Tag Archives: Share market investment in Sri Lanka

Unit Trust Solutions

First Capital Holdings PLC is a full-service investment bank with a 30-year history, which offers an array of investment solutions to its clients including services in capital markets advisory, fixed income, equities and wealth management.

The company’s wealth management suite serves individual and institutional investors through unit trusts, financial planning and discretionary portfolio management.

Currently, the company is focusing on promoting its unit trust products to the market, which offers a low-risk investment option. Unit trusts are well suited for both corporates and individuals, as it allows for capital to be invested and managed professionally. The unit trusts funds act as a pooling vehicle in which funds from multiple investors are accumulated, allowing for larger investment in certain instruments with negotiated terms.

First Capital unit trusts products cater to a large base of high-net-worth and institutional clientele including SME and mid-level corporates.

The funds are managed by professional fund managers, who ensure that risks are diversified over a multitude of assets, while the largest state bank, the Bank of Ceylon acts as an independent trustee. Investors are given further peace of mind through the stringent monitoring and regulatory control of the unit trust industry by the Securities Exchange Commission (SEC).

Globally, the unit trust sector asset  base exceeds that of the banking sector. According to the Central Bank of Sri Lanka the bank deposits at LKR 4.7 trillion as at year end 2014, is leaps ahead of industry assets under management LKR 133 billion. Considering the tax exemptions given to unit trusts investments and that retail investors are seeking higher-yield alternative investments away from conventional bank-deposits, the company sees potential for growth in this segment.

Striving to excel in its customer centricity, First Capital encourages potential investors to consider their risk appetite, objectives, and purpose for investing prior to getting involved, ensuring that customers choose the most fitting investment option. “We profile the client, looking at age, responsibilities and commitments, and help them understand what sort of risk they should be taking, to fulfil their goals in life,” explains CEO, Dilshan Wirasekara. The company conducts financial planning on behalf of its clients to help them assess where they stand in relation to achieving their goals.

First Capital has a range of unit trust products targeting varying investor requirements. For the passive investor, it provides a gilt-edged fund, which invests purely in government securities, while providing a money-market fund for moderate risk-takers giving a return of 7-8% per annum, giving a higher rate than short-term bank deposits.   For the more aggressive risk-takers who want high returns, the company offers an equity fund, maintained on ethical grounds.

The company’s flagship unit trust fund – First Capital Wealth Fund was the best-performing fund in its category in 2013 and 2014, and has outperformed the unit trust industry in terms of Annual Equivalent Rate (AER) for the five years ended December 2015.

First Capital even offers customised portfolio management for investors with larger funds, and provides investment advice covering many business sectors.

Wirasekara comments: “The Company differentiates itself by the ability to navigate varying market cycles in multiple asset classes. Its superior performance in unit trust is a result of the ability to identify advantageous trends coupled with exemplary risk management.”

First Capital’s asset management business is only one aspect of its total offering. “We are a fully-fledged investment bank, having many other business lines,” avers Wirasekara adding that “being a primary dealer, we have insights into the bond market and interest-rate direction.” As testimony, First Capital claims to have been the largest manager of debt issuance in the market last year, raising LKR 25 billion of debt.

The company enjoys an unparalleled advantage with its research-backed market insights and expertise, which enables its fund managers to make notable capital gains by capitalising on movement, through risk mitigation and locking-in long-term rates at high yields.

First Capital has extended its local footprint through branches in Colombo, Kandy, Matara and Kurunegala. The company is geared for its journey towards growth in unit trust investments and customer-centric wealth management.

 

Published in May 2016 on the LMD Magazine – Digest Segment on Wealth Management

Interested in the Stock Market? – Basic Terms You Should Know – Part 02

A knowledge investor is a wise investor. Awareness is the key to making positive gains through the Colombo Stock Exchange (CSE) – Stock Market in Sri Lanka, by making the correct choices, intelligent observations and by doing your investment homework. There are many reports and resources freely available to help evaluate your investment decisions.

First Capital believes that an educated investor contributes to develop the market, this article is the second part of a series covering the key terms that an investor needs to be familiar with before investing in shares.

Stock Broker – Is a regulated professional agent associated to a licensed Stock Brokering Firm that executes trades to buy and sell stocks and other securities on behalf of an investor.

A regulated commission or fee is charged by the Stock Broker for each buy or sell transaction made on behalf of the client.

With effect from 15 April 2016 transaction cost applicable for transactions upto Rs. 50 Mn for both equity securities is 1.12% divided as follows;

Brokerage Fees – 0.640%
CSE Fees – 0.084%
CDS Fees – 0.024%
SEC Cess – 0.072%
Share Transaction Levy – 0.300%

Central Depository System (CDS) – functions as a specialist market intermediary and clearing house, holding the securities of publicly listed companies such as shares, to smoothly transfer ownership between buying and selling investors.

As of 2011 securities of all listed companies have been converted from physical certificates to dematerialized form or electronic paperless format. As such an investor buying and selling shares will not be given a physical share certificate, instead an equivalent number of securities in electronic form will be credited in the CDS account registered under the investors name through a Stockbroker.

When an investor trades using his CDS account, he is given a ‘bought or sold note’ at the end of the day indicating details of the transaction as a confirmation. This is not a share certificate.

In Sri Lanka the CDS is licensed by the Securities and Exchange Commission of Sri Lanka (SEC).

CDS Account – is a paperless account maintained for an investor by the CDS in order to facilitate trading through the CSE. Investors are required to open a CDS account through a preferred Stock Broker.

There are specific account opening forms for individuals (resident and non-resident) and corporates (local and foreign). In addition to the account opening forms an investor is  required to provide the following documentation.

  • Copy of National Identity Card or a copy of a valid Passport as proof of identity.
  • Three (3) months utility bills or any other accepted document with address as proof of residence.

Once the completed application along with the above documents are submitted, the newly registered CDS Account Number is sent to the investor via post.

Securities and Exchange Commission of Sri Lanka (SEC) – is the regulator of the capital market appointed by the Government to proactively promote, develop and maintain a capital market that is fair, efficient, orderly and transparent.

The SEC was established to achieve the following objectives;

  • The creation and maintenance of a market to issue and trade securities in an orderly and fair manner.
  • Protecting the interest of the investors
  • Operation of a Compensation Fund to protect investors from financial loss arising as a result of any licensed stock broker or licensed stock dealer being found incapable of meeting his contractual obligations
  • The regulation of the securities market and to ensure that professional standards are maintained in such market.

Over the years the duties, functions and the powers of the SEC has expanded and it is currently bestowed with the following responsibilities;

To grant licenses for the operation of a stock exchange, stock brokers or unit trust managers, and to ensuring its proper conduct. To grant a certificate of registration to carry on business as a market intermediary and to ensure the proper conduct of such business. To give general or specific directions to all entities under its governance, periodically.

To grant compensation to any investor who suffers pecuniary loss arising as a result of any licensed stock broker or licensed stock dealer being found incapable of meeting his contractual obligations.

To regulate the listing and issuing of securities in the licensed stock exchange, and holds the authority to suspend the listing or trading of securities for the protection of investors.

To conduct investigations into any alleged violation or contravention of the provisions of the SEC Act or any rule or regulation made there under. Advising the government of developments in the securities market, while implementing the policies and programmes of the Government with respect to the market. In addition to a multitude of regulatory and governance undertakings listed out at www.sec.gov.lk.

(Sources: www.investopedia.com / www.cse.lk / www.sec.gov.lk)

Interested in the Stock Market? – Basic Terms You Should Know – Part 01

A knowledge investor is a wise investor. Awareness is the key to making positive gains through the Colombo Stock Exchange (CSE) – Stock Market in Sri Lanka, by making the correct choices, intelligent observations and by doing your investment homework. There are many reports and resources freely available to help evaluate your investment decisions.

First Capital believes that an educated investor contributes to develop the market, this article series covers the key terms that an investor needs to be familiar with before investing in shares.

Shares – are a proportionate piece of ownership of a PLC company that are issued to the public as a means of raising capital. An investor who buys a share of a company is therefore entitled to a quantity of its assets and earnings but will be the last to be settled on liquidation of the company. Shares of some companies are subcategorized as Voting and Non-Voting Shares.

Investors (shareholders) can freely buy and sell shares on the CSE through a licensed Stock Broker.

Earnings for shareholders come from the growth in share price (capital gains) and dividend payments (share of the company’s profits) both of which are subject to the performance of the company and market conditions.

Publicly Listed Companies (PLC) – Companies incorporated under the Companies Act or any other statutory corporation, incorporated or established under the laws of Sri Lanka or established under the laws of any other state (subject to Exchange Control approval) are eligible to seek a listing on the CSE to raise Debt or Equity.

Companies interested to be admitted to the official list of the CSE and to secure a listing of their securities are required to comply with the relevant provisions of the above act and the Securities & Exchange Commission Act and the Listing Rules of the CSE. This process of obtaining a listing is facilitated through an investment bank.

Additionally, the CSE regularly monitors listed companies as part of ongoing listing requirements to ensure the company abides by its listing rules (corporate governance, disclosures, financial reporting, transparency etc.). CSE also facilitates the trading (buying and selling) of the publicly held shares of the company.

As at 29 March 2016 CSE has 294 listed companies representing 20 business sectors.

Market Indices – The All Share Price Index (ASPI) and the S&P SL20 (Standard & Poor’s Sri Lanka 20) are the two main price indices used by the CSE.

The ASPI is a market capitalization weighted index where the weight of any listed company is taken as the number of shares listed in the market, while the S&P SL20 gives a measurement of the value of 20 selected stocks.

The ASPI indicates the price fluctuations of all the listed companies and covers all the traded companies during a market day.

Where,

Base values are established with average market value on year 1985. Hence, the base year becomes 1985.

This weighting system allows the price movements of larger companies to have a greater impact on the index. Such a weighting system was adopted on the assumption that the general economic situation has a greater influence on larger companies than on smaller ones.

The indices are calculated on an on-going basis during the trading session by computing the prices of stocks, with the closing values published at the end of each trading day. In addition to the above the CSE also calculates Sector Price Indices and Total Returns Indices.

Investors and financial managers use market indices as a tool to describe the market, and to compare the return on investments.

Market Capitalization – is the total Rupee (LKR) value of a company’s listed shares and is calculated on a daily basis by multiplying the current market price of one share by the total number of shares listed.

In calculating the sum of all companies listed on the CSE the market capitalization of the exchange is derived, this total market capitalization is utilized to indicate the relative size of the exchange.

The investor community and financial managers Market capitalization is used by the investment community in ranking the size of companies, as opposed to sales or total asset figures.

As at 29 March 2016 the Market Capitalization of 294 listed companies on the CSE stood at Rs. 2,591,06 Bn.

Boards – Listed companies are separated to either the Main Board or Diri Savi Board (for Equity) operated by the CSE based on listing criteria.

The Main Board consists of companies with a stated capital of not less than Rupees Five Hundred Million (Rs.500, 000,000/-) at the time of listing, net profit after tax for three (3) consecutive years immediately preceding the date of application, positive net assets as per the consolidated audited financial statements for the last two (2) financial years immediately preceding the date of application, and, a minimum public holding of 25% of the total number of shares for which the listing is sought which shall be in the hands of a minimum number of 1,000 public shareholders holding not less than 100 shares each.

The Diri Savi Board companies necessitate a stated capital of not less than Rupees Hundred Million (Rs.100, 000,000/-) at the time of listing, positive net assets as per the consolidated audited financial statements for the financial year immediately preceding the date of application, a minimum public holding of 10% of the total number of shares for which the listing is sought which shall be in the hands of a minimum number of 100 public shareholders holding not less than 100 shares each, and, an operating history of at least one (1) year immediately preceding the date of application.

Diri Savi Board companies are entitled to graduate to a Main Board listing, once such companies meet the Main Board listing criteria.

(source : www.investopedia.com / www.cse.lk)

First Capital powers National Conference of Chartered Accountants

First Capital Holdings PLC, a leading investment bank in Sri Lanka, recently came onboard to power the 36th National Conference of Chartered Accountants with a Gold sponsorship.

The conference, which will be held from November 4 to 6, 2015, is the flagship event of the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) and is one of the most sought-after events in the country’s corporate calendar, attended by high-profile business leaders and chartered accountants, including chairman, directors, CEOs, CFOs and partners.

This year’s conference will be held on the theme ‘Collaborate to Compete’ and is expected to attract about 1500 participants. The conference to be held at the BMICH, Colombo, will comprise of two days of technical sessions.

First Capital Holdings PLC Chief Executive Officer Dilshan Wirasekara said, “We at First Capital are delighted to sponsor a benchmark event such as the National Conference of Chartered Accountants. We believe this forum is held at the right moment as Sri Lanka’s capital market enters the next phase of growth, the theme of ‘Collaborate to Compete’ becomes significant to the industry.

In our commitment towards becoming the country’s leading investment bank we are constantly seeking to sharpen our competitive edge by collaborating with our investor base, regulatory authorities and governing bodies in offering innovative investment solutions,” Wirasekara said.

This is the first time First Capital Holdings PLC has been on-board as a Gold sponsor.

CA Sri Lanka President. Arjuna Herath said that over the years the conference has built a reputation as a business summit that focuses extensively and spurs insights into broad economic and business issues, apart from its core emphasis on finance-related topics.

“Every year we attract some of the leading companies in the country who come on-board as sponsors for this important corporate event and I take pleasure in welcoming First Capital Holdings PLC as a Gold sponsor this year,” Herath said.

Stock Watch – First Capital Holdings PLC

What happens when a news outlet teams up with an leading investment bank with over 3 decades of experience?
First Capital Holdings PLC together with NewsRadio brings you Stock Watch, a comprehensive recap of the day’s performance on the Colombo Stock Exchange. It’s accurate, up-to-date reporting backed up by unparalleled financial know-how.
Tune in to TNL Radio at 5.50pm every weekday for all this and more. The NewsRadio Stock Watch with First Capital Holdings PLC. A review you can rely on.

First Capital Holdings honours stakeholders

First Capital Holdings PLC recently hosted an evening of cocktails to celebrate the ongoing success of its partnerships and fete its stakeholders. Speaking at the reception, Executive Chairperson Manjula Mathews reflected on the company’s sustained growth and thanked those present for their continued support.

“We have achieved considerable progress over the past year thanks to the shared vision of all our stakeholders and propelled by a combination of teamwork, favourable market conditions and financial experience. We are sincerely grateful to our clients and other partners for their unstinting support as we progress on our journey towards becoming Sri Lanka’s leading investment bank.”

Elaborating on the company’s way forward, Mathews noted that the group plans to consolidate and build on the growth momentum of the past year by offering innovative and profitable investment banking solutions. Held at Cinnamon Grand, the reception brought together over 400 guests for a memorable evening of fellowship and entertainment and served as an occasion for the company to show its appreciation towards its regulators, collaborators, clients and members of the media.

The exclusive event provided an opportunity for the group’s senior management to engage and interact with all stakeholders and reaffirm the company’s commitment to strengthen and build on the trust and confidence placed in First Capital. During the first half of the financial year 2014/15, First Capital Holdings PLC reported profit after tax of Rs.868 million and received an upgrade in its national long-term and short-term corporate credit rating to A- /P2.

The company achieved several milestones such as the launch of a ‘Platinum Bond’ – the first-ever long-term repo investment product, pioneering the first ever microfinance-backed securitization and the introduction of three new unit trusts including a gilt-edged and money market unit trust. The First Capital Wealth Fund was lauded as the best performing fixed income unit trust over the past 12 months, with returns of over 25 percent. The corporate structuring arm of the company is accredited with the management of a landmark AAA-rated debenture, while First Capital Treasuries is currently the market leader in its niche, among standalone primary dealers.

Keenly attuned to the market and strengthened with a strong group research unit, First Capital Holdings PLC has recently added finance advisory services to its range of services in order to cater to the diverse needs of its clientele and provide superior investment banking solutions. First Capital Holdings PLC comprises of First Capital Treasuries Limited, First Capital Asset Management Limited, First Capital Equities (Private) Limited, First Capital Markets Limited and First Capital Limited. The company has a network of branches in Colombo, Matara, Negombo, Kandy and Kurunegala and is equipped with nearly three decades of experience in financial services.

First Capital Holdings posts healthy profits

Colombo, 13 May, First Capital Holdings PLC has posted a healthy profit after tax for the financial year 2010/2011 of Rs. 990,260,000 compared to Rs. 682,244,000 for the previous financial year. Profits for the quarter ended 31 March 2011 were Rs. 81,299,000 an improvement on Rs. 41,264,000 for the same period the previous year. Earnings per share were Rs. 10.03 whilst Net Assets Per Share stood at Rs. 15.04.

“In the last couple of years, we have seen exceptional profit growth at First Capital,” a Company official said. “In 2010/11 although conditions were less conducive than those in the previous year in which a highly favourable bond trading environment resulted in exceptional profits by the Group’s primary dealer arm, the Company was able to sustain its momentum helped by strong performance in all areas.”

He went on to explain that reported profits were boosted by a one-off gain from the sale of an associate company – Kotmale Holdings PLC amounting to Rs. 180 million and a decision in the company’s favour by the Inland Revenue Board of Review resulting in a tax reversal of Rs. 444 million. He affirmed that First Capital was gearing up for measured and steady growth.

“First Capital Wealth Fund – a Unit Trust dedicated to investment in fixed income securities was launched and the company was granted a license to function as a Dealer on the Debt Exchange (DEX). Promotional campaigns and initiatives to further broad-base the services of the Group are on the cards,” he added.

The First Capital Group boasts of a rich pedigree in the Sri Lankan financial services arena with its lineage tracing 28 years. Having obtained its Primary Dealership license in 1992, when the Central Bank formed the Primary Dealership system, First Capital Treasuries has steadily grown to become a strong and resilient front runner with a loyal and widening customer base. With pioneer status in this area, aided by an unblemished reputation, First Capital Treasuries has developed strong bonds with its principal business partners which are commercial banks, other primary dealers and investors both big and small.

First Capital Asset Management Limited under license from the Securities and Exchange Commission, functions as an ‘Investment Manager’ and has mobilised a substantial quantum of funds under management on discretionary mandates. Upon being approved by the SEC to manage Unit Trusts, the company launched First Capital Wealth Fund in October 2010.

First Capital Markets is an SEC approved Margin lender for listed equity. It has, over the years, built up a strong client base. With the recent surge in the share market, this area has featured as a prominent contributor in the performance of the group.

First Capital Limited is actively involved in structuring and underwriting both short term and long term corporate paper and in generating placements on these and other secondary market debt instruments. The company has positioned itself as a debt market specialist by creating a ready marketplace for those seeking investments in debt securities and those vying to borrow from the debt capital markets.