Galleon Exits

Galleon Master Fund sold the 29% stake it had in Ceylon Leather Products at Friday’s trading, market sources told The Sunday Leader.

This fund is controlled by controversial international fund manager Raj Rajaratnam, a dual U.S.-Sri Lanka citizen, who is being investigated by U.S. authorities for alleged insider trading.

This deal was valued at Rs. 200 million and comprised more than half of Friday’s turnover of Rs. 368.9 million. It comprised a total of 3.6 million shares executed at Rs. 55 a share. The buyer was Environmental Resources PLC.

Net Foreign Outflow: Rs. 342 Mn.

Charges of insider trading by U.S. authorities on Raj Rajaratnam who has invested heavily on the local bourse, compounded by the holiday season continued to impact on the bourse.

Market sources however said that the presidential elections due on January 26 was a little too early to have an effect on the bourse. The bourse saw a net foreign outflow of Rs. 342.1 million last week.

The benchmark A.S.P.I. fell by 54.39 points (1.9%) to 2,878.96 points and the more sensitive M.P.I. by 50.6 points (1.5%) to 3, 282.96 points week on week (w.o.w.).
Market capitalisation fell by Rs. 17.3 billion (1.8%) w.o.w. while average turnover for the week was Rs. 287.5 million.

$ to go upto Rs. 115

With the market facing a U.S. dollar shortfall in part contributed by seasonal demand, low interest rates and lack of dollar inflows, there is pressure for the greenback to appreciate, market sources told The Sunday Leader.

As a result, the Central Bank of Sri Lanka (C.B.S.L.) through its agent, state owned Bank of Ceylon was selling dollars to the market at Rs. 114.60 a unit, they said. If not for this intervention, the dollar may have had even gone upto Rs. 115, the sources said. The dollar since Thursday has appreciated by 10 Sri Lanka cents.

Previously, when there were dollar inflows into the market, C.B.S.L. was preventing the rupee to appreciate against the greenback by buying dollars from the market at the Rs. 114/80 levels at that time, they said.

They further said that the daily dollar shortfall in the market was in the region of U.S.$50-60 million.

Lack Of Foreign Interest

Fall in interest rates have made the government securities market unattractive to foreign investors, market sources told The Sunday Leader.
With Government securities yields dropping to 10% and below as opposed to the 14-15% yields those securities commanded a few months ago, foreigners have lost interest in the government securities market, the sources said.
That, coupled with investors wanting to book profits due to the year end has made yields to go up, they said. As a result, the 2012 maturing Treasury (T) Bond appreciated by 75 basis points (b.p.s) over Wednesday, to be trading at 11% on Friday. There were no trades done on Thursday. Similarly the 2013 Bond went up by 30 b.p.s to 11%. However the rupee liquidity in the market was being maintained due to earlier dollar inflows.
The impending presidential election is yet to impact on the market, the sources said.

Can do

A former Government servant said that the late President Ranasinghe Premadasa exemplified the “can do” attitude when he launched the Government’s 200 factory programme in rural areas in the early 1990s.

Former B.o.I Chairman and President of the Institute of Certified Professional Managers (C.P.M.) Prof. Lakshman R. Watawala speaking at a function in Colombo on Tuesday said that garment quotas, tax breaks and the offer to buy a Mercedez Benz duty free were made to entrepreneurs under this programme.

They in turn had to invest in new factories, offering jobs to a minimum of 500 persons.
This catapaulted the garment industry to be the country’s top foreign exchange earner, he said.

Watawala speaking at the C.P.M.’s annual conference said that investors’ problems were solved overnight, with institutions such as the C.E.B. and N.W.S.D.B. directed to give immediate connections.

Those who were unable to carry out instructions were transferred, Watawala said.