      Business Editor : Eriq Dewanarayana
Fall Through The Key Support Vanik Scores Another Point Over International Markets have a Market Outlook
Market Statistics Kahawatta May Not Be As Popular As The Previous
Plantation IPO's Gainers: Stocks that moved up significantly during the week were
Losers: Stocks that moved down significantly during the week
Heavily Traded Stocks: Economic Outlook The IMF has already revised down global growth estimates from 3.2% to just 2.0%. Worsening Asian economic/currency crisis is now creating political turmoil in several Far Eastern countries, notably in Malaysia and Indonesia. When governments prove to be impotent in solving the domestic economic problems it naturally paves the way for political unrest. We have already seen this happening in Russia, Indonesia and Malaysia. CDIC Sassoon Research Lankem: 'Plantations industry outlook not encouraging' - New CEO for Citibank, N.A. Mr Kapila Jayawardena has taken over as the new Chief Executive (CEO) and Country Corporate Officer of Citibank N.A Colombo. Mr. Jayawardena functioned as the Vice President (Treasury and Financial Institutions) of Citibank N A Colombo prior to this appointment. He is an old boy of Trinity College and Royal College and holds an in MBA Financial Management. Citibank N.A is the largest Bank ~ the United States. The Bank has been operating in Sri Lanka since 1979 and offers a wide range of banking services' Citibank N. A. also operates a joint venture Citi National Investment Bank with National Development Bank (NDB) specializing in Corporate Finance Activities. With the merger of Citicorp with Travelers Group in the USA, Citi Group will be the largest Financia1 Institution in the world with assets totalling over US$ 700 Billion While declaring a 25 per cent dividend for the year 1997/98 the Lankem Group has become conscious of the difficulties that lie ahead in some of the sectors the company is involved in The Group Chairman Mr. N.Jayasingam in his review for the year under review says: 'As regards the plantations industry the outlook is not very encouraging at the moment' The Lankem Group owns the Kotagala plantations and Agarapatana. Mr. Jayasingam says: 'As regards the plantations industry the outlook is not very encouraging at the moment. Global production of tea todate in 1998 has reached high levels with Kenya restoring its customary output of tea. Whilst price levels of tea remained buoyant in the first half of 1998 a sharp decline has occurred in recent months, with the tapering off of demand particularly in Russia and the CIS countries which represent the largest market for Sri Lankan tea. The recent depreciation of the rouble and the attendant economic turmoil in Russia is likely to impact adversely on price levels at the Colombo Auctions. 'In the case of rubber the forecast seems rather bleak in the context of currency depreciation in major producing countries such as Malaysia, Indonesia and Thailand.' However, he points out to the fact the Company staff on the plantations are doing an excellent job to improve productivity. Meanwhile the company reports an improved turnover of Rs: 3,396.8 million in the year under review as compared to Rs: 2,003.4 million in the previous year. This has been attributed to the excellent results of the two plantation companies and trading activities of Lankem Ceylon Ltd. Thus, the profits before taxation had reached Rs: 370.9 million from a loss of 16.3 million in the previous year. The Lankem Group's main activities range from manufacture and marketing of chemicals and allied products, tea and rubber plantations to hotels. In regard to hotels the Chairman expresses concern over its prospects in the near term. Uncertainty due to local security situation and the current reduction of hotel rates in other parts of South East Asia have become the deterrent to the improvement of the hotel sector. Mr. Jayasingam says that despite this uncertainty the company is maintaining rapport with tour operators and are hopeful of the future. Asia International Tea Conference '98 The Annual Asia International Tea Conference 1998 was held on the 1st and 2nd of October 1998 in Singapore. A wide range of topics were discussed with regard to the critical issues surrounding Asia's new and changing market environments, short and long term prospects and the key challenges that have to be overcome in maximising prospects. The struggle faced by the industry over the years for 'share of throat' or 'share of mouth' as termed by some and the competition faced by the global tea industry from the 'big boys' such as the the Cola giants, the coffee industry etc. was a critical issue that came up for discussion. A problem solution presented was the promoting of the tea for health campaign. The targetting of tea promotion toward a younger generation was also discussed. It was mentioned that adding value has shown a change in traditional Middle Eastern markets where packeted teas have been the bigger seller is interestingly showing that tea bags are becoming popular as mentioned by one of the speakers. He went on to say that the males still prefer the packeted tea. The females however seem to find the use of tea bags to be trendy. It was mentioned that one of the major concerns is that in the present economic downturn in Asia, cheap 'rubbishy' tea could try to find a market whilst producers of good quality teas may not find selling prices remunerative. This could however pose a threat in the longer term. It was suggested that this could be a good time to curb the production and export of poor teas to the world markets to ensure that the genuine producers of better products can still remain viable. The need for an agenda for promotion for the Indian tea industry was also discussed. Past trends indicate that while production in India has considerably gone up over the years export has been stagnant. The domestic market has absorbed the entire increase. But despite the apparently fast growth of the domestic consumption tea prices have not improved in real terms. Further the per capita consumption of tea in India is comparatively low at about 700 grams per year. The Chinese delegate Mr. Chen Zongmao mentioned that world tea production has steadily increased this century. It has doubled every 20 years during the past five decades. He believes that this could be attributed to the following achievements on science and technology: The widespreading and application of tea clones; The development of short-node cutting propagating technique; The discovery of microeliment deficiency on tea plant; The development of balance fertilisation in tea production; The establishment of tea blister blight forecasting system and the introduction of parasitic wasp in the control of tea leaf-roller; The development of withering trough and CTC technology in the black tea production; The popularisation and application of tea plucking machine; The regulation of control of pesticide residue in tea; The development in the diversification of tea products; The developments in the investigation on moderating function of tea to humans. SAARC was seen to be a major platform on which to launch regional corporation. South Asia has the highest regional stake in tea, accounting for 55% of the global production of black tea, 45% of export and 36% of consumption. Yet progress at regional coperation has not been to the desired level - an opportunity is now available via SAARC and its extension under the proposed SAPTA/SAFTA. The objective was not to evolve any form of producers cartel but to facilitate meaningful interaction at the SAARC level on common goals that will benefit producers and consumers both within the region and throughout the world of tea. The measures proposed envisage, collaborative research studies, saving in production costs, standardisation of MIS packages, setting up an international auction centre, exchange of statistical information, training of plantation personnel, development of intermediate technology for small holders, and joint marketing initiatives. It was revealed that when comparing the price fluctuation of selected commodities such as tea, coffee, cocoa, sugar, rice and rubber for a period of 25 years' tea showed the least fluctuation. The difference for the period ranged between 1 to 2 whereas from commodities such as sugar showed differences Dom 1 to 7.8. When comparing the FOB price for tea exports in US$, Sri Lanka leads the field with India and Kenya com'ng in second and third respectively. It was also interesting to note that Sri Lanka earned the highest total foreign exchange amongst the producer countries from the export of tea. - Forbes & Walfer Stock
Market Review The Colombo bourse remains lethargic September Inflation falls to 10.3% Increase in capital requirement for finance
companies Equity risk premium is headed down - JF - HNB Research |
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