2012 Country Stock Market Performance

As at Wednesday, March 7, 2012

Below we highlight the year to date stock market performance for 78 countries around the world.
The average year to date performance of the 78 countries listed below currently stands at 6.82%, with 66 of 78 (85%) in the black.  Venezuela is up the most at 36.95%, followed by Vietnam at 26.30% and Russia at 21.69%.  Bangladesh is down the most at -18.51%, followed by Sri Lanka at -9.92% and Slovakia at -6.74%.
Of the G7 countries, Japan is surprisingly up the most in 2012 with a gain of 13.25%.  With a gain of 7.55%, the US ranks 4th out of the G7 countries behind Japan, Germany and Italy.  Canada has been the worst performing G7 country in 2012 with a gain of 3.11%.
While the BRICs underperformed last year, all four are outperforming the US in 2012.

Bourse crosses half a million ‘individuals’ milestone

Despite being Asia’s worst performer, there is some news for cheer as the Colombo Bourse has achieved the milestone of over half a million local individuals dabbling in shares though not regularly.

The total operative CDS accounts of local individuals by end March grew to 500,198, thereby crossing the half a million mark for the first time in Bourse’s history.
As per the Colombo Stock Exchange (CSE), this figure excludes the number of multiple registrations sought by the same client through different participants.
The total number of registered CDS accounts amounted to 677,296, up from 666,665 as at end of last year reflecting an increase of 10,631 over the three months ended in March.
The number of foreign individuals having CDS accounts was 3,946, up by 99 from 3,847 last year whilst local companies grew to 7,485 as against 7,321 (up 164) and foreign companies were 4,148, up by 36 from end December 2011.
Analysts said that the increase though nominal was encouraging given the fact that the stock market has remained bearish so far this year on top of the first negative return in three years in 2011.
“The fact that over 10,000 new accounts have been opened is positive. The first quarter didn’t have many IPOs either whilst bearish sentiments as well as rising interest rates had also made investors look to opportunities outside the Bourse,” they added.Largely on account of the relatively better performance of the Bourse as well as spate of IPOs, the number of local individual accounts rose by 20% to a record 81,798 last year. Total registrations recording a similar percentage growth amounted to 666,665.
In the first quarter of this year local individuals’ contribution to market turnover was a healthy 34.6%, same as the 2011 full year figure but higher than 22% in 2008. In 2009 and 2010 the share was 36% and a high 44% respectively.
Local companies accounted for 40.6% and foreign companies share was 23.7% in the first quarter of 2012.
As of yesterday the year to date negative return of All Share Index was near 11% whilst MPI is down by 6%. Last year ASI was down by 8.5%, reversing fortunes enjoyed by Colombo in 2009 and 2010 as world’s most consistent best performer with returns of 125% and 96% respectively.
The only silver lining of the Colombo bourse this year is the strong net foreign inflow of Rs. 21 billion year to date as opposed to outflows in the past three years.
That apart the market’s bearish performance continued yesterday as well. Arrenga Capital opined yesterday that the languid steps of the market seem to be discouraging most investors as it is taking too long to shake off its previous over runs.
“Most players in the market have transformed to be fidgety market timers as they wait to see the sunny side of the market whilst ignoring the attractively beaten down shares.
Investor confidence is the only element that could revitalise current market conditions and we advise investors to have a closer look at counters in the banks, food, beverage and alcohol and selected counters in the Manufacturing sector,” it said.
Asia Wealth Management noted activities at the bourse continue to show very dull sentiments as retail participation has been waved off and most of the institutional investors are on a bargaining buying spree.
“However it’s noteworthy to mention that the foreign participation has been continuously witnessing on the bourse which gives a light of hope for both local and foreign investors who are waiting to enter into the market again,” pointed Asia.
DNH Financial said trading remained lacklustre as investors sit in the wings following the (Sinhala-Tamil) New Year holidays.
“Although some analysts may begin to question the sustainability of Sri Lanka’s economic growth pointing to the possibility of a deceleration, we believe that a significant slowdown is highly unlikely despite the high interest rate environment. However, we advise investors to continue to adopt a selective approach in their stock picking focusing on medium to longer term returns,” DNH added.

Dhammika-Nimal duo’s 12th acquisition brews a perfect cuppa!

Royal Ceramics sees prospects and related party synergies in 51% buy of Asia Siyaka Commodities for

Rs. 363 m

• New Chairman Nimal says broking, credit and warehouse biz will be expanded
• Listing via introduction coming up

The famous duo Dhammika Perera and Nimal Perera last week effected the 12th acquisition, reaffirming their prowess of growing via strategic buys spanning a decade.


This time around via the acquisition of a 51% stake in Asia Siyaka Commodities Ltd. by Royal Ceramics Plc (RCL), the duo hopes to brew a perfect cuppa though times are challenging for the tea industry.
In a deal worth Rs. 336.6 million, RCL bought the 51% stake amounting to 132.6 million shares at Rs. 2.54 each.
For Asia Siyaka, the fourth largest tea broker, few notches down from where it was originally, the acquisition marks another phase of coming under a new set of shareholders.
Set up in 1998 under the Asia Capital Group along with a team of professional brokers, Asia Siyaka saw in July 2011 the exit of its co-founder selling 40% stake for Rs. 175 million to Asia Siyake Pvt Ltd., which is an entity formed by directors and staff.
At least by the sale price the enterprise was valued at Rs. 437.5 million. A few months later, Ishara Nanayakkara of LOLC Group and Dinal Wijemanne bought a 35% stake for Rs. 228 million putting the value at Rs. 651 million which is almost equal to the price at which RCL based its acquisition. Asia Siyaka’s revenue is estimated at over Rs. 400 million whilst it had made a net profit of Rs. 50 million last year.
RCL Managing Director Nimal Perera who will shortly assume duties as Chairman of Asia Siyaka told the Daily FT yesterday that the acquisition was strategic with a long term perspective.
Asia Siyaka will also be listed via an introduction with the application submitted before 31 March being processed by the Colombo Stock Exchange.RCL bought stake from Dinal Wijemanne (15%) and some staff holdings whilst Ishara reduced his stake from 20% to 17.5%. Co-founder Anil Cooke will remain the CEO at Asia Siyaka.
The acquisition also signals that RCL, the market leader in tiles and bath ware, is keen to pursue select diversification.
The acquisition of Asia Siyaka’s control comes hot on the heels of RCL consolidating LB Finance Plc as an associate, having increased the stake to 25% recently. Last year it acquired Ever Paint and Chemical Industries Ltd., mostly as a Research and Development venture.
Given its financial muscle (RCL Group’s retained earnings were at Rs. 4.8 billion and Rs. 2.6 billion at company level as at end 2011) and expertise from LB Finance, the fastest growing in its league, Asia Siyaka is likely to enhance its credit offerings to smaller tea factories.
The warehouse business operated via a subsidiary will be expanded as well harnessing the three acre land space available according to Nimal.
Apart from its own customer base, Asia Siyaka is also expected to benefit from the synergies from Hayleys Plc’s plantation business. Dhammika directly and indirectly controls both RCL and Hayleys.
Hayleys two plantation companies Talawakelle and Kelani Valley have a combined tea crop of 13 million kilos (2011) accounting for 4% of national production.
Talawakella Plantation Plc was ranked No. 1at the Colombo Tea Auctions for prices amongst the Regional Plantation Companies for the eight and fifth year in succession for high and low grown elevations respectively. Its average price registered was well above the national averages.
Last year tea prices declined for the first time since 2000 at the Colombo tea auctions. The national average price declined by Rs. 10.72 per kilo to Rs. 359.89 per kilo.
Colombo auction centre however continued to receive the highest price at US $ 3.29 per kilo.
Forbes and Walker Tea Brokers however said yesterday that weekly auction average of sale No.14 of Rs.396.54 (US$3.06) for the second consecutive week was higher than the corresponding sale average of 2011 of Rs.373.27 (US$3.35).
Medium Growns totalling Rs.358.36 (US$2.27) for sale No.14 of 2012 show a gain of Rs.4.72 vis-a-vis Rs.353.64 (US$3.18)of 2011. Low Growns too totalling Rs.418.72 (US$3.23) show a significant gain of Rs.37.78 vis-a-vis Rs.380.94(US$3.42) of 2011.
High Grown’s however totalling Rs.357.70 (US$2.76) show a decrease of Rs.8.42 vis-a-vis Rs.366.12 (US$3.79).
Forbes said it was evident that Medium/Low Grown’s have shown a growth YoY in Rupee terms. High Grown prices remain below the corresponding sale prices of 2011. You will also observe that although we have seen a growth YoY in Rupee terms, we remain below the corresponding prices of 2011 in US$ terms.
Whilst the Dhammika and Nimal duo see prospects in Asia Siyaka’s under RCL banner, Hayleys and Talawakelle Plantations Chairman Mohan Pandithage in the latter’s 2011 Annual Report noted that the tea industry was at cross roads; requiring a breakthrough in productivity to remain viable.
“It is important that all stakeholders including policy makers, recognise that international competitiveness is a prerequisite for the stability of the industry. Hence, industry wage structure, work practices and government policy should soon move to mirror the required flexibilities,” he added.
“We look to 2012 with cautious optimism expecting at least some of our key export markets returning to normalcy before long. Possible tight supply situation from rising domestic demand in India and China too could help prices to improve. We on the other hand are concerned with the on-going embargo on Iran, increase in domestic interest costs and liquidity constraints,” said Pandithage whose comments more or less echoed sentiments from rest of the regional plantation companies.
Industry analysts said that commodity broking business survives on volume and price garnered by clients for their produce in auctions. Whilst better times for the overall plantation industry could boost prospects for brokers, entities such as Asia Siyaka could also maximise earnings from their other services such as credit and warehousing facilities.
RCL in the first nine months of 2011/12 financial year saw its bottom line grow by 45% to Rs. 1.48 billion whilst in the third quarter the Company produced a net profit of Rs. 752.5 million.
This performance was emphasised by analysts as outstanding given the fact that RCL is only dealing with a single product sector. Group revenue rose by 23% to Rs. 5.8 billion in the nine months whilst for the quarter it rose to Rs. 2.4 billion from Rs. 1.8 billion a year earlier.

Tata Director’s presence on Board to boost Hemas growth, regional foray

Hemas Holdings Plc is confident that contributions and insights from its newest Director on the Board, R. Gopalakrishnan, a top executive from Tata Sons and formerly from Hindustan Unilever will help the local conglomerate’s growth via acquisitions as well as forays into the region.


Hemas last week announced the appointment of Gopalakrishnan, Director of Tata Sons Ltd. as a non-executive Director to its Board. Gopalakrishnan is also Chairman of four Tata companies – Tata Auto-Component Systems Ltd., Rallis India Ltd., Metahelix Life Sciences Ltd. and Advinus Therapeutics Ltd.
Hemas Holdings Chief Executive Husein Esufally told the Daily FT that the presence of Gopalakrishnan on the Board will be a major boost.
“He (Gopalakrishnan) has been a part of the Tata story since the turn of the century when the company moved from being an India-centric company to being a global player with revenues of $83.3 billion (in 2010/11). Hopefully, he can contribute towards helping Hemas grow exponentially in the years to come,” Esufally said. “Much of Tata’s growth came through an acquisition strategy which we intend to pursue more aggressively.”“As we look to expand regionally, Gopal’s worldwide experience and high level contacts will be invaluable,” added the CEO of Hemas, one of Sri Lanka’s leading conglomerates with a focus on five key sectors – FMCG, healthcare, transportation, leisure and power generation.
Since Gopalakrishnan had also spent over three decades at Hindustan Unilever, Esufally said his wisdom will help Hemas’s FMCG and other consumer centric businesses immensely.
“One of Tata’s greatest successes was in creating superior shareholder value whilst operating a diversified portfolio of businesses.
This is a challenge facing most conglomerates and we could benefit from his deep insights of the Tata model,” the Hemas CEO noted.
He also said that philosophically, Hemas share many common values with Tata, in terms of corporate values and ethics. “We look forward to his guidance on these aspects as well,” Esufally emphasised.
Corporate analysts have hailed Hemas’s success in inviting an Indian business leader of Gopalakrishnan’s calibre to its Board.
Apart from his existing positions at Tata, Gopalakrishnan also serves as Vice Chairman of Tata Chemicals, is a Director of Tata Power and Tata Technologies and is an independent Director on the boards of the Indian subsidiaries of Akzo Nobel and Castrol India.
Since 1967, Gopalakrishnan has worked as a professional manager with 31 years in Hindustan Unilever and 13 years in Tata.
He studied physics at the University of Calcutta and engineering at IIT Kharagpur before joining Hindustan Unilever as a trainee.
He has served Unilever as Chairman of Unilever Arabia, as Managing Director of Brooke Bond Lipton India and as Vice Chairman of Hindustan Lever Limited.
Gopal is a past President of the All India Management Association.
In 2007, he authored his first book, ‘The Case of the Bonsai Manager’ published by Penguin India. In 2010, his second book titled ‘When the Penny Drops’ was also published by Penguin India.
He is also a guest lecturer in India and abroad while his articles have been published widely. He has taught a credit course titled ‘LWNT – Learning What’s Not Taught’ at IIM, Ahmedabad, Great Lakes Institute, Chennai and XIM, Bhubaneshwar.

Daily Alerts: Today

Rights Issues - Trading  Of Rights Commences On: Heyleys MGT Knitting Mills PLC

XD From: Gestetner of Ceylon PLC

Corporate Announcements

No Corporate Announcements.

Local News

·         Apparel industry posts $ 4 b revenue in 2011

·         Browns Investments expands operations in Leisure Sector

·         Dhammika-Nimal duo’s 12th acquisition brews a perfect cuppa!

·         CPC, CEB  combined loss  Rs. 119.5bn

·         45 storeyed Rs. 3 bn apartment high-rise to emerge in Rajagiriya

·         IMF says economy to grow 7.5%, inflation to increase

·         Sri Lanka graphite firm sees higher lubricant demand

Foreign News

·         Oil Trades Near One-Week Low on Rising U.S. Stockpiles

·         Yen Drops Versus Peers on BOJ Easing Bets, Trade Deficit

·         Pound Strengthens as Posen Ends Push for More QE; Gilts Decline

Rupee depreciation impacts Bogala Graphite

Bogala Graphite Lanka says, the rupee depreciation against the Euro has impacted the company’s cash outflows during the year 2011 financial year, as the firm had to repay the debt in Euros to its parent firm.

However, Chairman of the firm Vijaya Malalasekara says the company has been able to re-schedule the repayment of their debt to be paid over a longer period of time, after discussing with the parent firm.

“This will ease the pressure on our cash flows into future” added Malalasekera.

The company during the year 2011 financial year has recorded a Profit After Tax of Rs. 33. 2 million, while the Revenues have seen a year on year growth of 3% to run up to Rs. 399 million.

However, the public quoted company’s Gross Profit has declined from Rs. 131 million to Rs.  129 million during 2011, with administrative expenses increasing due to wage increases.

In the Chairman’s review of the year 2011 annual report, Malalasekera says the lubricant plant of the firm, which was installed during the year under review, is beginning to pay reasonable returns.

“Our sales of lubricants to the South Asian market have increased. This appears to be an area of growth into the future” further added the Chairman.

He also mentions that the pricing of the firm’s products is going to a key determinant to profitability, in both the graphite and lubricants.

According to the Chairman’s review, Boghala Graphite is currently in the process of negotiating prices with its key buyers.

Bogala Graphite is a firm engaged in Graphite mining, processing and exporting and is a Ms Graphit Kropfmühl AG group of companies in Germany.

FITCH Asia Pacific Weekly Highlights - April 7 to April 13

Week of April 9 www.fitchratings.com

Welcome to Fitch Ratings' Asia Pacific Weekly Highlights. This newsletter compiles all ratings and research activity across the region. Included each week are links to recent ratings actions, new issue ratings, issuer reports, special reports and commentary, as well as upcoming Fitch events for Asia-Pacific. Sector Research Global Card Network Review (Processing a Changing Landscape) Strong Input Trends: Growth in personal consumption expenditures (PCEs) and a continued shift from paper to electronic forms of payment are expected to support global growth in credit/debit card network volumes for the foreseeable future. The largest opportunities will be outside the U.S., where approximately 85% of purchases are still done in cash...   Fitch: Korea Election Will Spur Spending, not Worsen Fiscals Fitch Ratings-London/Hong Kong-12 April 2012: South Korea's social spending bill will jump after its recent National Assembly election, but Fitch Ratings does not expect this to lead to a significant deterioration in public finances. The incumbent Saenuri Party won the elections, albeit by a smaller margin. The party was under... Fitch: Macau Gaming Supply Constrained After Sands Opening Fitch Ratings-Chicago-11 April 2012: Fitch Ratings expects Macau's gaming market fundamentals to remain positive following the opening of Las Vegas Sands Corp.'s (LVS) new casino property on the Cotai Strip. Although gaming revenue growth in Macau continues to decelerate, new supply additions will be constrained over the next few years... New Issue Ratings Fitch Rates Hong Leong Bank's Senior Notes 'BBB+(exp)' Fitch Rates Hong Leong Bank's MTN Programme 'BBB+' Fitch Rates Genting Singapore's Proposed Perpetuals 'BBB(exp)' Fitch Rates BCAF's Senior Bond Programme 'AA+(idn)' Rating Actions Fitch Affirms China Foreign Currency 'A+' Stable Outlook; Local Currency 'AA-' Negative Outlook Fitch Affirms Japan's Suruga Bank at 'A-'; Outlook Stable Fitch Affirms 3 Chinese Policy Banks Fitch Affirms Korea ACE Mortgage at 'AAAsf'/Stable Fitch Downgrades Finansa to 'BBB-(tha)'; Outlook Negative Fitch Revises Indika's Outlook to Positive; Affirms at 'B+' Fitch Affirms SVI at 'BBB+(tha)'; off RWN; Outlook Stable Fitch Revises Shanshui's Outlook to Positive, Affirms at 'BB-' Fitch Revises Sunac's Outlook to Stable, Affirms at 'BB-' Issuer Research Thoresen Thai Agencies Public Company Limited PT Tugu Reasuransi Indonesia