaw and Dr. Uditha Liyanage, Chairman CIM Sri Lanka Branch.

Caltex expert holds seminars in Sri Lanka

Kalim A. Siddiqui, Manager Product Development - Industrial of Caltex Lubricants Technology, Sydney, Australia conducted a series of seminars and visited key customers in the Hydro Power Generation sector. These visits were a part of the technology propositions offered by Caltex Lubricants Lanka Limited, the Pre-eminent Lubricant marketer in Sri Lanka.

A vast area covering topics such as the types of turbines, turbine oil functions and its properties, methods of oil monitoring for turbine oils and the current market trends were discussed during his visit.

"What are the locally conducted tests", "At what level of viscosity do tests need to be conducted," "Is the rust test a qualitative test"? etc., were some participant questions raised during the seminar. Caltex is proud to say that many of the tests for this industry such as the standard ASTM tests, Flash point, Cleanlines rating, Rust test, Water seperability and wear metal tests are conducted locally.

Apart from which special emphasis was made on how to determine and conduct in-house tests and oil drain intervals etc.

A man who has 22 years of experience with Caltex, Kalim had the opportunity of visiting Kelanitissa Power Plant, Kotmale and Luxshapana hydropower stations to gain an insight on how the industry operates locally. At each of these power stations technical support in the areas of Turbine, Compressor, Heat Transfer, Circulating and Cylinder lubricants etc., were handled and addressed. The studies made during these visits would enable Caltex to contribute in maintaining the current high standards it has upheld in this market and fulfil future customer needs by assessing product requirements and keeping abreast of technological advancements.

LG Chemicals takes over Hyundai PVC

"LG. Chemicals" Korea, a business unit of LG. Korea, recently became the 2nd largest PVC player in Asia after its take over of Hyundai Petrochemical's 200,000 ton annual PVC business, at a purchase price of US$ 87.8 million.

This acquisition raises LG. Chemicals PVC capacity to 900,000 tons a year making LG. Chemicals the 7th largest PVC producer in the world and the second largest in Asia. LG Chemicals hope to increase this capacity to over 1 million tons a year with completion of the expansion of their Chinese joint venture PVC factory by 2002.

Sole Agents for LG. Chemicals in Sri Lanka "Vaughan Chemicals (Pvt.) Ltd.", who have been promoting the LG Chemicals range of plastic resins, surfactant and other industrial raw materials along with the promotion of non ferrous metals of LG. International Corporation in Sri Lanka will also be responsible for marketing LG. PVC resin in Sri Lanka. A subsidiary of Vaughan chemicals "Vaughan Fine Chemicals & Pharmaceuticals" also represents "LG. Pharmaceuticals" as their agents in Sri Lanka.

Pathum Vimana 2001 launched

Hatton National Bank launched Pathum Vimana 2001 for the 8th consecutive year. There will be more prizes to be won in this year's Pathum Vimana draw and the number of prizes in the daily draw has been increased to 6.

There will be 3 Gold Sovereigns for current Account holders and 3 Gold sovereigns for Savings and Silverline account holders every working day of the year.

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