Tag Archives: Investment in Sri Lanka

Atchuthan Srirangan, Assistant Manager – Research, at First Capital on the Bond and equity Market performance – 15.07.2019

Treasury Bills and Bonds in Sri Lanka

Atchuthan Srirangan, Assistant Manager – Research, at First Capital on the bond and equity market performance – 15.07.2019

First Capital is an investment bank providing a full range of financial advisory and services. The Company’s research delivers a heightened perspective in fundamental research aiding Share Market Investment in Sri Lanka. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis. With fundamental research coverage of 62 listed securities (reflecting approximately 65% market capitalization) across 15 sectors in Share Market Investment in Sri Lanka.

First Capital Holdings PLC is an investment bank and is the pioneer non-bank affiliated Primary Dealer in Treasury Bills and Bonds in Sri Lanka. With a track record of over 25 years, the Company was the first licensed primary dealer appointed by the Central Bank and is also the only listed and rated primary dealer in Treasury Bills and Bonds in Sri Lanka
First Capital delivers the only source for fixed income research in the local financial services industry. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis.

Amanda Lokugamage, Senior Research Analyst, at First Capital on the bond and equity market performance – 08.07.2019

Treasury Bills and Bonds in Sri Lanka

Amanda Lokugamage, Senior Research Analyst, at First Capital on the bond and equity market performance – 08.07.2019

First Capital is an investment bank providing a full range of financial advisory and services. The Company’s research delivers a heightened perspective in fundamental research aiding Share Market Investment in Sri Lanka. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis. With fundamental research coverage of 62 listed securities (reflecting approximately 65% market capitalization) across 15 sectors in Share Market Investment in Sri Lanka.

First Capital Holdings PLC is an investment bank and is the pioneer non-bank affiliated Primary Dealer in Treasury Bills and Bonds in Sri Lanka. With a track record of over 25 years, the Company was the first licensed primary dealer appointed by the Central Bank and is also the only listed and rated primary dealer in Treasury Bills and Bonds in Sri Lanka
First Capital delivers the only source for fixed income research in the local financial services industry. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis.

Sri Lanka corporate earnings to recover from 4Q19

ECONOMY NEXT | 05.07.2019

Earnings of Sri Lanka’s listed firms are expected to improve from the fourth quarter of 2019 as the country recovers faster than expected from the Easter Sunday attacks, the research arm of First Capital, an investment house said.

“Despite the Easter Sunday attacks Sri Lanka’s economic outlook has shown signs of resilience and ability to recover quickly as economic activities were seen returning to normalcy while removal of travel advisories were faster than anticipated,” Research Head Dimantha Matthew said.

“Though the unfortunate attacks and the subsequent events are likely to have directly or indirectly impacted all sectors affecting earnings of most companies, we believe that the impact has now been factored into the market and an accelerated recovery is more likely than not,” he said.

“The heavy decline in interest rates is expected to lower finance costs, thereby improving earnings of most listed entities towards 4Q2019.”

He said stocks are becoming more attractive as bond yields are moving downwards following Sri Lanka’s 2 billion sovereign bond sale which was oversubscribed and showed investor confidence.

Bond yields are likely to remain low due to current inflation, credit growth, liquidity and reserves, he said.

With the central bank ceiling on fixed deposit rates linked to gilt yields, investors are likely to turn towards the equity market, Matthew said.

“Lower fixed income returns may lead investors to hunt for alternative investment options with higher returns, of which equity investments is likely to be a more probable option considering the current attractive valuations,” he said.

The market price to earnings ratio was a 8.7 multiple on Thursday.

“Thereby we expect an improvement in demand for stocks leading to a possible re-rating of the market,” Matthew said.

First Capital is an investment bank offering services as Stock Brokers in Sri Lanka. The Company acts as a conduit between retail and institutional clients and the secondary market of the Colombo Stock Exchange. First Capital’s best-in-class research team provide a series of actionable trade recommendations, daily and periodic market commentaries and publications for Stock Brokers in Sri Lanka.

First Capital is an investment bank providing a full range of financial advisory and services. The Company’s research delivers a heightened perspective in fundamental research aiding Share Market Investment in Sri Lanka. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis. With fundamental research coverage of 62 listed securities (reflecting approximately 65% market capitalization) across 15 sectors in Share Market Investment in Sri Lanka.

One-year bill yield dips to near 3½-year low

CEYLON TODAY | 05.07.2019

Share Market Investment in Sri Lanka

By First Capital Research
Weekly Yield movement & Volume

During the week, the secondary market traded on a bullish note, with renewed buying interest, shifting the yield curve downwards primarily on the long end. Successful issuance of the US$ 2.0 billion International Sovereign Bond and anticipated improvement in foreign reserves propelled the buying interest in the market.
Moreover, at the weekly primary bill auction held on 3 July, yields of the three-month, six-month and one-year recorded declines by 7, 17 and 11bps to 8.17 per cent, 8.32 per cent and 8.59 per cent, with the one-year declining to a near 3½-year low. Meanwhile, in the forex market, the rupee continued to appreciate during the week, while closing at Rs 176.06 on 3 July, relative to Rs 176.42 held at the beginning of the week.

Liquidity & CBSL Holdings

Market liquidity remained positive throughout the week to close at Rs 12.1 billion, while CBSL continued to drain out liquidity by way of term repo auctions during the week. CBSL holdings slightly declined to Rs 123.9 billion relative to Rs 128.1 billion held at the beginning of the week.

Foreign Interest

Foreign holding in Government Securities increased by Rs 2.2 billion to record at Rs 146.1 billion. Foreign holding percentage for the week was increased to 2.7 per cent.

Maturities for next Week

The Government Security Market has to settle a Treasury bill maturity amounting to Rs 22.2 billion during the week ending 12 July 2019.

Daily summary

Thursday (27.6.19): The secondary market yield curve remained broadly unchanged, while the overall market witnessed moderate volumes. On the Treasury bond auction held today, the total offered amount of Rs 125 billion was fully accepted with [15. 6.24] and [15.3.35] accepted at weighted averages of 9.83 per cent and 10.59 per cent, respectively. Post auction profit taking was seen with moderate volumes with [15.3.24] trading at 9.85-9.95 per cent levels. The newly accepted bond [15.6.24] traded at 9.9 per cent after being accepted at a notable weighted average of 9.83 per cent. Business was done on the following maturities with [15.10.21] trading at 9.25-9.30 per cent levels, [15.03.24] at 9.95 per cent, [15.06.24] at 9.95 per cent, [15.01.27] at 10.20 per cent, [15.06.27] at 10.40 per cent, [01.05.29] at 10.35 per cent and [15.05.30] at 10.45 per cent.

 
Friday (28.6.19): The secondary market witnessed mixed levels of activities during the day while overall market recorded high volumes. During the early part of the day, in the midst of selling interest, [15.3.24] and [15.6.24] reached intra-day highs of 10.02 per cent and 10 per cent, although towards the latter half of the day, with buying interest, saw its yields dipping to intra-day lows of 9.90 per cent and 9.88 per cent. Moreover, buying interest was observed in [01.3.21], [1.5.21], [1.8.21] and [15.10.21], with business done at 9.10 per cent, 9.20 per cent, 9.25 per cent and 9.30 per cent. Foreign buying interest on [1.6.26], [15.1.27] and [15.6.27] led the yields to trade at 10.15 per cent, 10.17 per cent and 10.26 per cent levels.

 
Monday (1.7.19): With the commencement of the week, the secondary market witnessed continued buying interest, although overall market witnessed thin volumes with limited activities. During the day, shorter tenor [15.10.21] traded at 9.25 per cent levels, while in the belly end of the curve, the [15.6.24] maturity traded in the range of 9.88-9.83 per cent levels.

 
Tuesday (2.7.19): Secondary market witnessed slowdown in overall activity levels while the belly- and long-end of the yield curve experienced slight parallel downward shifts with low volumes. Buying interest was witnessed on short tenure [1.3.21] at 9.12 per cent ahead of the primary bill auction, where CBSL has offered Rs 23 billion consisting of all three maturities. Buying interest saw long tenure [01.5.29] trading at 10.35 per cent, while mid-tenure 2024 maturities ([15.3.24] and [15.6.24]) changed hands at 9.88 per cent.

Weekly Yield movement & Volume by First Capital Research

CEYLON TODAY | 01.07.2019

Investment in Sri Lanka

The secondary market yield curve shifted downwards across the board on the back of bullish outcomes witnessed at the international sovereign bond issuance and both local primary auctions held recently. Notably, the secondary market participants reacted on a positive note for this year’s second ISB issuance to raise US$ 2.0 billion, which propelled a heavy buying interest in the market.
At the weekly primary bill auction, the three-month, six-month and one-year were accepted at weighted averages of 8.24 per cent, 8.49 per cent and 8.70 per cent respectively. Furthermore, with the outcome of the bill auction, the one-year bill closed the day at 8.55 per cent.
Retrospectively, at the Treasury bond auction (27 June 2019) the total offered amount of Rs 125.0 billion was fully accepted, with [15.06.24] and [15.03.35] accepted at weighted averages of 9.83 per cent and 10.59 per cent, respectively. In the forex market, the rupee appreciated mid-week to Rs 176.45, prior to closing at Rs 176.51 on 27 June relative to Rs 176.72 at the beginning of the week.

 
Liquidity & CBSL Holdings
Market liquidity remained positive throughout the week to close at Rs 53.2 billion, while CBSL continued to drain out liquidity by way of term repo auctions during the week. CBSL holdings spiked to Rs 371.4 billion mid-week, prior to normalising at previous levels of Rs 128.1 billion held at the beginning of the week.

 
Foreign interest
Foreign holding in Government Securities increased by Rs 0.9 billion to record at Rs 143.8 billion. Foreign holding percentage for the week was maintained at 2.6 per cent.

 

Maturities for next week
The Government Security Market has to settle a Treasury bill maturity, amounting to Rs 23.2 billion and a treasury bond amounting to Rs 109.6 billion. In addition, a T-bond interest amounting to Rs 43.7 billion needs to be settled during the week ending 5 July 2019.

 
Daily summary
Thursday (20.06.19): The secondary market yield curve remained relatively unchanged, while the overall market witnessed thin volumes. Buying interest with limited activity was primarily centered on the following maturities with shorter tenure maturities [01.05.21], [15.10.21] and [15.12.21] trading at 9.50 per cent, 9.60 per cent and 9.65 per cent, while [15.07.23] changed hands at 10.05 per cent.

 
Friday (21.06.19): The secondary bond market witnessed heavy buying interest with high level of activities, resulting in the overall yield curve to shift downwards. On the shorter end of the curve, yields of [01.03.21], [01.05.21], [15.10.21] and [15.12.21] maturities were seen dipping to day’s lows of 9.30 per cent, 9.40 per cent, 9.45 per cent and 9.53 per cent, respectively. In 2022 maturities, [15.03.22] and [01.10.22] traded at intra day’s low of 9.80 per cent. Furthermore, mid tenor [15.03.23], [15.07.23], [15.03.24] and [01.08.26] traded at day’s lows of 9.90 per cent, 9.84 per cent, 10.05 per cent and 10.30 per cent, respectively. Meanwhile [15.01.27] traded at levels of 10.37 per cent.

 
Monday (24.06.19): The secondary bond market commenced the week on a bullish note, as the market participants reacted to the announcement of the second international sovereign bond this year to raise US$ 2.5 billion, which led to heavy buying interest and downward shift in yields across the curve. During the day, the market witnessed high volumes with the following maturities reaching intraday lows: [01.08.21] at 9.32 per cent, [15.10.21] at 9.35 per cent, [15.12.21] at 9.45 per cent and [01.10.22] at 9.74 per cent. In the belly-end of the curve, the following maturities were seen dipping to day’s lows with [15.03.23] trading at 9.85 per cent, [15.07.23] at 9.90 per cent, [15.03.24] at 9.97 per cent and [15.01.27] at 10.30 per cent. In the long end of the curve, [01.05.29] was seen trading at levels of 10.45 per cent. Meanwhile, CBSL also announced an issue of Rs 125.0 billion worth of bonds through the bond auction to be held on 27 June.

 
Tuesday (25.06.19): The secondary market yield curve remained relatively steady, while the overall market witnessed high volumes. Buying interest with limited activity was seen on the shorter end of the curve with [01.03.21], [15.10.21] and [15.12.21] trading at day’s low of 9.18 per cent, 9.35 per cent and 9.40 per cent, respectively, while foreign selling was witnessed on [01.08.21] at 9.35 per cent. Buying interest was seen on the following mid tenure maturities [15.03.23], [15.07.23], [15.12.23], [15.03.24] trading at an intraday low of 9.83 per cent, 9.87 per cent, 9.90 per cent and 9.97 per cent. CBSL has offered Rs 16.5 billion comprising all three maturities for weekly T-bill auction scheduled to be held on 26 June 2019.

 
Wednesday (26.06.19): With the positive momentum gathered from the successful issuance of the ISB, the secondary market witnessed aggressive buying interest, while shifting yields downwards across the board, with the overall market witnessing high volumes for the day. In the midst of buying interest, short tenor [01.03.21] was seen trading at day’s low of 9.00 per cent, while [01.05.21], [01.08.21], [15.10.21] and [15.12.21] maturities were seen trading at intra-day’s low of 9.20 per cent.

 
Furthermore, [01.01.22] and [15.03.22] were seen trading at intra-day’s low of 9.65 per cent, while [01.10.22] traded at 9.60 per cent. In the belly-end of the curve, [15.03.23], [15.05.23], [15.12.23], [15.03.24] and [15.01.27] were seen trading in the levels of 9.80 per cent, 9.83 per cent, 9.80 per cent, 9.90 per cent and 10.16 per cent respectively. Long tenor [01.05.29] traded at 10.38 per cent. Meanwhile at the weekly bill auction, yields of the three-month, six-month and one-year declined by 14, 11 and 16bps to 8.24 per cent, 8.49 per cent and 8.70 per cent, respectively. Furthermore, with the outcome of the bill auction, the one-year bill closed the day at 8.55 per cent level.

 
Thursday (27.06.19): The secondary market yield curve remained broadly unchanged, while the overall market witnessed moderate volumes. At the Treasury bond auction, the total offered amount of Rs 125.0 billion was fully accepted, with [15.06.24] and [15.03.35] accepted at weighted averages of 9.83 per cent and 10.59 per cent respectively. Post auction profit taking was seen at moderate volumes, with [15.03.24] trading at 9.85-9.95 per cent levels.

 

The newly accepted bond [15.06.24] traded at 9.90 per cent after being accepted at a notable weighted average of 9.83 per cent. Business was done on the following maturities with [15.10.21] trading at 9.25-9.30 per cent levels, [15.03.24] at 9.95 per cent, [15.06.24] at 9.95 per cent, [15.01.27] at 10.20 per cent, [15.06.27] at 10.40 per cent, [01.05.29] at 10.35 per cent and [15.05.30] at 10.45 per cent.

Dimantha Mathew, Head of Research, at First Capital on the bond and equity market forecast – 30.06.2019

Treasury Bills and Bonds in Sri Lanka

Dimantha Mathew, Head of Research, at First Capital on the bond and equity market performance – 30.06.2019

First Capital is an investment bank offering services as Stock Brokers in Sri Lanka. The Company acts as a conduit between retail and institutional clients and the secondary market of the Colombo Stock Exchange. First Capital’s best-in-class research team provide a series of actionable trade recommendations, daily and periodic market commentaries and publications for Stock Brokers in Sri Lanka.

First Capital Holdings PLC is an investment bank and is the pioneer non-bank affiliated Primary Dealer in Treasury Bills and Bonds in Sri Lanka. With a track record of over 25 years, the Company was the first licensed primary dealer appointed by the Central Bank and is also the only listed and rated primary dealer in Treasury Bills and Bonds in Sri Lanka
First Capital delivers the only source for fixed income research in the local financial services industry. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis.

Hiruni Perera, Senior Research Analyst, at First Capital on the bond market performance – 27.06.2019

Government Securities Sri Lanka

Hiruni Perera, Senior Research Analyst, at First Capital on the bond and equity market forecast – 27.06.2019

First Capital Holdings PLC is an investment bank and is the pioneer non-bank affiliated Primary Dealer in Treasury Bills and Bonds in Sri Lanka. With a track record of over 25 years, the Company was the first licensed primary dealer appointed by the Central Bank and is also the only listed and rated primary dealer in Treasury Bills and Bonds in Sri Lanka
First Capital delivers the only source for fixed income research in the local financial services industry. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis.

Rupee Falls as USD Bonds Marketed Overseas: Inside Sri Lanka

Treasury Bills and Bonds in Sri Lanka

(Bloomberg) — Sri Lanka’s rupee fell as investors watch marketing of dollar-denominated bonds in overseas markets for the second time since March that would help repay the island nation’s debt and bolster its foreign exchange reserves.

* Sri Lanka may price five- and 10-year bonds Monday, and it has set initial price guidance of 6.6% and 7.8%, respectively for the offerings.

* “After the Easter Sunday attacks, there’s been a weakness in the rupee. But these bond sales will help build more confidence and drive sentiment,” as it draws foreign inflows and helps boost reserves, says Dimantha Mathew, head of research at First Capital in Colombo.

* USD/LKR up 0.1% to 176.80

* The yield on 10% bonds due March 2023 fell 15bps Friday to 9.90%.

* Overseas investors sold a net $0.2m of local equities on Friday, helping take withdrawals this year to $33m: exchange data.

* Sri Lanka’s May national consumer prices rose 3.5% y/y

Sri Lanka Returns to Overseas Bond Markets After Terror Attacks

Investment Bank in Sri Lanka

(Bloomberg) — Sri Lanka is marketing dollar-denominated bonds in overseas markets for the second time since March as the South Asian nation recovers from the Easter Sunday terror attacks.

* The sovereign is offering five-year and long 10-year bonds with initial price talk in the area of 6.6% and 7.8%. That’s lower than the yields on similar maturity bonds the country priced in March, before a series of coordinated explosions in April at churches and luxury hotels killed more than 250 people.

* Sri Lanka borrowers are finding a window for issuance after the Federal Reserve last week opened the door for an interest- rate cut as early as July, and the European Central Bank said extra monetary stimulus might be needed.

*The government’s bond sale comes right after struggling carrier Sri Lankan Airlines Ltd. priced $175 million of five-year notes last week.

“The government is capitalizing on increased investor risk appetite subsequent to recent dovish comments by the Fed and ECB, and the successful placement last week of the Sri Lankan Airlines government-guaranteed bond, which was massively oversubscribed,” said Todd Schubert, head of fixed-income research at Bank of Singapore Ltd.

“Returning to the overseas bond markets will allow Sri Lanka to increase foreign-currency reserves and prop up the economy after the suicide bombings affected tourism and consumer demand, said Dimantha Mathew, head of research at First Capital Holdings PLC in Colombo.”

1-Yr T-bill rallies on its downward spiral

CEYLON TODAY | 24.06.2019

Treasury Bills and Bonds in Sri Lanka

By First Capital Research
Weekly Yield movement & Volume

The secondary market yield curve remained relatively unchanged, however, closing the week with a slight downward shift on the back of buying interest that stemmed mainly from local counterparties. On the back of continued buying interest, the short end of the curve dipped by 5-10bps, while the belly-end of the curve dipped by 10-20bps and the long end of the curve fell by 11-12bps.
At the primary bill auction, the three-month and six-month were accepted at a weighted average of 8.38 per cent and 8.60 per cent respectively, while the one-year was accepted at a weighted average of 8.86 per cent. The total offered amount of Rs 19.0 billion was fully subscribed with a bid-to-offer ratio of 3.22:1, recording a four-week high. In the forex market, the rupee appreciated marginally to close at
Rs 176.68 on 19 June, relative to
Rs 176.71 at the beginning of the week.

 
Liquidity and CBSL
Holdings

Market liquidity remained positive throughout the week to close at Rs 24.3 billion, while CBSL continued to drain out liquidity by way of term repo auctions during the week. CBSL holdings marginally declined to Rs 129.1 billion, relative to Rs 130.1 billion held at the beginning of the week.

 
Foreign Holdings
Foreign holdings in Government securities increased by Rs 311.0 million to record Rs 143.0 billion, while foreign holding percentage for the week was maintained at 2.6 per cent.

 
Maturities for next Week
The Government Security Market has a Treasury Bill maturity amounting to Rs 16.5 billion that needs to be settled during the week ending 28 June 2019.

 
Daily Summary
Friday (14.06.19): The secondary market yield curve remained mostly unchanged while overall market witnessed thin volumes. Limited activity was seen on selected maturities, with short end of the curve [01.05.20], [15.10.21] and [15.12.21] trading at 8.80 per cent, 9.80 per cent and 9.82 per cent-9.79 per cent levels respectively, while mid tenure maturities, [01.10.22], [15.03.23] and [15.03.24] traded at 10.00 per cent, 10.20 per cent and 10.33 per cent. In addition, on the long end of the curve, [01.08.26] traded at 10.50 per cent, [15.01.27] at 10.58-10.55 per cent levels, [15.06.27] at 10.64 per cent and [01.05.29] at 10.68 per cent.

 
Monday (17.06.19): The secondary market witnessed moderate volumes with limited activity, resulting in the overall yield curve remaining unchanged. Buying was mainly centred on short-tenor [15.10.21] and [15.12.21], resulting in yields dipping to day’s lows of 9.75 per cent and 9.76 per cent respectively. Furthermore, [01.10.22] traded at 10.00 per cent, while [15.06.27] changed hands in the range of 10.65-10.63 per cent. In the long end of the curve, [01.05.29] traded at 10.68 per cent.

 
Tuesday (18.06.19): The secondary market yield curve remained relatively unchanged with greater number of market participants remaining on the sideline ahead of the primary T-bill auction. Buying interest with limited activity was seen primarily centred on the following maturities, short-tenor [01.05.20], [15.10.21] and [15.12.21] traded at day’s low of 8.75 per cent, 9.74 per cent and 9.75 per cent respectively. Mid- to long-tenor maturities traded at their intraday lows with [15.03.22] trading at 9.92 per cent, [15.03.23] at 10.14 per cent, [15.03.24] at 10.26 per cent; in addition, [15.01.27] traded at 10.57 per cent, while overall market witnessed thin volumes.

 
Wednesday (19.06.19): The secondary market witnessed moderate activity levels and volumes, while the yield curve witnessed a slight downward shift with continued buying interest.

 

On the shorter end of the curve, [01.05.21] and [15.10.21] maturities saw yields dipping to day’s lows of 9.50 per cent and 9.63 per cent, while [15.03.22] traded at 9.90 per cent. Mid-tenor [15.03.23] and [15.03.24] traded at 10.02 per cent and 10.17 per cent. Furthermore, [15.01.27] traded at intra-day low of 10.49 per cent. Meanwhile, at the primary bill auction, the six-month and one-year bill declined to 8.60 per cent and 8.86 per cent respectively, while the three-month bill remained steady.