Sri Lanka Foreign Roadshow Book

8/10/2019 Sri Lanka Foreign Roadshow Book

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Invest in Sri Lanka

Be a Part of South Asias

Strongest Growth Story


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Colombo Stock Exchange

An attractive opportunity to invest in growth

SINCE the end of Sri Lankas three-decade civil war in 2009, the country has

been on a fast track to achieving growth unmatched by most economies. SriLanka is poised to pull off average GDP growth of 8% per annum over the

next three years, buoyed by sound scal and monetary policies, unprecedentedgrowth in infrastructure development, evolution as a tourism and transshipment hub,and a rapidly growing middle class. Sri Lankas medium-term GDP growth forecastsrank it as South Asias fastest-growing economy.

The Colombo Stock Exchange (CSE) trades at a discount and offers attractivereturns, underlined by strong corporate earnings potential. The CSEs low correlationto developed markets compared to most other emerging markets provides aunique diversi cation opportunity to investors seeking emerging market exposure.Furthermore, the CSE, together with the Securities and Exchange Commission(SEC) of Sri Lanka, is taking concrete measures to increase free oat and marketdepth in order to improve investibility.

Given Sri Lankas robust growth and the CSEs attractive returns, the Sri Lankanequity and debt markets offer a unique opportunity to investors in an investment eraimpacted by economic growth worries.


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Sri Lanka is a land brimming wit great promise. We are ready for a great leap forward through which

we will transform our nation to be asmart nation, with smart people.

President Mahinda Rajapaks


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Sri Lankas economy has been on an upward trajectory since the end of the three-decade civil war inMay 2009. This signi cant growth has been a result of the peace dividend, along with subsequentlyintroduced well-executed development plans. Sri Lanka currently boasts South Asias highest GDPgrowth, conducive scal and monetary policy, and favorable socio-economic conditions, which togethercreate an attractive investment destination.

Sri Lankas growth story to continue with average GDP growth of 8% per annum overthe next three years

Since the end of the war, the Sri Lankan economy has grown at an impressive 7.5% per annum (Exhibit 1) wellabove that of the global economy and indicative of resilience in the wake of domestic and global challenges. TheCentral Bank of Sri Lanka (CBSL) expects the economy to grow at an average 8% per annum over the next threeyears, even amid the global slowdown; this growth rate is much higher than that expected in other emerging anddeveloping economies (Exhibit 2).

Exhibit 1: Sri Lankas GDP growth to maintainupward trajectory Exhibit 2:Sri Lankas growth to continue outpacingthat of the global economy

Source: Central Bank of Sri Lanka, Department of Census and

Statistics

Source: World Economic Outlook (WEO)

Per capita income to reach USD4,000 by 2016E

Sri Lankas per capita income jumped to USD3,282 by the end of 2013 from USD1,421 in 2006 on the backof signi cant GDP growth. Sri Lankas per capita income is signi cantly higher than that of other South Asiancountries and compares well with more advanced economies such as Indonesia and Thailand (Exhibit 3). TheSri Lankan government expects per capita income to rise to USD4,000 by 2016E; this would be indicative of astrong middle-income economy and represents a per capita income CAGR of 7% for 2014E-2016E (Exhibit 4).

Sri Lanka South Asias fastest-growing economy


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Exhibit 3: Sri Lankas per capita income is far aheadof its South Asian peers Exhibit 4:Next three years to see a 22% increase inper capita income

752 1,257 1,489

1,7552,923

3,557

5,480

01,0002,0003,0004,0005,0006,000

B a n g

l a d e s

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k i s t a n

I n d i a

V i e t n a m

S r i

L a n

k a

I n d o n e s

i a

T h a

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USD GDP per capita (2012) : Sri Lanka vs. peers

Source: The World Bank Source: Central Bank of Sri Lanka

Despite growth, in ation to be maintained at mid-single digits

After the war, both headline and core in ation dropped to single digits from the double digits that prevailed duringthe wartime (Exhibit 5). The country has reined in in ation to single digits for close to ve years. (Exhibit 6).

Headline in ation came in at 4.7% during December 2013 (the lowest gure in the past 22 months), below5.6% reported in November 2013. In ation continued at mid-single digit levels despite a decline in the averageweighted prime lending rate (AWPR) over 2013, with interest rates ending the year at 9.96% (compared with

14.14% during end-2012). This decline in in ation during the year was due to the moderation of global commodityprices, contraction of scal de cit, lagged effect of the effective monetary policy stance and lack of signi cantdomestic supply-side shocks. The government continues to target mid-single digit in ation over the next threeyears and has focused on obtaining nancing from non-in ationary sources, such as debt and equity markets,and through direct nancing from external sources.

Exhibit 5: Post-war core in ation has averaged 6.2% Exhibit 6: Headline in ation less than 10% for 59consecutive months

8.57.7

13.6

7.0 7.0 6.95.8

4.5

0.0

5.0

10.0

15.0

2006 2007 2008 2009 2010 2011 2012 2013

% Core inflation annual average (2006-2013)

6.9

2.1

4.7

0.02.04.06.08.0

10.012.0

J a n - 1

0

M a y - 1

0

O c t - 1 0

M a r - 1 1

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1

J a n - 1

2

M a y - 1

2

O c t - 1 2

M a r - 1 3

A u g - 1

3

D e c - 1

3

% Headline and core inflation movement(Jan 2010- Dec 2013)

Headline Core Headline (annual avg.)

Source: Department of Census and Statistics, Central Bank ofSri Lanka

Source: Department of Census and Statistics, Central Bank ofSri Lanka


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Robust exchange rate policy has minimized currency risk

Over the past two years, the government has responded to a high import bill with a more exible exchangerate policy that better re ects market conditions. In February 2012, the government depreciated the Sri Lankanrupee (LKR) against major foreign currencies; the rupee depreciated 12.1% against the US dollar (Exhibit 7)throughout 2012. Furthermore, the rupee depreciated 4.3% to reach a high of LKR133.1/USD in September2013 (from the start of the year). Subsequently, the rupee rebounded and appreciated 1.7% from September toDecember 2013 (to reach LKR130.8/USD on December 31 2013). With the rupee now stable at LKR131/USD,2013 witnessed an overall rupee depreciation of only 2.5% against the USD. The government maintains that thedepreciation is a corrective measure to curb the trade de cit and make exports competitive.

Recovery in balance of payments provides impetus for a stable currency

Sri Lankas balance of payment (BOP) has continued to strengthen, with a USD985m surplus, growing from a

USD151m surplus in 2012 (Exhibit 8). The CBSL expects the BOP to further improve to an estimated USD3.7bnin 2016E due to a projected increase in capital in ows and improving trading conditions. The government is alsocommitted to reducing Sri Lankas dependency on imported crude oil which currently accounts for ~25% ofimports. With several coal and renewable energy projects underway, Sri Lanka is looking at a favorable energymix by 2015, with dependency on imported crude oil falling to 8% from 31% in 2010.

Exhibit 7: Rupee to stabilize at LKR131 per US dollarin the medium term Exhibit 8:Balance of payment to continue tostrengthen through 2016E

100

150

200

250

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7

M a y - 0 7

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LKR LKR movement against USD, EUR and GBP(Jan 2007-Dec 2013)

LKR/USD LKR/EUR LKR/GBP

Source: Bloomberg Source: Central Bank of Sri Lanka


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Government targets 3.8% budget de cit by 2016E without compromising economic growth

Sri Lankas scal de cit has steadily declined since 2009, and the government projects a further drop to 3.8% ofGDP in 2016E (Exhibit 9). The government expects to achieve greater scal consolidation through expenditurerationalization policies, while maintaining public investment at levels that support economic growth (Exhibit 10).Tax reform policies implemented since 2011 have also increased revenue mobilization.

Exhibit 9: A 3.8% scal de cit target set for 2016E Exhibit 10: Disciplined recurrent expendituremanagement should lower scal de cit

Source: Central Bank of Sri Lanka Source: Central Bank of Sri Lanka

Prudent debt management strengthens countrys balance sheet

Sri Lanka has never been in sovereign debt default and has a good track record of managing debt. The debt-to-GDP ratio steadily declined starting 2009, and stands at 78.3% in 2013 (declining from 79.1% in 2012). Thegovernment targets a debt-to-GDP ratio of 65% by 2016E, mainly on the back of economic expansion (Exhibit11).

Exhibit 11: Debt-to-GDP to fall to 65% by 2016E

Source: Central Bank of Sri Lanka


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Sri Lankas credit ratings re ect strong economic trajectory

Sri Lankas sovereign credit ratings have improved since the end of the war, and this has helped it accessinternational capital. The country has maintained its ratings over the past three years (Exhibit 12) despite manycountries having their sovereign ratings downgraded.

Exhibit 12: Sri Lankas sovereign credit ratings remained largely unchanged in 2013

B+negative

B+positive

BB-stable

BB-stable BB-stable

2009 2010 2011 2012 2013

Fitch

Bnegative

B+stable

B+positive

B+stable

B+stable

2009 2010 2011 2012 2013

Standard & Poor's

B1stable

B1positive

B1positive B1

stable

2010 2011 2012 2013

Moody's

Source: Fitch, S&P and Moodys

Fitch Ratings maintained its rating and believes Sri Lankas resilient growth performance, healthy humandevelopment and strong payment record should offset weakness in its scal and external balance sheet andmoderate domestic savings relative to investment needs.S&P af rmed its rating due to the countrys robust growth prospects, progress in addressing a number of itsstructural weaknesses through scal measures as well as success in maintaining in ation at single digits.However, the rating agency cautioned against Sri Lankas weak external liquidity and a moderately high and

increasing net external liability position.Moodys con rmed Sri Lankas stable rating, but revised its outlook to stable from positive. The rating agencystated the revision was due mainly to the decline in the countrys strength of its external payment position overthe past two years and a slowdown in the pace of its scal consolidation.

Increased foreign direct investments (FDIs) A sign of growing investor con dence

Sri Lankas attractive investment climate has helped the country capture substantial FDI in ows. The governmentis estimated to have achieved FDI in ows of approximately USD1.5bn in 2013 (from USD1.3bn in 2012) andexpects this positive momentum to continue. The governments infrastructure development strategy and taxincentives, as well as the countrys favorable socio-economic indicators, have enhanced investor con dence;this, together with the relaxation of exchange control regulations, should boost FDI in ows.


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Exhibit 13: FDI in ows to reach USD1.4bn in 2013

Source: Ministry of Finance and Planning, Board of Investment of Sri Lanka, Central Bank of Sri Lanka

Improvements in socio-economic indicators create an environment conducivefor investments

Doing Business Index Ranked #1 in South Asia

Sri Lanka is the highest-ranking country in South Asia on the International Finance Corps Doing BusinessIndex. Although the countrys position slipped four places to reach 85 in 2014, it continues to remain in the #1position across South Asia (Exhibit 14).

Human Development Index Reached High Human Development status in 2012

In 2012, Sri Lanka improved its HDI status to High Human Development from Medium Human Developmentand is ranked 92 out of 187 countries. In addition, Sri Lankas HDI value has been higher than the worldaverage since 2005 (Exhibit 15).

Exhibit 14: Sri Lanka #1 in Ease of Doing Businessin South Asia since 2013 Exhibit 15:Sri Lanka moved into High HumanDevelopment status in 2012

2014 2013 2012

Sri Lanka 85 81 89

Maldives 95 95 79

Nepal 105 108 107

Pakistan 110 107 105

Bangladesh 130 129 122

India 134 132 132

Bhutan 141 148 142

Afghanistan 164 168 160

Source: Central Bank of Sri Lanka, World Bank Source: Human Development Reports (1980-2012)

0.30.4

0.50.60.70.8

1 9 8 0

1 9 8 2

1 9 8 4

1 9 8 6

1 9 8 8

1 9 9 0

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1 9 9 4

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1 9 9 8

2 0 0 0

2 0 0 2

2 0 0 4

2 0 0 6

2 0 0 8

2 0 1 0

HDI Value Sri Lanka's HDI status compared with theregion and world: 1980-2012

Sri LankaHigh Human DevelopmentMedium Human DevelopmentSouth AsiaWorld


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The Sri Lankan government hasidenti ed the Tourism sectoras a key growth area in post-

con ict development with anambitious target of attracting

2.5m visitors by 2016

Board of Investments in Sri Lank


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The Sri Lankan government targets a continuation of the countrys growth trajectory in the mediumterm, resulting in a USD100bn economy by 2016E (from an estimated USD67bn in 2013). Sri Lankacontinues to provide an attractive alternative, driven by a number of growth areas, against the currentglobal economic backdrop impacted by growth worries.

#1 Tourism remains the center of attraction in Sri Lankas growth storyTourist arrivals have steadily increased each year since the end of the war due to improved security and havedoubled since 2009. The number of arrivals rose 27% year-over-year (YoY) in 2013, (Exhibit 16). Similarly,foreign exchange earnings from tourism grew at a CAGR of 36% starting 2010 to reach USD1.5bn in 2013(Exhibit 17). The Sri Lanka Tourism Development Authority (SLTDA) targets 2.5m tourist arrivals by 2016E (ata 25% CAGR over 2014E-2016E), with foreign exchange earnings from tourism growing at a 29% CAGR over2014E-2016E to reach USD3.1bn by 2016E (Exhibit 17).

Exhibit 16: Tourist arrivals to more than double by2016E Exhibit 17:Tourism industry to contribute USD3.1bn inforeign exchange by 2016E

Source: SLTDA, Central Bank of Sri Lanka Source: SLTDA, Central Bank of Sri Lanka

Sri Lanka was named as the #1 travel destination for 2013

Travel guide leader Lonely Planet named Sri Lanka as the top travel destination for 2013. British Airways toonamed Sri Lanka as its top travel destination for 2013, highlighting the diversity offered in a relatively smallcountry. Earlier, National Geographic named Sri Lanka the top travel destination for 2012, pointing to thecountrys beaches, wildlife, heritage and historical sites.

Sri Lanka targets USD100bn economy by 2016E, driven bygrowth in tourism, transportation and export-oriented industries

4 4 7

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6 5 4

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8 5 5

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2 0 0 9

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2 0 1 4 E

2 0 1 6 E

Total tourist arrivals: 2008-2016E

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2010 2011 2012 2013 2014E 2016E

USDm Foreign exchange earnings from tourism: 2010-2016E


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Tourism industry continues to attract public and private investments

The government is promoting tourism through airport expansions, infrastructure development, tax incentivesand promotional campaigns. Local and foreign hotel developers are investing heavily in anticipation of increasedtourist arrivals. Some of these development projects are detailed below:

Several domestic-listed companies have drawn up plans to open hotels in several parts of the country, includingTrincomalee, Yala, Kalpitiya, Wilpattu and Galle; these hotels would contribute towards the SLTDAs 2015 target of 30,000hotel rooms.

In addition, several international chains are set to launch hotels around Sri Lanka. Hyatt Hotels Corporation aims to launchthe Hyatt Regency Colombo in 2014. The Sheraton brand, owned by US-based Starwood Hotels & Resorts WorldwideInc., has signed an agreement to manage and operate the Sheraton Colombo hotel. This USD80m, 306-room luxury hotelis expected to start operations in 2014. Shangri-La, a Hong Kong-based hotel chain, is investing USD350m in a 6-star,500-room hotel on Galle Face Green, Colombo 01, expected to commence operations in a couple of years. The companyhas also invested USD150m in a 300-room hotel in Hambantota, to be opened in 2014.

A number of integrated resort projects are in the pipeline, namely the Waterfront Development Project (by JohnKeells Holdings PLC), Crown Sr i Lanka, and the Queensbury (by Vallibel One PLC), with their estimated completiondates scheduled within three to five years.

#2 Port expansion plans aimed at promoting Sri Lanka as a leading transshipment hub

Sri Lanka has the potential to become a transshipment hub in Asia owing to its strategic location on severalshipping routes, coupled with ongoing investment and expansions. The countrys container port traf c increasedto 4.3m twenty-foot equivalent units (TEUs) in 2013 from 3.1m TEUs in 2006 at a CAGR of 4.9% (Exhibit 18).The announcements made in late-2013 regarding the free-port concept at the Colombo and Hambantota portsshould only serve to fuel this growth trajectory.

Exhibit 18: Sri Lankas container port traf c increased at 4.9% CAGR over 2007-2013

3.1

3.7 3.73.5

4.0 4.2 4.2 4.3

0.0

1.0

2.0

3.0

4.0

5.0

2006 2007 2008 2009 2010 2011 2012 2013

Container port traffic (TEUm): 2006-2013

Source: World Bank data, Sri Lanka Ports Authority, Central Bank of Sri Lanka

Expansions underway to increase port capacity to 32.5m TEUs by 2015E

The Colombo ports current capacity is 7.5m TEUs; the completion of two additional terminals will increasecapacity to 12.5m TEUs by 2015E. With the Colombo port reaching full capacity, the completion of theHambantota port will ease container traf c and equip Sri Lanka to handle more ships. Upon completion in 2015,the Hambantota port will be able to handle 20m TEUs per year and bene t from its proximity to internationalshipping routes, which are utilised by ships from Asia and Europe. The Hambantota ports location makes the


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port a convenient stop for ships from China that need to refuel, break bulk cargo and supply replenishment. Theport can also provide ships from China ample space to set up extensive warehouses for storage and break bulkhandling, which Singapore and Thailand have had dif culty providing in recent times. The new capacity additionswill place Sri Lanka on par with Singapore, one of the largest transshipment hubs in Asia.

#3 Outsourcing industry to fuel growth in export earnings

Knowledge services industry to generate USD1bn in foreign exchange earnings by 2016E

The knowledge services industry comprising information technology (IT), business process outsourcing (BPO)and knowledge process outsourcing (KPO) generates earnings of about USD600m (4% of exports) in foreignexchange and provides approximately 65,000 jobs. It grew at a CAGR of 25% over 2008-2012 (Exhibit 19).

Sri Lanka is ranked 21st in AT Kearneys (a global management consulting rm) Global Services Location Indexafter entering the index only three years ago. In October 2013, the country was also awarded the OutsourcingDestination of the Year, presented by the National Outsourcing Association, UK. Sri Lanka stands to gain furtherfrom this sector, given the countrys high literacy rate of more than 90%, good standard of English and cost

advantages (as much as 30% lower than other countries involved in outsourcing). The Sri Lankan governmentis promoting the industry through tax incentives and investments in training and development, with a target of150,000 jobs and over USD1bn of foreign exchange earnings by 2016E.

Apparel industry continues to be largest contributor to exports, with earnings target of USD5bn by2015E

The apparel industry contributed roughly 40% of Sri Lankas export revenues in 2013, thus making it the singlelargest contributor. Apparel sector exports rebounded recording growth of 8% in 2013 after experiencing a 5%decline in 2012. The Sri Lankan apparel industry currently provides services to top international brands, such asVictorias Secret, Nike, Tommy Hil ger, Next and Marks & Spencer. This industry directly employs approximately300,000 and indirectly employs an additional 600,000.

In recent budgets, the government extended several incentives to the apparel industry, including depreciationallowances and lower sea port and airport levies, to help it become more competitive with international peers.The industry is targeting revenues of USD5bn in 2015E at an 8% CAGR (Exhibit 20).

Exhibit 19:Knowledge services industry tocontribute USD1bn in foreign exchangeearnings by 2016E

Exhibit 20: Apparel industry to contribute USD5bn inforeign exchange earnings by 2015E

193 256270 310

400600

1,000

0

200

400

600

800

1,000

1,200

2007 2008 2009 2010 2011 2012 2016E

USDm IT/BPO industry earnings: 2007-2016E

Source: SLASSCOM, Central Bank of Sri Lanka Source: Central Bank of Sri Lanka


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#4 Increased consumer demand and foreign investments drive growth in real estateand nancial services

Local and foreign investment appetite has driven a real estate boom

Real estate demand in urban areas has been buoyant over the past two years owing to an expanding middleclass and interest from the expatriate community. Urban land prices should see double digit growth after 2013 onaccount of this high demand, as per the ndings of the Research Intelligence Unit (a Sri Lanka-based researchand consultancy rm). Meanwhile, several development projects have been planned or are under construction inColombo, which should be supported by the 2014 budgets proposal of imposing only a 15% tax charge on leaseof land to foreigners. Some of the afore-mentioned development projects are listed below:

Altair, Sri Lankas tallest condominium, located near the Beira Lake and consisting of 400 units, is set for completion by2017. The project is valued at USD250m.

The OnThree20 apartment project, developed by John Keells Holdings PLC, is a USD65m project expected to feature 475apartment units. The company aims to complete this by December 2014.

Iconic is another luxury apartment complex being set up in Rajagiriya (a suburban city south of Colombo). With aninvestment of USD30m, this project will house 188 apartments and is expected to be completed in mid-2014.

Financial services sector expands to keep pace with economic developments

The banking sectors total loan book grew at a 16% CAGR over 2009-2013 on the back of increased economicactivity (Exhibit 21). Over 2008-2013, the number of licensed commercial bank (LCB) branches and other outletsincreased at a CAGR of 4% and the number of ATMs grew at a CAGR of 9% (Exhibit 22).

Exhibit 21: Banking sectors loan book hasexpanded significantly since 2009 Exhibit 22:Bank branches and ATM networks haveseen considerable growth since 2007

Source: Central Bank of Sri Lanka Source: Central Bank of Sri Lanka

The Sri Lankan government has extended several incentives to the nancial services sector in order to continuesupporting economic growth and personal consumption. One proposal allows LCBs to borrow up to USD50meach year from 2013-2015, without obtaining approval from the Exchange Control Department. Another proposalallows National Development Bank (NDB) and DFCC Bank (DFCC) to raise up to USD250m each from foreignsources over a 10-year period in order to provide long-term nancing to key growth sectors. The government willunderwrite the exchange risks of these borrowings. In line with this, DFCC issued USD100m in debt in October2013.


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Now we are ready to take of.The opportunity is in the time to

come and we invite you to lookpositively at Sri Lanka and do youown research and understand thecountry and see how best you can

make use of these opportunitiesyet to come.

Chairman, Securities and ExchangCommission of Sri Lan


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The Sri Lankan equity market offers a rare and attractive alternative to investors in an investment eraimpacted by economic growth worries. Backed by the countrys robust economic growth, the Sri Lankancapital market is well set to offer attractive returns to investors who are keen to be a part of this emergingmarket success story. There are several strong incentives for entering the Sri Lankan capital market.

CSE has had a bull run unmatched by most other markets since 2009

As on 31 December 2013, the CSE had listed on it 289 companies covering 20 sectors, with a market capitalizationof approximately USD19bn. The CSE witnessed remarkable growth after the end of the war, with the benchmark

All Share Index (CSEALL) peaking at 7,800 points in February 2011. Given the bourses unprecedented growthlevels, Bloomberg named it one of the best-performing stock markets in the world for the years 2009 and 2010.

The CSEALL, on average, performed better (over June 2009-December 2013) than global indices (Exhibit 23)and some of the best-performing regional indices (Exhibit 24), although growth over the immediate post warperiod eased after mid-2011 due to a market correction.

Positive market sentiment and conducive regulatory environment has driven market recoverysince mid-2012

However, market fundamentals remain strong, with corporates performing well in the wake of the boomingeconomy. The market grew 22% by end-2013 after it bottomed out in May 2012; improved market sentimentsand the easing of market liquidity drove this growth.

Exhibit 23:The CSEALL has signi cantlyoutperformed global and developedmarket indices

Exhibit 24: The CSEALL has also outperformed some ofthe best-performing regional indices

0

80

160

240

320

400

Jun-09 Mar-10 Dec-10 Sep-11 Jun-12 Mar-13 Dec-13

CSEALL performance against global indices:(June 09 - Dec 13)

CSEALL Dow Jones FTSE 100MSCI World DAX

0100

200

300

400

Jun-09 Mar-10 Dec-10 Sep-11 Jun-12 Mar-13 Dec-13CSEALL Bombay (BSE 500)Jakarta (JCI) Philippines (PASHR)Thailand (SET) Hanoi (VNINDEX)MSCI Emerging Market Index

CSEALL performance against regional indices:(June 09 - Dec 13)

Source: Bloomberg Source: Bloomberg

Sri Lankas capital market on a higher growth trajectorysupported by strong market fundamentals


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Market capitalization/GDP of 30% indicates further growth potential

Market capitalization has more than doubled since 2009 and stood at LKR2,460bn (approximately USD19bn)as at 31 December 2013 (Exhibit 25). Nevertheless, there is further growth potential since the CSEs marketcapitalization/GDP is still low compared to that of most other emerging markets in the region (Exhibit 26). Thegovernment expects the CSEs market capitalization to reach LKR6,500bn by 2016E.

Exhibit 25: The CSEs market capitalization hasdoubled since 2009 Exhibit 26:Market capitalization/GDP is still low vs.other emerging markets in the region

17%29% 30%

43%53%

77%87%

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Market cap/GDP ratio 2012

Source: Bloomberg, Central Bank of Sri Lanka Source: Bloomberg

Sri Lankan equity market trades at a discount despite strong fundamentals

The CSEALL currently trades at a low P/E valuation compared with most of its regional peers, despite thecountry being one of the fastest-growing economies in the world. The CSEALLs current valuation of 12.8x is ata 22% discount to its regional peers. Similarly, the CSEALLs forward valuations also trade at discounts to peers(Exhibit 27), despite expected growth in market EPS over the next 12 months (Exhibit 28).

Exhibit 27: The CSEALLs P/E valuation at a discountto regional peers Exhibit 28:The CSEALLs EPS growth to continuedespite a modest dip in 2013

05

10

15

20

S r i

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V i e t n a m

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X P/E valuation - Sri Lanka vs. regional peers

Current 1 yr fwd 2 yr fwd

116

376449

492 466525

0

100

200

300400

500

600

700

2009 2010 2011 2012 2013 2014E

CSEALL Index forward 2009-2014E


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LKRbn Market capitalization: 2008-2016E


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Most sectors in the CSEALL trading below market and historical valuations

The Hotels & Travel, Diversi ed and Beverage, Food & Tobacco sectors have consistently traded at higherP/E multiples than the market over the past four years, thus re ecting their growth trajectory. However, mostother sectors with similar growth potential, such as Manufacturing, Power and Energy, Land & Property andConstruction & Engineering, still trade below the market (Exhibit 29). The P/B valuation shows a similar trend,with most sectors trading below the four-year market average and historical sector valuations, thereby presentingattractive investment opportunities (Exhibit 30).

Exhibit 29: Most sector P/Es are below marketaverage and historical valuations Exhibit 30: Trend is similar on P/B basis

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Sector P/E ratio: 2010 - 2013

2010 20112012 2013

Avg. market P/E 2010-2013

0

1

2

3

4

5

6

B a n k s , F i n a n c e & I n s u r a n c e

B e v e r a g e

, F o o d & T o b a c c o

C h e m i c a l s & P h a r m a c e u t i c a l s

C o n s t r u c t i o n & E n g i n e e r i n g

D i v e r s i f i e d

H o t e l s & t r a v e l s

I n v e s t m e n t T r u s t s

L a n d & P r o p e r t y

M a n u f a c t u r i n g

P l a n t a t i o n s

P o w e r & E n e r g y

S e r v i c e s

T e l e c o m m u n i c a t i o n

Sector P/BV ratio: 2010 - 2013

2010 2011

2012 2013

Avg. market P/BV 2010-2013

Source: Colombo Stock Exchange Source: Colombo Stock Exchange

The CSE provides a good diversi cation option for emerging market investors

The CSEALL index has little or no correlation with major worldwide indices, thus making it a good diversi cationoption for investors (Exhibit 31).

The MSCI Emerging Market Index has strong correlation with some of the major indices, while the CSEALL hasweak correlation to the same indices (Exhibit 32). This provides a good diversi cation option for those lookingto invest in emerging markets.


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Exhibit 31: The CSEALL has very low correlation withglobal markets Exhibit 32:The CSEALL is a better diversi cation optionvs. MSCI Emerging Market Index

0%

100%

200%

300%

400%

Jun-09 Jul-10 Sep-11 Oct-12 Dec-13

CSEALL vs. global indices :June 2009 - Dec 2013

CSEALL MSCI emergingDJI S&P 500FTSE 100 Hang SengStraits Times MSCI world

MSCI EmergingMarket Index

CSE All ShareIndex

DJI 0.634159 0.456548

S&P 500 0.632342 0.383773

FTSE 100 0.774584 0.382894

HSI 0.935409 0.256034

STI 0.900236 0.401249

MSCI World 0.746769 0.162613


Increased foreign investor con dence in the market witnessed through netforeign buying

In 2012, the market witnessed a net positive ow of foreign investments of LKR39bn, epitomizing foreign investorcon dence in Sri Lankas economic prospects. This trend continued into 2013 with net foreign in ows reachingLKR23bn from net foreign out ows of LKR32bn in 2010 and LKR19bn in 2011 (Exhibit 33).

Foreign turnover levels increased to LKR72bn during 2013, signi cantly higher than the levels seen over the

past two years. Foreign turnover came in at LKR59bn in 2011, while it reached LKR53bn in 2012 (Exhibit 34).

Exhibit 33: The CSE witnessed a signi cant increasein net foreign buying in 2012 and 2013 Exhibit 34:Foreign turnover increased in 2013 despitelower overall market turnover

-50

0

50

100

150

2009 2010 2011 2012 2013

LKRbn Foreign inflows: 2009 - 2013

Purchases Sales Net foreign flow

0

200

400

600

2009 2010 2011 2012 2013

LKRbn Market turnover split: 2009 - 2013

Foreign Domestic

Source: Colombo Stock Exchange Source: Colombo Stock Exchange


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Banks, Finance & Insurance sector the top pick of foreign investors in 2013

During 2013, Banks, Finance & Insurance witnessed the most net foreign in ows, followed by the Beverage,Food & Tobacco and Diversi ed sectors. The Motors sector also returned net in ows of close to LKR2.0bn overthe same period (Exhibit 35).

Exhibit 35: Sectors that witnessed net positive in ows during 2013 (in LKRbn)

2009 2010 2011 2012 2013

Banks, Finance & Insurance (3.78) (6.42) (9.45) 2.89 10.71

Beverage, Food & Tobacco 0.60 2.81 (3.96) 4.02 5.63

Diversi ed 0.55 (17.13) (4.45) 29.68 4.77

Motors 0.02 (0.72) (0.69) (0.68) 1.85 Telecommunication (0.49) (1.61) (0.30) (0.09) 0.95

Manufacturing (0.34) (0.65) (1.16) 1.37 0.68

Information Technology 0.00 (0.14) 0.47 (0.15) 0.32

Land & Property (0.04) (0.90) (1.53) 0.22 0.16

Footwear & Textiles (0.16) (0.30) (0.04) 1.31 0.12

Chemicals & Pharmaceuticals (0.42) (0.24) 0.05 0.00 0.08

Plantation (0.17) (0.17) (0.16) (0.02) 0.07

Stores & Supplies 0.01 (0.02) (0.27) (0.00) 0.00

Net In ows (0.79) (32.19) (19.04) 38.67 22.78

Source: Colombo Stock Exchange


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Liquidity remains a concern, but corrective action is being taken to address this issue

Market liquidity contracted during the early part of 2012; however, volumes have picked up since then andare now on par with the ve-year historical average (Exhibit 36). Factors that contributed to this spike includethe CSEs decision to relax some of its rules relating to broker credit. Furthermore, a rebound in retail investorsentiment has also contributed to the markets increased liquidity. One of the key concerns of investors hasbeen the lack of liquidity in the market, which constricts block trades and easy exits. Even though the CSEALLcurrently has a free oat of ~25%, most companies within the index have a free oat of less than 5%. In a bidto increase liquidity, the Securities and Exchange Commission (SEC) of Sri Lanka issued a directive statingthat Main Board-listed companies should have a minimum public free oat of 20%. This continuous listingrequirement is effective from 1 January 2014.

Exhibit 36: Market liquidity has improved following improvements in broker credit and market sentiment

050

100150200250300

J a n - 0

8

M a r - 0 8

M a y - 0 8

J u n - 0

8

A u g - 0

8

O c t - 0

8

D e c - 0

8

F e b - 0

9

A p r - 0 9

J u n - 0

9

A u g - 0

9

O c t - 0

9

D e c - 0

9

F e b - 1

0

A p r - 1 0

J u n - 1

0

A u g - 1

0

O c t - 1

0

D e c - 1

0

F e b - 1

1

A p r - 1 1

J u n - 1

1

A u g - 1

1

O c t - 1

1

D e c - 1

1

F e b - 1

2

A p r - 1 2

J u n - 1

2

A u g - 1

2

O c t - 1

2

D e c - 1

2

F e b - 1

3

A p r - 1 3

J u n - 1

3

A u g - 1

3

O c t - 1

3

m The CSEALL's average daily volume: 2008 to 2013

Volume Level Average

Source: Colombo Stock Exchange

S&P SL 20 Proxy to Sri Lankas growth story

The S&P SL 20, which was introduced in 2012, consists of the 20 largest blue chip companies in Sri Lankabased on total market capitalization, with the highest liquidity listed on the CSE. Based on calculated historicalprices, the S&P SL 20 has consistently mirrored the CSEALLs performance, providing a good proxy for overallmarket performance (Exhibit 37).


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S&P SL 20 includes some of the most liquid stocks in the CSE

Given the criteria to be included in the S&P SL 20, most companies in the index have much higher free oatsthan those of the rest of the market; this factor increases the investibility of the index (Exhibit 38).

Exhibit 37: S&P SL 20 has gained more than 272%since 2009 Exhibit 38:Most companies in S&P SL 20 have higherfree oats than the broader market

0%

200%

400%

J a n - 0

9

J u n - 0

9

N o v - 0

9

M a y - 1 0

O c t - 1 0

A p r - 1 1

S e p - 1

1

M a r - 1 2

A u g - 1

2

J a n - 1

3

J u l - 1 3

D e c - 1

3

CSEALL vs. S&P SL 20: 2009- 2013

S&P 20 Index CSEALL Index

Source: Colombo Stock ExchangeNote: S&P SL 20 index information prior to 2012 is compiled basedon index constituents

Source: Bloomberg, company reports

The S&P SL 20 has a good representation of Sri Lankas growth sectors

The S&P SL 20, based on market capitalization, mainly comprises companies in the Food, Beverage & Tobacco(35%), Diversi ed (29%) and Banks, Finance & Insurance (21%) sectors (Exhibit 39).

The companies in the index have strong exposure to the economys key growth areas, thus providing a gatewayto investors looking to bene t from the Sri Lankan growth story (Exhibit 40). The S&P SL 20 has 50% exposureto the Beverage, Food & Tobacco sector which should see strong growth in the medium term on the back ofper capita income growth and an expanding middle class. Given the governments budget incentives, increasingdemand in personal consumption and the robust business climate, the Banking, Finance & Insurance sector isalso positioned to perform well; the index has an exposure of 26% to this sector. The indexs 6% exposure tothe Telecom sector should bene t from increasing mobile and Internet penetration and from Sri Lankas movetowards becoming a commercial hub within the region. The index has only 4% exposure to the burgeoningtourism sector, but this should increase rapidly as corporate revenues bene t from growth in tourist arrivals.


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Exhibit 39: S&P SL 20 weighted towards F&B andDiversi ed companies Exhibit 40:S&P SL 20 highly exposed to sectors drivenby consumer demand

21%

35%

29%

2%2%

5%6%

S&P SL 20 composition

Banks, Finance & Insurance Beverage, Food & Tobacco

Diversified Hotels and Travels

Manufacturing Oil Palms

Telecommunication

50%

4%6%

26%

4% 10%

S&P SL 20 exposure to sectors

Food and Beverage Tourism

Telecom Financial

Real estate Transportation and Logistics

Other

Source: Colombo Stock Exchange Source: Company Annual Reports

The governments budget proposals stimulate capital market growth

The Sri Lankan government is committed to providing incentives for investors in order to stimulate market

activity and expansion. The governments 2013 and 2014 budget proposals introduced a number of measuresaimed at market participation at different stakeholder levels:

A three-year half-tax holiday for companies seeking a new listing, with at least a 20% oat Exemption of stamp duty for transferring shares to and from margin-trading accounts A reduction of the tax rate on unit trust management companies to 10% from the current 28% The full allowance of expenses incurred on the establishment of Broker Back Of ce systems to be compliant with CSE

requirements in relation to risk management systems

The allowance of direct investments in foreign currency in unit trusts without a Securities Investment Account (SIA) The appointment of a Presidential Task Force to implement a Capital Market Development Master Plan to oversee the

development of the countrys capital market


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Corporate debt market expands in 2013 and signals further growth potential

Corporate bonds worth LKR68.3bn issued in 2013 The CBSL targets growing the corporate bond market to USD10bn by 2016E from its current levels. Thegovernment took the rst step in this direction by removing withholding tax on interest earned on listed debt(previously 10%) starting January 2013. As a result, debentures worth LKR68.3bn were issued in 2013 (fromLKR12.5bn in 2012), with approximately 84% of these issues coming from banks and other nancial institutions.

Exhibit 41: Over 80% of funding came from nancial institutions

49%

3%

32%

16%

Funds raised through listed debentures in 2013

LCB s LS Bs LFCs Non- financial instit utions

Source: Central Bank of Sri Lanka

In a low interest rate environment, Sri Lankan corporate issuances present attractive investmentopportunities

Despite a recent spike in yields due to the impact of a global asset sell-off, yields on the governments sovereigndebt issuance have been on a downward trend since mid-2012. Meanwhile, corporate debenture issuances inSri Lanka carried rates of 13-15% (the effective annual interest rate), well above the government bond rate of11%. With government interest rates on a decline and a low interest rate environment in most economies, localcorporate issuances present attractive investment opportunities, providing healthy returns with relatively lowrisks. Furthermore, in 2013, two of Sri Lankas leading savings and development banks leveraged increasinginvestor appetite by completing bond issuances state-owned National Savings Bank raised USD750m inSeptember and DFCC Bank raised USD100m in October.

Sri Lankan debt market still dominated by government securities

Government securities accounted for the majority of Sri Lankas LKR3tn debt market. Although the bulk ofgovernment debt is denominated in rupees, the government has successfully issued several foreign currencybonds. Thus far, the government has issued six sovereign bonds; the most recent issuance, a ve-year USD1bnsovereign bond with a 6.0% coupon, was oversubscribed 3.2 times. At the same time, foreign holdings of SriLankan debt increased to about 23% in 2012 from 3% in 2004.


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Unit trust investments Provides access to professional fund management services

As on 30 November 2013, Sri Lanka had 44 unit trusts, including income, growth, gilt-edged, money market,balanced, Shariah, equity and IPO funds.

Participation in unit trusts doubled in 2013, with assets under management (AUM) coming in at LKR47bn orUSD360m (compared with AUM of LKR23bn in 2012), with a majority of exposure to xed income and equityinvestments. This phenomenal growth is largely due to recent budget proposals, which include tax incentivesfor participating in unit trusts, and the removal of restrictions on foreign participation, thereby creating anotheravenue for foreigners to take part in the market.

Sri Lankas 2013 budget proposed the taxation of unit trust management companies be brought down to 10%from 28% in order to strengthen the unit trust industry. Unit trust management companies, along with the SEC,are presently undertaking a major public awareness campaign about the industry, with the aim of strengtheningits retail investor base.

Exhibit 42 Unit trust industrys AUM has doubled in 2013

6,798 9,408

22,191 22,671 23,076

47,155

0

20,000

40,000

60,000

2008 2009 2010 2011 2012 2013

LKRm Assets under management : 2008 - November 2013

Equity Fixed income Other

Source: Unit Trust Association of Sri Lanka


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Over the past three years, most unit trusts have outperformed the overall market

Unit trusts have provided investors high returns since 2009 and over the past three years, most unit trusts haveoutperformed the CSEALL (Exhibit 43).

Exhibit 43 Returns of top ve unit trusts (by market cap) has been higher than market return for most periods

PERFORMANCE

YTD

31-Dec-12Beginning NAV date in the performance calculationBENCHMARK PERFORMANCE

CSE All Share Index

FUND PERFORMANCE

Cey bank Unit Trust

Eagle Income Fund OPEN-ENDED

OPEN-ENDED BALANCED FUNDS

BALANCED FUNDS

MONEY-MARKET FUNDS

OPEN-ENDED

OPEN-ENDED

OPEN-ENDED GILT-EDGED FUNDS

INCOME FUND

Eagle Gilt Edged Fund

National Equity Fund

Cey bank Savings Plus Fund

12 MONTHS

30-Dec-12

Unit NAV as at

30-Nov-13

2.34% -5.13%7.92% -10.25%

2.81% -9.13%4.14% -17.75%

15.27% 15.75%17.69% 4.06%

10.27% 19.29%11.30% 27.01%

10.27% 22.80%11.19% 29.85%

11.96%

26.18

28.12

10.18

10.56

10.59 27.51%13.30% 38.45%

24 MONTHS

30-Nov-11

36 MONTHS

30-Nov-10

Source: Unit Trust Association of Sri Lanka

* Above table only includes unit trusts that have been in operation before 30 November 2010

Please note that past performance of unit trusts is not indicative of future performance

How to invest in unit trustsIn order to invest in a unit trust, an individual should obtain an application and an offer memorandum from asales agent or a fund management company, and then hand over the completed form, along with a cheque infavor of the management company or the place from which the form was received. The minimum that can beinvested is LKR1,000, which will be inclusive of a 5% front-end fee. The number of units allotted to an individualis calculated by dividing the initial investment by the offer price on the day on which the payment is made.


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Unit trust investments can bring signi cant bene ts to retail investors

Unit trusts manage a portfolio of asset classes and provide investors options to diversify investments Funds are administered by professional fund managers at a reasonable cost Unit trust investment is hassle-free since there is minimum administrative work, and even this is often handled by the fund

management company

Investments can be liquidated at any time, as fund managers are obliged to buy back investments at the daily-quoted rates Investors can choose from a wide range of funds, including equity growth, xed income and balanced portfolio funds,

depending on their risk appetite. Sri Lanka also offers Shariah-compliant funds

Dividends, capital gains and sales proceeds from unit trusts are tax free The 2013 budget, in a bid to popularize Sri Lankan unit trusts among foreign nationals and non-resident Sri Lankans,

proposed that direct investments in unit trusts in foreign currency need not be channelled through an SIA Investors are protected by independent trustees, who are legally appointed under a deed of trust, to safeguard the

interests of unit holders

Most unit trust management companies in Sri Lanka are backed by banks or nancial institutions, thereby providing theunit trusts the same stability as their parent institutions


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We want to tell our investors all overthe world that Sri Lanka is open forbusiness, it is an attractive destination.The time to invest is now because SriLanka is still undervalued and youwill have good values as far as yourinvestments are concerned.

Governor, Central Bank of Sri Lanka


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The CSE provides both local and foreign investors an opportunity to diversify their portfolios through investment inequity shares, units of closed-end funds, corporate debt and Sri Lankan government securities. The informationset out below will provide potential investors with the information they require to begin investment in the CSE:

How to open a CDS account

If an investor wishes to conduct share transactions through the CSE, he/she should open a securities accountin the CDS through a participant organization (a Stockbroker or a custodian bank). The applicant has to submitthe duly completed Client Account Opening Forms, together with the relevant supporting documents, to theparticipant.

After scrutinizing the account opening documents, inclusive of the supporting documents, the CDS will registerthe applicant in the CDS system.

Once the registration process is completed, the CDS system will generate an acknowledgment slip (CDS Form13) with the Client Account Number. This acknowledgment would be handed over to the participant con rmingthe CDS account opening.

Documents required

Details regarding the required documents for different individuals/entities can be found at the links below:

Local companies, foreign companies and designated accounts (margin trading accounts, collateral accounts andsegregated accounts):http://www.cds.lk/service/opening-client-accounts-companies.html#sectionA

Resident individuals, plantation employees (if the NIC is not available) and internally displaced persons (IDPs):http://www.cds.lk/service/opening-client-accounts-resident-individuals.html#sectionA

Non-resident foreigners and non-resident Sri Lankans:http://www.cds.lk/service/opening-client-accounts-non-resident-individuals.html

Funds:http://www.cds.lk/service/opening-client-accounts-funds.html

How to invest in the Colombo Stock Exchange


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Trading on the CSE

Equity sharesTo trade in the secondary market, the investor must contact his/her stockbroker. This can be done through apersonal visit, by phone or fax or through brokers who provide online trading. As at 31 December 2013, 284companies were listed on the CSE.

Debt

As at 31 December 2013, 142 corporate debt securities were listed on the CSE. All government debt andcorporate debt securities are tradable through the Automated Trading System (ATS).

Market indices

The CSE has two main price indices (the CSEALL and S&P SL 20) and 20 sector price indices. Index values arecalculated on an ongoing basis during trading sessions, with closing values published at the end of regular tradingsessions.

The All Share Price Index (CSEALL)

CSEALL is a market capitalization-weighted index wherein the weight of a company is taken as the number ofordinary shares listed on the market. This weighting system allows the price movements of larger companiesto have a greater impact on the index. This kind of weighting system was adopted on the assumption that thegeneral economic situation has a greater in uence on larger companies than on smaller ones.

The S&P Sri Lanka 20 (S&P SL 20)

The index consists of the largest blue chip companies based on total market capitalization, with the highestliquidity listed on the Sri Lankan stock market. The S&P SL 20 follows the methodology of Standard & Poorsindices in order to provide consistency, transparency and liquidity. The index was designed to be a basis fortradable products, acting as a cost-effective and relatively simple method of replicating trading instruments, withpossible use as index funds and exchange-traded funds (ETFs). To warrant inclusion in the S&P SL 20, stockshave to meet the standards set for size, liquidity and nancial viability.

Size: Stocks are included only if they have a oat-adjusted market capitalization of more than LKR500m as of the re-balancing reference dates. Stocks listed on the index have a three-stock buffer to be listed, i.e. a stock has to rank withinthe top 23 in order to remain listed. If a stock listed on the index experiences a fall in market capitalization to less thanLKR500m, but is still at more than LKR300m, the stock will remain listed, given that it still ranks within the top 23 andmeets all other required criteria.

Liquidity: In order to ensure the maintenance of liquidity, a minimum six-month average daily value traded (ADVT) ofLKR1m is required. At each reconstitution, which occurs annually, companies listed on the index must maintain their ADVTat LKR0.7m-1m in order to remain eligible.

Financial viability: In order to maintain eligibility, stocks must continue to be pro table, which is determined by earningpositive net income over the 12-month period preceding the re-balancing reference rate.

Total Return Indices (TRIs)

The CSE also publishes TRIs, which re ect returns due on both share price movements and dividend income.


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Trading details

Exhibit 44: Trading Hours [Monday - Friday (Except CSE holidays)]

Market phase Hours

Open auction call 9.00 am-9.30 am

Regular trading 9.30 am-2.30 pm

Market close 2.30 pm

Open Auction Call

During open auction call (9.00 am-9.30 am), the system accepts orders. These orders can be amended andcancelled during this session. However, no trades take place during this stage. Orders during this period areheld in the ATS and will be forwarded to the execution engine. At 9.30 am, the system starts matching ordersaccording to an algorithm. It establishes the opening price and determines the orders to be executed accordingto the rules of the open auction call session (Automated Trading Rule 4).

Regular Trading

During regular trading (9.30am- 2.30pm), new orders are continually matched to existing orders in the orderbook. If an order cannot be executed, it is stored in the order book.

Market Halt

In the event that the S&P SL20 Index drops 5% within a day from the previous market days close, a Market

Halt is imposed on all equity securities for a period of 30 minutes. If the above scenario takes place at 2.00pm or later, the market is halted and closed at 2.30 pm. Broker rms may cancel any pending orders during theMarket Halt. However, broker rms cannot enter new orders or amend pending orders during the Market Halt.

Transaction costs

Equity

Exhibit 45: Transaction fees

Fee Transactions up to LKR50m Transactions over LKR50m

Brokerage fees 0.640% Negotiable ( oor 0.2%)CSE fees 0.084% 0.0525%

CDS fees 0.024% 0.015%

SEC cess 0.072% 0.045%

Share transaction levy 0.300% 0.300%

Total 1.120% 0.6125% (minimum)


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The CSE trading records indicate the brokerage as zero for transactions of more than LKR50m. Broker rmsare expected to insert 0.2000% or a higher percentage negotiated between the client and the brokerage beforeprinting bought/sold notes.

Corporate Debt

Brokerage - Negotiable Fees (SEC, CSE & CDS) - 2bps (Divided equally among the three institutions)

Government Debt

Brokerage - Negotiable

Closed-End Funds

Exhibit 46: Transaction fees

Fee Percentage

Brokerage fees Negotiable with a cap of 1%

CSE fees 0.02%

CDS fees 0.01%

SEC cess 0.02%

Share Transaction Levy will not be applicable for units of closed-end funds

SettlementExhibit 47: Settlement details

Security type

Equity T+3

Corporate debt T+1 or T+2 on Delivery vs. Payment

Government debt T+1 or T+2 on Delivery vs. Payment

Infrastructure and systems

The CSE offers advanced infrastructure and systems for secondary trading of equity and debt instruments usingfully integrated trading and clearing systems.


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The Central Depository System (CDS)

The Central Depository Systems (Pvt.) Ltd. is the depository for all listed securities in Sri Lanka. It provides asafekeeping facility and an electronic record of all listed securities that are dematerialized. The CDS offers arange of depository services to member rms, custodian banks, account holders and listed companies, including:

Client account opening Client account maintenance Security certi cate dematerialization (deposit) Security certi cate re-materialization (withdrawal) Transfer of shares Co-ordinate funds settlement

Rights issues and share splits Share repurchases Takeovers and mergers Provision of entitlements Monthly statement publication Transmission nominations

The Automated Trading System (ATS)

This is a robust, event-driven push technology trading platform built on a rule-based, distributed, fault-tolerantsystem, enabling it to be highly reliable, scalable and exible to meet the CSEs business requirements. ATS is amulti-asset class trading system where shares, corporate debt, government debt and units of closed end fundsare traded. This ef cient and transparent system provides high-speed execution of transactions and has variousfeatures, such as:

Information on price and volumes of securities traded Online reporting of trades executed Online reporting of price indices Corporate information Information on the status of pending orders Order matching on a price-time priority


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Regulatory framework

The CSE is licensed by the SEC to operate as a stock exchange. It is Sri Lankas only stock exchange.The SEC has rules for securities de-listing, takeovers and mergers and insider dealing. Further details areavailable at www.sec.gov.lk .

The CSE has in place stockbroker rules, listing rules for listed companies, as well as ATS and CDS rules. Theseare available at www.cse.lk .

CSE Governance structure

Exhibit 48: Governing body

Name Of ce

Mr. Krishan Balendra Chairman

Mr. Vajira Kulatilaka Elected Director

Mr. Asanga Seneviratne Elected Director

Mr. M. R. Prelis Elected Director

Mr. Ray Abeywardena Elected Director

Mr. Dakshitha T. W. Thalgodapitiya Appointed Director

Mr. Hiran M C de Alwis Appointed Director

Ms. M.A.D.S. Jeeva Shirajanie Niriella Appointed Director

Other stock market-related information

The CSE publishes stock market activities on a daily, weekly, monthly and annual basis. These include:

Stock market daily and weekly reports Monthly market reports and quarterly reports Annual reports Data libraries

Listing rules Member regulations CDS rules


40/50

BARTLEET RELIGARE SECURITIES (PVT) LTD.

Level G, Bartleet House, 65, Braybrooke Place,Colombo 02.Tel: +94 11 5220200Fax: +94 11 2434985E-mail: [email protected]: www.bartleetreligare.comMr. R. MuralidaranManaging Director

ASSETLINE SECURITIES (PVT) LTD.

120, 120A, Pannipitiya Road, Battaramulla.Tel: +94 11 4700111, 2307366Fax: +94 11 4700112, 2307365E-mail: [email protected]: http://www.assetline.lk/stock_brokering.htmlMr. Deepta EkanayakeManaging Director

ACUITY STOCKBROKERS (PVT) LTD.Level 6, Acuity House, No. 53,Dharmapala Mawatha, Colombo 03.Tel: +94 11 2206206Fax: +94 11 2206298-9E-mail: [email protected]: www.acuity.lkMr. P.P.S. FernandoDirector / CEO

SOMERVILLE STOCKBROKERS (PVT) LTD.137, Vauxhall Street, Colombo 02.Tel: +94 11 2329201-5, 2332827, 2338292-3Fax: +94 11 2338291E-mail: [email protected]. Shalini DiasDirector

JOHN KEELLS STOCK BROKERS (PVT) LTD.

186, Vauxhall Street, Colombo 02.Tel: +94 11 2306250, 2342066-7Fax: +94 (0) 11 2342068E-mail: [email protected]: www.jksb.keells.lkMr. Tivanka RatnayakeChief Executive Of cer

J B SECURITIES (PVT) LTD.

150, St. Joseph Street, Colombo 14.Tel: +94 11 2490900, 77 2490900, 77 2490901Fax: +94 11 2430070, 2446085, 2447875E-mail: [email protected]: www.jbs.lkMr. Murtaza JafferjeeChief Executive Of cer

ASHA PHILLIP SECURITIES LTD.

2nd Floor, Lakshmans Building,321, Galle Road, Colombo 03.Tel: +94 11 2429100Fax: +94 11 2429199E-mail: [email protected]: www.ashaphillip.netMr. Dimuthu AbeysekeraDirector / CEO

LANKA SECURITIES (PVT) LTD.

228/1, Galle Road, Colombo 04.Tel: +94 11 4706757, 2554942Fax: +94 11 4706767E-mail: [email protected]: www.lsl.lkMr. Kosala GamageManaging Director / CEO

Members


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ASIA SECURITIES (PVT) LTD.

Level 21, West Tower, World Trade Centre,Echelon Square, Colombo 01.Tel: +94 11 2423905, 5320000Fax: +94 11 2336018E-mail: [email protected]: www.asiasecurities.netMr. Sabri Marikar Chief Executive Of cer

CT SMITH STOCKBROKERS (PVT) LTD.

4-14,Majestic City, 10, Station Road, Colombo 04.Tel. +94 11 2552290-4Fax: +94 11 2552289E-mail: [email protected]: www.ctsmith.lkMr. Rohan FernandoManaging Director

NATION LANKA EQUITIES (PVT) LTD.44, Guildford Crescent, Colombo 07.Tel: +94 11 4889061-3, 2684483Fax: +94 11 2688899E-mail: [email protected]: www.nlequities.comMr. Janaka PalapathwalaDirector / General Manager

FIRST CAPITAL EQUITIES (PVT) LTD.No. 01, Level 02, Lake Crescent, Colombo 02.Tel: +94 11 2145000Fax: +94 11 5736264E-mail: inquiries@ rstcapital.lkWebsite: www. rstcapital.lkMr. Seedantha KulatilakeChief Executive Of cer

CAPITAL TRUST SECURITIES (PVT) LTD.

42, Mohamed Macan Markar Mawatha, Colombo 03.Tel: +94 11 2174174, +94 11 2174175Fax: +94 11 2174173E-mail: [email protected]: www.capitaltrust.lkMr. Tushan WickramasingheManaging Director

NDB SECURITIES (PVT) LTD.

5th Floor, NDB Building,40, Navam Mawatha, Colombo 02.Tel: +94 11 2314170 to 2314178Fax: +94 11 2 314180E-mail: [email protected]: www.ndbs.lkMrs. Prasansini MendisChief Executive Of cer

S C SECURITIES (PVT) LTD.

2nd Floor, 55, D.R. Wijewardena Mawatha,Colombo 10.Tel: +94 11 4711000, 11 4711001Fax: +94 11 2394405E-mail: [email protected]: www.sampathsecurities.lkMr. Harsha FernandoDirector / Chief Executive Of cer


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Trading members

CAPITAL ALLIANCE SECURITIES (PVT) LTD.

Level 5, Millennium House,46/58 Navam Mawatha, Colombo 02.Tel: +94 11 2317777Fax: +94 11 2317788E-mail: [email protected]: www.capitalalliance.lkMr. Harinlal AturupaneManaging Director / CEO

CANDOR EQUITIES LTD.

Level 8, South Wing, Millennium House,46/58 Nawam Mawatha, Colombo 02.Tel: +94 11 2359100Fax: +94 11 2305522E-mail: [email protected]: www.candorh.comMr. Ravi AbeysuriyaDirector / CEO

SMB SECURITIES (PVT) LTD.47, Dharmapala Mawatha, Colombo 03.Tel: +94 11 4388138Fax: +94 11 2339292E-mail: [email protected]: www.smbsecurities.lkMr. C.N. Priyankara

Acting Chief Executive Of cer

SERENDIB STOCK BROKERS (PVT) LTD.156, 3rd oor, Walukarama Road, Colombo 03.Tel: +94 11 2565635Fax: +94 11 2565604E-mail: [email protected]: www.serendibsb.comMr. Naushervan BegChief Executive Of cer

FIRST GUARDIAN EQUITIES (PVT) LTD.

32nd Floor, East Tower, World Trade Centre,Echelon Square, Colombo 01.Tel: +94 11 5884400 (Hunting)Fax: +94 11 5884401E-mail: info@ rstguardianequities.comWebsite: www. rstguardianequities.comMr. Rohan GoonewardeneManaging Director / CEO

IIFL SECURITIES CEYLON (PVT) LTD.

27th Floor, East Tower, World Trade Centre,Echelon Square, Colombo 01.Tel: +94 11 2333000Fax: +94 11 2333383E-mail: info.ceylon@ii cap.comMr. Dhushyanth WijayasingheChief Executive Of cer

TAPROBANE SECURITIES (PVT) LTD.

2nd Floor, 10, Gothami Road, Colombo 08.Tel: +94 11 5328200Fax: +94 11 5328277E-mail: [email protected]: www.taprobanestocks.comMr.Niranjan Niles

Acting Chief Executive Of cer

TKS SECURITIES (PVT) LTD.

19-01, East Tower, World Trade Centre,Echelon Square, Colombo 01.Tel: +94 11 7857799Fax: +94 11 7857857E-mail: [email protected]: www.tks.lkMr. Hussain GaniChief Executive Of cer


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RICHARD PIERIS SECURITIES (PVT) LTD.

55/20, Vauxhall Lane, Colombo 02.Tel: +94 11 7448900, 5900800Fax: +94 11 2330711E-mail: [email protected]. Jayantha PereraChief Executive Of cer

SOFTLOGIC STOCKBROKERS (PVT) LTD.

6, 37th Lane, Queens Road, Colombo 03.Tel: +94 11 7277000-98Fax: +94 11 7277099Email: [email protected]: www.softlogicequity.lkMr. Dihan DedigamaChief Executive Of cer

CLARIDGE STOCKBROKERS (PVT) LTD.10, Gnanartha Pradeepa Mawatha, Colombo 08.Tel: +94 11 2697974Fax: +94 11 2689250E-mail: [email protected]. P. N. A. EpaChief Executive Of cer

LOLC SECURITIES LTD.Level 18, West Tower, World Trade Centre,Echelon Square, Colombo 01.Tel: +94 11 7880880Fax: +94 11 2434771Mr. Sriyan GurusingheCEO / Managing Director

NAVARA SECURITIES (PVT) LTD.

2nd Floor, 45/2, Braybrooke Street, Colombo 02.Tel: +94 11 2358700 / 20Fax: +94 11 2358701Website: www.nws.lkMr. Nadun JayathilakeChief Executive Of cer

FIRST CAPITAL MARKETS LTD.

(Trading Member - Debt)

75, Arnold Ratnayake Mawatha, Colombo 10.Tel: +94 11 2639898, 11 2681888Fax: +94 11 2639899, 11 2681460E-Mail: info@ rstcapital.lkWeb site: www. rstcapital.lkMr. A. J. IsmailChief Executive Of cer

CAPITAL ALLIANCE LIMITED.

(Trading Member - Debt)

Level 5, Millenium House

46/58, Nawam Mawatha, Colombo 2.Tel: +94 11 2317777Fax: +94 11 2317788Mr. Gihan HemachandraChief Executive Of cer


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Custodian banks

Commercial banks have special participant status in the CDS and provide services to investors. These include:

Access to all stockbrokers Fund remittance Maintenance of portfolios for investors

The banks include:

BANK OF CEYLON

4, Bank of Ceylon Mawatha, Colombo 01.Tel: +94 11 2448348, 2338742/55

Email: [email protected]. W. Y. BandulaChief Manager Investments

DEUTSCHE BANK

P O Box 314, No.86, Galle Road, Colombo 03.Tel: +94 11 4791115, 2447062, 2438057

Email: [email protected]. Susan LappenHead of Operations Trust and Securities Service s

BANQUE INDOSUEZC/o Hatton National Bank Limited,Cinnamon Garden Branch, 251,Dharmapala Mawatha, Colombo 07.Tel: +94 11 2681720, 2686537, 2689176Email: [email protected]. Sureni MapatunaManager Remittance

HATTON NATIONAL BANK LIMITEDHNB Towers, 479, T B Jayah Mawatha, Colombo 10.Tel: +94 11 2661640, 2664664Email: [email protected]. Ashok GunasekeraChief Accountant

CITI BANK NA65C, Dharmapala Mawatha, P O Box 888,Colombo 07.Tel: +94 11 4794700, 2447316/8, 2447318, 2449061,2328526Email: [email protected]. Mihiri KrishnamoorthyVice President Securities & Fund Service

THE HONGKONG & SHANGHAI BANKINGCORPORATION LIMITED24, Sir Baron Jayathilake Mawatha, Colombo 01.Tel: +94 11 4793370 Ext. 7494Email: [email protected]. Shehan PattersonSenior Vice President HSBC Securities Services

COMMERCIAL BANK OF CEYLON LIMITEDCommercial House, 21, Bristol Street,P O Box 853, Colombo 01.Tel: +94 11 2533154, 2445010-15, 238193-5,430420, 336700Email: [email protected]. Duminda De SilvaSenior Manager Capital Markets

PEOPLES BANKHead of ce - Treasury, 5th Floor, 75,Sir Chittampalam A Gardiner Mawatha, Colombo 02.Tel: +94 11 2206782, 2781481, 2327841-9, 2446316-15, 2430561, 2324967Email: [email protected]. Clieve FonsekaHead of Treasury & Investment Banking


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STANDARD CHARTERED BANK37, York Street, P O Box 112, Colombo 01.Tel: +94 11 2480450, 4794400, 2480000Email: [email protected]. Krishan Maddegoda,Head of Securities Services

UNION BANK OF COLOMBO LIMITED64A, Galle Road, Colombo 03.Tel: +94 11 234110, 2370870Email: [email protected]. Asanga TennakoonChief Manager Zone II

SAMPATH BANK LIMITED

110, Sir James Peiris Mawatha, Colombo 02.Tel: +94 11 4730114, 2300260, 4730630Email: [email protected]. Hiranthi De Silva

Acting DGM-Corporate Credit

NATIONS TRUST BANK LIMITED

256, Sri Ramanathan Mawatha, Colombo 15.Tel: +94 11 2307850, 4313131Email: [email protected]. Chamath MunasingheChief Manager Credit Operations

STATE BANK OF INDIA16, Sir Baron Jayathilake Mawatha, Colombo 01.Tel: +94 11 2326133-5, 2439405-6, 2447166,2472097Email: [email protected]. D. DorabaduVP Credit

PAN ASIA BANKING CORPORATION PLCHead Of ce, 450, Galle Road, Colombo 03.Tel: +94 11 2565565Email: [email protected]. Udaya ThuduwewattaHead of Margin Trading & Custodian Division

SEYLAN BANK LIMITED

Corporate Banking, Level 6, CeylincoSeylan Towers, 90, Galle Road, Colombo 03.Tel: +94 11 2456812, 2456789, 4701812, 4701819,4701829Email: [email protected]. Y Udurawana

AGM- Corporate Banking Margin Trading Unit

PUBLIC BANK BERHAD

340, R. A. De Mel Mawatha, Colombo 03.Tel: +94 11 2576289, 7290200-07Email: [email protected]. Angelo FernandoCountry Head


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Unit Trust Management Companies

NATIONAL ASSET MANAGEMENT LTD.

Union Bank Building, 64, Galle Road, Colombo 03.Tel: +94 11 2445911Fax: +94 11 2445903Mr. Avancka HerathExecutive Director Email: [email protected]: www.namalfunds.com

CEYBANK ASSET MANAGEMENT LTD.

54/C1, Ward Place, Colombo 07Tel: + 94 11 7602000Fax: + 94 11 2693475Mr. Chithral SathkumaraChief Executive Of cer Email: [email protected]: www.ceybank.com

CEYLON ASSET MANAGEMENT LTD.

281, Union Place, Colombo 02.Tel: + 94 71 7030000Fax: + 94 11 7394007Mr. Dulindra FernandoDirectorEmail: [email protected]: www.ceylonassetmanagement.com

NDB WEALTH MANAGEMENT LTD.

DHPL Building (Ground Floor),42, Nawam Mawatha, Colombo 02.Tel: +94 112303232Fax: +94 11 2303237Mr. Ruwan Perera

Assistant Vice President Email: [email protected]: www.ndbwealth.com

FIRST CAPITAL ASSET MANAGEMENT LTD.

2, Deal Place, Colombo 03.Tel: + 94 11 2639898Fax: + 94 11 2681460Mr. Dilshan WeerasekaraDeputy CEOE-Mail: info@ rstcapital.lkWeb site: www. rstcapital.lk

ORIENT WEALTH LTD.

3, 4th Floor, Lakshmi Gardens, Colombo 08.Tel: +94 11 7664444Fax: +94 11 7664449Mr. S. JeyavarmanChief Executive Of cer Email: [email protected]: www.orientwealth.lk

COMTRUST ASSET MANAGEMENT (PVT) LTD.

4 th, Floor, Majestic City,10, Station Road, Colombo 04.Tel: +94 11 5759571Fax: +94 11 2506347Mr. P. AsokanDirector CEOEmail: [email protected]: www.comtrust.lk

CANDOR ASSET MANAGEMENT (PVT) LTD.

Level 8, South Wing Millennium House,46/58, Nawam Mawatha, Colombo 02.Tel: +94 11 2359100Fax: +94 11 2314831Mr. Ravi AmarasingheFund Manager Email: [email protected]: www.cam.cando-holdings.com


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GUARDIAN ACUITY ASSET MANAGEMENT LTD.

61, Janadhipathi Mawatha, Colombo 01.Tel: + 94 11 2449500Fax: + 94 11 4739385Ms. Niloo Jayathilake

Alternate Director Email: [email protected]: www.guardianacuity.com

ARPICO ATARAXIA ASSET MANAGEMENT(PVT) LTD.

55/20, Vauxhall Lane, Colombo 02.Tel: +94 11 7448900, +94 11 5900700Fax: +94 11 2675064Mr. Ashan SebestianHead of Structured ProductsEmail: [email protected]: www.arpicoataraxia.com

CAPITAL ALLIANCE INVESTMENTS LTD.

Level 5, Millennium House, 46/58,Nawam Mawatha, Colombo 02.Tel: +94 11 2317777Fax: +94 11 2317788Ms. Ashveeni Shanthikumar Chief Investment Of cer Email: [email protected]: www.capitalalliance.lk

ASSET TRUST MANAGEMENT (PVT) LTD.

32, Castle Street, Colombo 08.Tel: +94 11 2675077Fax: +94 11 2689605Mr. Dilshan HettiarachchiCEOEmail: [email protected]

JB FINANCIAL (PVT) LTD.

150, St. Josephs Street, Colombo 14.Tel: +94 11 2490900Fax: +94 11 2430070Ms. Christine Dias BandaranaikeConsultant, Investment Management Email: info@jb nancial.lkWebsite: www.jb nancial.lk


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Colombo Stock Exchange Holidays for 2014

January

1, Wednesday

14, Tuesday

15, Wednesday

CSE Special Holiday

Tamil Thai Pongal Day / Milad-Un-Nabi (Holy Prophets Birthday)

Duruthu Full Moon Poya Day

February

4, Tuesday

14, Friday

27, Thursday

National Day

Nawam Full Moon Poya Day

Mahasivarathri Day

April

14, Monday

15, Tuesday

18, Friday

Sinhala and Tamil New Year Day / Bak Full Moon Poya Day

Additional holiday in lieu of day prior to Sinhala & Tamil New Year Dayfalling on a Sunday

Good Friday

May

1, Thursday

14, Wednesday

15, Thursday

May day

Vesak Full Moon Poya Day

Day following Vesak Full Moon Poya Day

June 12, Thursday Poson Full Moon Poya Day

July 29, Tuesday Id-Ul-Fitr (Ramazan Festival Day)

September 8, Monday Binara Full Moon Poya Day

October 8, Wednesday

22, Wednesday

Vap Full Moon Poya Day

Deepavali Festival Day

November 6, Thursday Ill Full Moon Poya Day

December 25, Thursday Christmas Day


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Disclaimer

This book is intended to provide some general information relating to the CSE. Whilst reasonable efforts have beenmade to include accurate and up-to-date information in the booklet, the CSE does not make any warranties orrepresentations regarding the accuracy, adequacy, reliability and completeness of the information.

Therefore, the CSE and its employees disclaim all liability for any loss suffered (directly or indirectly) by any personacting in reliance upon the information contained herein.


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Colombo Stock ExchangeLevel 4, West Block, World Trade Center, Echelon Square, Colombo 01, Sri Lanka.

Tel:+94 (11) 2446581, 2356456 | Fax:+94 (11) 2445279

E-mail: [email protected] | Website: www.cse.lk

Sri Lanka Foreign Roadshow Book

Documents

Transcript of Sri Lanka Foreign Roadshow Book