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New Price index from January 4
The Colombo Stock exchange will introduce a new index which will be known as the 'Milanka Price Index' (MPI) with effect from 4th January 1999. The MPI will replace the Sensitive Price Index. The base index will be at 1000 points.
The MP1 is conducive to the introduction of Index based Instruments. It mirrors the changes in the ASPI and the Issue of liquidity has also been addressed in its construction. Criteria taken into account in its construction are size and liquidity. Size has been measured by market capitalization as at 30th June 1998 and liquidity has been determined by the number of trades executed over the period January to June 1998 and the trading value (over January to June 1998) as a percentage of the average market capitalization as at 1st January, 31 March and 30th June 1998.
According to a study done by the CSE the degree of correlation between the ASPI and the MPI is 99.5% which Is indicative of the fact that the MPI reflects market movement.
Twenty-five companies are included In calculating the Milanka Price Index which represents 55% of the total market capitalization and approximately 10% of all the listed companies,
The CSE expects to revise the Milanka Price Index annually.
The companies In the MPI are as follows:
Banks Finance & Insurance
* Sampath Bank
* National Development Bank
* DFCC Bank
* Commercial Bank
* Hatton National Bank
* Asia Capital
Beverage Food & Tobacco
* Ceylon Cold Stores
* Distilleries Co. of SL
* Lion Brewery
* Pure Beverages
* Ceylon Tobacco
* Nestle Lanka
* Ceylon Brewery
Construction & Engineering
* Colombo Dockyard
Diversified Holdings
* John Keells Holdings
* Aitken Spence
* Hayleys Ltd.
Hotels & Travels
* Asian Hotels Corporation
* Trans Asia
Manufacturing
* Ceylon Grain Elevators
* Richard Peiris & Co.
* Lanka Lubricants
Plantations
* Watawala Plantations
* Maskeliya Plantations
* Kelani Valley Plantations
Market Comment
Low Growns lower againLow Growns were lower once again, but price drops were not as sharp as at the last auction. Sellers tended to accept prevailing market levels, which resulted in the volume of unsold teas decreasing. There was more activity for the OPAs and some of the below best types tended dearer on last week's levels. These factors are likely to impact on the Low Grown auction average, which reached its lowest level yet at the last sale. Last week auction average for Low Growns dropped to Rs. 122.75. These auction averages are now well into the lower levels that prevailed during the first quarter 1997. In US dollar terms however, the equivalent value in 1997 was $2.07. If this is extended to the current Rupee Dollar exchange rate a figure of Rs. 139.50 would be achieved. In fact the current market level of 1.82 US Dollars is closer to rates that prevailed during end 1996, prior to the full impact of Russian buying. The position does not look like improving over the next few sales, and inclusion of the unsold low value grades would reveal a gloomier picture.
In this market of depressed prices there was a particularly bright moment. An invoice of New Vithanakande BOP1 achieved a record price of Rs. 312 per Kg in the Asia Siyaka Low Grown catalogue. This was an exceptional price paid considering that the next highest was Rs. 220 per kg. It is well earned recognition for a factory that has consistently delivered a superior product.
The Ex Estate sale got off to a very hesitant start with most categories recording a lower level of price. The market picked up thereafter particularly for the BOPFs, which went on to close fully firm on last week's levels. A feature was the higher prices paid for the better liquoring teas. It was also significant that the light bright teas from Nuwara Eliya and Upapussellawa continue to attract good demand.
- Asia Siyaka
Low Growns continued its downward trend particularly at the higher price levels. The stronger market however for the Ex Estate offerings was indeed an encouraging feature. Off Grades and Dusts also sold well compared to previous week's levels.
The averages for the sale of 2nd December 1998 recorded declines alround with the Mid Growns and Low Growns dropping fairly sharply to Rs. 98/19 and and 122/75 respectively compared with Rs. 107/25 and Rs. 129/98 respectively the previous week. Consequently the total auction average has declined to Rs. 116/23 per kg which is the lowest weekly auction average since Rs. 115.86 per kg. recorded at the sale of 23rd July 1997. In addition, the total unsold quantity for this sale amounted to almost 20% of the total offerings ie. 1 million kgs on the total catalogue weight of 5.6 million kgs.
In this gloomy scenario of a Silver Lining is optimistic due to the following:
(a) The possible increased activity by Russia at the Indian auction centres which is likely to push up prices in India from now on as already reflected on last week's auction in Cochin.
(b) With the sharp decline in Low Grown prices over the past few weeks the current levels for these grades could reflect good value vis a vis other auction centres.
(c) The strength of the market for Ex Estate offerings which indicates that the Western out markets in particular are likely to remain reasonably active into the new year.
(d) The first quarter of a year normally does not represent a heavy cropping period globally particularly the months of February and March.
- Forbes & Walker
India's Raymond Suitings in Sri Lanka
The internationally known brand of premium suitings made in India has now come to Sri Lanka in a big way. Raymond whose branded product is being solely distributed in Sri Lanka through Hameedias, the premier tailoring establishment has opened its first retail outlet in Colombo in collaboration with Hameedias.
Raymond is a part of the JK group which has a turnover of US$1 billion. Established in 1925, it is India's largest composite worsted fabric manufacturing mill. Raymond's fabrics are said to be produced in three state-of-the-art plants in India. Besides, the company produces more than half a million pieces each of woollen blankets and ready-made garments.
In Sri Lanka the company sold its products through Hameedias and in keeping with its policy of developing an international chain of retail outlets it has come to Colombo with the 12th shop. Apart from the over 200 outlets in India, Raymond has set up shops in the United Kingdom, the Middle East and a host of other countries.
V. Bakshi, General Manager, Exports who had come down from Bombay for the opening of the Colombo outlet said Raymond enjoys 50 per cent of the Sri Lankan market for premium brand suitings. Over the past five years this business had been conducted solely through Hameedias about which Fouzul Hameed of Hameedias says they have been happy with the collaboration.
Bakshi says they were confident of further strengthening its foothold in this market and would be opening other outlets shortly.
+ Exchange Rates The Central Bank's Spot Rates for transactions with Commercial Banks announced on the morning of December 10, 1998 were as follows:
Buying Selling 100 US Dollars Rs. 6676.24 Rs. 6813.16 The approximate middle exchange rates of following currencies calculated on the basis of cross rates quoted by Gulf International Bank, Bahrain as it appeared in Reuters Financial Information System on December 10, 1998 were as follows:
Saudi Arabia Riyal Rs. 17.99 Bahrain Dinar Rs. 178.95 Kuwait Dinar Rs. 222.30 Qatar Riyal Rs. 18.54 UAE Dirham Rs. 18.37 Oman Riyal Rs. 175.23 Average rates at which the following currencies were quoted by Commercial Banks in Colombo for Telegraphic Transfers at mid-day on December 10, 1998 were as follows:
Buying Selling 100 US Dollars Rs. 6761.60 Rs. 6801.00 100 Sterling Pounds Rs. 11178.91 Rs. 11303.17 100 Deutsche Marks Rs. 4031.96 Rs. 4093.96 100 French Francs Rs. 1200.86 Rs. 1222.17 100 Japanese Yen Rs. 57.46 Rs. 58.40 Average Weighted Prime Lending Rate (AWRP) and Lowest Prime Rate (LPR) of Commercial Banks
The Average Weighted Prime Lending Rate (AWPR) during the week ended December 04, 1998 was 16.0 per cent for all banks. The Lowest Prime Rate among banks during this week was 13.5 per cent.Average Weighted Deposit Rate (AWDR) of Commercial Banks
The Average Weighted Deposit Rate (AWDR) of Commercial Banks for the month ended November 30th, 1998 was 9.2 percent.
* Unit Trust Prices
Comtrust Equity Fund
Manager's Selling Price Rs. 5.16 Managers Buying Price Rs. 4.83
Eagle Gilt Edged Fund
Manager's Selling Price Rs. 11.04 Managers Buying Price More than one year Rs. 11.03 Less than one year Rs. 10.92*
Eagle Income Fund
Manager's Selling Price Rs. 11.03 Managers Buying Price More than one year Rs. 11.02 Less than one year Rs. 10.91*
Eagle Growth Fund
Manager's Selling Price Rs. 8.29 Managers Buying Price More than one year Rs. 7.97* Less than one year Rs. 7.89* * After deducting the relevant exit fees applicable
National Equity Fund
Manager's Selling Price Rs. 7.80 (per unit) Managers Buying Price Rs. 7.33 (per unit)
Namal Growth Fund
Manager's Selling Price Rs. 8.98 (per unit) Managers Buying Price Rs. 8.40 (per unit) NOTE: * After deducting exit fees
Namal Income Fund
Manager's Selling Price Rs. 10.54 (per unit) Managers Buying Price Rs. 10.42* (per unit) NOTE: *After deducting exit fees
Pyramid Unit Trust
Manager's Selling Price Rs. 5.65 Managers Buying Price Rs. 5.26
Ceybank Unit Trust
Manager's Selling Price Rs. 5.82 Managers Buying Price Rs. 5.45
Ceybank Century Growth Fund
Manager's Selling Price Rs. 8.08 Managers Buying Price Rs. 7.92
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