Morning note - Sri Lanka Equity

16 August, 2021

Index 13th Aug 12th Aug Change % Change

ASPI 7,996.04 7,980.91 15.13 0.19%
S&P SL20 2,990.91 2,989.02 1.89 0.06%

Notable CSE Announcements.

➢ CSE said, the go live date of the implementation of the Delivery Versus Payment (DVP) Settlement
mechanism has been scheduled today. On 16th August 2021, the open auction call session will be from 10.15
am. To 11.00 am. in order to provide adequate time for order entry. All the pending orders were purged on
Friday 16th August 2021
➢ Lamurep Investments Limited holding 229.2Mn shares (51.09% stake) in Sunshine Holdings PLC (SUN),
purchased further 30.1Mn & 7.5Mn shares (8.38% stake) on 11th & 12th Aug 2021 at prices of 25.50 & 26.60.
Cash Dividends
DIVIDEND PER PAYMENT DIVIDEND PER PAYMENT
CODE TYPE XD DATE CODE TYPE XD DATE
SHARE DATE SHARE DATE
LLUB 2.00 2nd interim 13 Aug 2021. 24 Aug 2021. TKYO 0.85 Final 26 Aug 2021. 15 Sep 2021.
GUAR 1.60 1st & Final 18 Aug 2021. 07 Sep 2021. SFL 1.16 Final 02 Sep 2021. 22 Sep 2021.
CINV 0.70 1st & Final 18 Aug 2021. 07 Sep 2021. SWAD 1.00 1st & Final 06 Sep 2021. 27 Sep 2021.
CWM 7.00 1st & Final 19 Aug 2021. 08 Sep 2021. COCR 1.50 1st & Final 06 Sep 2021. 27 Sep 2021.
AEL 0.25 1st interim 19 Aug 2021. 07 Sep 2021. SOY 10.00 Final 14 Sep 2021. 23 Sep 2021.
VPEL 0.70 1st interim 19 Aug 2021. 08 Sep 2021. MCPL 1.50 Final 28 Sep 2021. 18 Oct 2021.
CTC 19.00 2nd interim 23 Aug 2021. 10 Sep 2021. ASHO 2.00 1st & Final 21 Sep 2021. 11 Oct 2021.
KZOO 0.20 1st & Final 23 Aug 2021. 10 Sep 2021. SFCL 1.16 Final To be notified
TYRE 5.00 1st interim 24 Aug 2021. 13 Sep 2021. HDFC 0.25 Final To be notified
TJL 1.15 Final 24 Aug 2021. 13 Sep 2021. LIOC 0.85 1st & Final To be notified
Scrip Dividends
CODE Consideration Value Propotion : 1 Voting for Propotion : 1 Non-Voting for XD DATE PAYMENT DATE
PLC 13.00 0.75 17.333333496 na 06 Aug 2021. To be notified
CFI 75.70 1.20 63.083505268 na 20 Aug 2021. To be notified
CIT 125.00 1.20 104.167019317 na 20 Aug 2021. To be notified

Rights Issues
Company, Issue Price Issue Value Proportion XR Date Letter Dispatch Trading of Rights Acceptance
Kotagala Plantation PLC (KOTA) LKR 3.00 LKR 790Mn 7 for 2 20 Jul 2021. 28 Jul 2021. 03 Aug - 10 Aug 17 Aug 2021.
MERCHANT BANK OF SL (MBSL) LKR 6.00 LKR 2.24Bn 9 for 4 19 Aug 2021. 25 Aug 2021. 31 Aug - 07 Sep 08 Sep 2021.
DIALOG FINANCE PLC (CALF) LKR 65.00 LKR 560.07Mn 8 for 101 27 Aug 2021. 02 Sep 2021. 08 Sep - 15 Sep 16 Sep 2021.
SENKADAGALA FINANCE PLC (SFCL) LKR 55.00 LKR 474.54Mn 1 for 9 To Be Notified

Mandatory Offers
OFFEROR OFFEREE DATE OF ANNOUCEMENT OFFER PERIOD OFFER PRICE
R I L Property PLC Panasian Power PLC (PAP) 09-Jul-2021. 28 Jul 2021 - 18 Aug 2021 LKR 4.30
Mr. H Ravindranath Srilal Wijeratne SMB Leasing PLC (SEMB.N) 14-Jul-2021. To be notified LKR 0.35

Market Comments
➢ Ceylon Today- The Colombo Stock Exchange recovered from a near one month low on Friday (13) as the
benchmark index posted gains on a modest turnover despite continued foreign exits from the Colombo
Bourse.
➢ Reuters- Sri Lankan shares edged up on Friday as financial stocks gained, but closed the week lower as the
country posted a record single-day death toll due to COVID-19.

Local News
➢ ECONOMYNEXT – Sri Lanka’s gross official reserves dropped to 2,833.5 million US dollars in July 2021, from
4,060 million in June after a billion US dollar bond and some other accounts were repaid in July, official
data show. Sri Lanka has been injecting unprecedented volumes of liquidity into banks as excess rupee
reserves triggering a balance of payments deficit under so-called ‘Modern Monetary Theory’ (an extreme
 form of ‘stimulus’ after cutting taxes in a fiscal ‘stimulus’, triggering a run-on reserves and credit
downgrades. The reserves are the lowest since July 2009, when the country had just finished a war and was
rebuilding reserves. At the time monetary policy was tight and prevented a monetary meltdown amid the
collapse of the Federal Reserve housing bubble. In 2021 liquidity has also boosted imports, despite controls
on items like vehicles, which bring the highest level of taxes, dollar for dollar, hurting tax revenues, triggering
more money printing and reserve losses.

➢ ECONOMYNEXT – Sri Lanka’s imports hit 10,015 Mn US dollars in the six months to June 2021, highest since
2018 and the trade deficit hit 4,316 Mn dollars, also a three year high, official data showed as the central
bank ran unusually inflationary policy, injecting liquidity. Sri Lanka’s imports hit 1,659 Mn US dollars in June
2021, up from 1,055 Mn in 2020, when credit collapsed in a lockdown. Of the total imports 1,592 were non-oil
imports in June 2021 despite import controls. Analysts had warned that import controls were damaging and
also useless as long as liquidity was injected. The June 2021 imports were higher than the 1.4 Bn recorded in
2019, but lower than the 1.8 Bn seen in June 2018. In 2019 Sri Lanka’s central bank was sterilizing inflows,
slowing domestic credit below potential and buying dollars and sterilizing the inflows (sterilized purchases of
forex) which classical economists call ‘deflationary policy’ in a pegged exchange rate regime.
➢ Daily FT- The Government is facilitating the import of gold for “genuine” export-oriented jewellery
manufacturers whilst continuing with the licencing scheme for others, it has been revealed. The support is
for those registered under the TIEP scheme of Sri Lanka Customs and Board of Investment (BOI) and for
those who have non-foreign currency (NFC) exchange. This is aimed at legitimising jewellery manufacturers.
According to the NFC exchange, the buyers transfer gold for the manufacturers and the finished products
are then re-exported. Last month, the Cabinet of Ministers decided to bring the import of gold under the
import licence scheme. The industry was however irked by the move and called on the Government to
introduce a mechanism to allow gold imports for export-oriented businesses.
➢ The Morning- The National Ratings on Sri Lankan banks remain constrained by the sovereign credit profile
(CCC), Fitch Ratings stated. The highest National Rating for domestic banks with ratings driven by their
intrinsic credit profiles is ‘AA-(lka)’. This is the highest point on the national scale that corresponds to an
international scale rating of ‘CCC’ according to Fitch’s National Ratings Correspondence Table for Sri Lanka.
“Given current conditions, we would not assess Sri Lankan banks’ Viability Ratings (or intrinsic credit profiles)
and Local-Currency Issuer Default Ratings (IDRs) on the international scale to be above the sovereign’s Local-
Currency IDR of ‘CCC’ and the banks’ operating environment score of ‘ccc’. This is because the banks have
significant direct exposure to the sovereign, largely via government-security holdings, as well as to the wider
domestic economy and local financial markets through their Sri Lanka-centric operations. Moreover,
sovereign exposure tends to be higher among the larger banks in Sri Lanka.”
Global markets
• (Reuters) - Asian share markets slipped on Monday after a raft of Chinese data showed a surprisingly sharp
slowdown in the engine of global growth, just as much of the world races to stem the spread of the Delta
variant of COVID-19 with vaccinations.

• Figures on July retail sales, industrial production and urban investment all missed forecasts, a trend that is
only likely to get worse given the recent tightening in coronavirus restrictions there.

• There was added uncertainty about the possible geopolitical implications of the sudden collapse of the
Afghan government and what it mean for political stability in the region.

• MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.2%, nudging back toward the lows for the
year touched last month. Chinese blue chips were hanging onto gains of 0.3%, perhaps in anticipation of a
more aggressive policy easing from Beijing. Japan’s Nikkei fell 1.8%, though economic growth topped
forecasts for the June quarter.

• Nasdaq futures and S&P 500 futures were both down 0.2%. EUROSTOXX 50 futures fell 0.4% and FTSE futures
0.6%. Wall Street had managed fresh records last week even as a survey showed a shock slump in U.S.
consumer sentiment to the lowest since 2011 amid Delta fears.
 • The dismal report pulled 10-year Treasury yields down to 1.27%, after a sharp drop of 8 basis points on Friday
that erased a week of steady increases. It also wiped out a week of gains for the dollar, sending it back to
92.517 against a basket of currencies from a near five-month top of 93.195. The euro bounced to $1.1799 and
away from major chart support at $1.1740, while the dollar recoiled to 109.36 yen leaving behind last week’s
peak of 110.79. In Asia, the Malaysian ringgit fell to a one-year low on reports the country’s Prime Minister
was about to resign.

• In commodity markets, gold extended its bounce to $1,778 in the wake of a sudden stop-loss tumble to
$1,684 at the start of last week. Oil prices eased partly on concerns coronavirus travel restrictions would hurt
demand, particularly in China. Brent fell 78 cents to $69.81 a barrel, while U.S. crude lost 80 cents to $67.64.

Economic Update

Gvt. Securities Secondary Market Trade Summary

13.08.2021
Total Turnover (Rs.Mn) 1,733
No of Trades 11
No of Securities Traded 4
No of Participants 7
Tenure Security Volume No.
(Years) Type W. A Yeild Rs. Mn Trades
1.92 TBond 6.05 500 1
2.26 TBond 6.36 450 3
3.30 TBond 7.10 633 6
4.47 TBond 7.45 150 1

Important Information
This document has been prepared and issued by Asha Securities Ltd, on the basis of publicly available information, internally developed data and other sources,
believed to be reliable. Whilst all responsible care has been taken to ensure that the facts stated are accurate and the opinions given are fair and reasonable neither
Asha Securities Ltd, nor any Director Officer or employee, shall in any way be responsible for any decisions made on its contents. Asha Securities Ltd may act as a
Broker in the investments which are the subject of this document or related investments and may have acted upon or used the information contained in this
document, or the research or analysis on which it is based, before its publication. Asha Securities Ltd., Its Directors, Officers or Employees may also have a position
or be otherwise interested in the investments referred to in this document. This is not an offer to sell or buy the investments referred to in this document.