The Investor Sentiment - Equity and investments forum for Sri Lankans
Search
 
 

Display results as :
 


Rechercher Advanced Search

Latest topics
» PB. N0000 (People's Bank)
Today at 6:01 pm by Ethical Trader

» Sri Lanka President drops assassination bombshell, accuses India
Today at 6:00 pm by Ethical Trader

» BOC.N0000 ( Bank of Ceylon)
Today at 5:52 pm by Ethical Trader

» රුපියලේ ඉරණම
Today at 5:50 pm by Ethical Trader

» Sri Lanka gets US$1bn eight-year loan from China Development Bank
Today at 8:06 am by serene

» Sri Lanka 3-month Treasuries yield up 20bp at auction
Today at 7:48 am by The Invisible

» Sri Lanka seeks joint venture with Indian Oil unit for Trinco oil tanks
Today at 7:46 am by The Invisible

» Sri Lanka stocks down 0.33-pct, rupee steady
Today at 7:45 am by The Invisible

» Global stocks mostly fall as Fed signals more US rate hikes ahead
Today at 7:44 am by The Invisible

» SAMP.N0000 (SAMPATH BANK PLC)
Today at 7:39 am by The Invisible

» Plantation sector updates
Yesterday at 5:22 pm by කිත්සිරි ද සිල්වා

» Fed Rate hike , Rs Devaluation PART 2 : Should CSE be like this? Whose FAULT is it?
Yesterday at 3:14 pm by Yin-Yang

» Banking Sector
Yesterday at 11:17 am by lanka

» Sri Lanka needs prudent fiscal policy to retain confidence, refinance debt: Economist
Yesterday at 9:51 am by The Invisible

» EPF needs governance overhaul, proxy advisor, to invest in Sri Lanka stock market
Yesterday at 9:49 am by The Invisible

» 17-pct of Sri Lankans stunted: World Bank Human Capital Index
Yesterday at 9:45 am by The Invisible

» Coalition politics hurt Sri Lanka liberalization drive: Harsha
Yesterday at 9:44 am by The Invisible

» Sri Lanka President calls to expand Nixon shock as rupee falls
Yesterday at 9:43 am by The Invisible

» Sri Lanka new car registrations down 40-pct in September
Yesterday at 9:39 am by The Invisible

» Sri Lanka stocks up 0.37-pct, rupee ends marginally lower
Yesterday at 9:38 am by The Invisible

» Sri Lanka’s Nations Trust Bank gets US$50mn from Dutch lender
Yesterday at 7:58 am by serene

» JKH shares trade Rs1.1bn worth at 126-127/share in today’s trades
Tue Oct 16, 2018 8:45 pm by PANTOMATH

» Only 8-pct of Sri Lanka’s 2018 budget promises progressing on track: Verité
Tue Oct 16, 2018 7:14 pm by serene

» වෙළෙඳපොළ වැටුණු මොහොතේ නිමල් රු. බිලියන 2 ක කොටස් අරන්
Tue Oct 16, 2018 11:35 am by Ethical Trader

» බැඳුම්කර මගඩියෙන් අර්ථසාධක අරමුදලට වූ පාඩු පියවා ගන්න මහ බැංකුව සිවිල් නඩුකර පවරයි
Tue Oct 16, 2018 11:32 am by Ethical Trader

» සිංගර් කොටස් ගනුදෙනුවෙන් පසු ශුද්ධ විදේශීය ගලායාම රු. බිලියන 8 ඉක්මවයි
Tue Oct 16, 2018 11:23 am by Ethical Trader

» Hayleys buys balance 9.47-stake in Singer Sri Lanka
Tue Oct 16, 2018 8:24 am by yellow knife

» Sri Lanka's All Share index falls below 5,800 points
Tue Oct 16, 2018 7:50 am by serene

» Sri Lanka stocks end 0.70-pct lower, rupee lose some gains
Tue Oct 16, 2018 7:33 am by The Invisible

» Sri Lanka gilt yield curve flattens amid currency pressure
Tue Oct 16, 2018 7:30 am by The Invisible

» Global stocks mixed as oil gains amid scrutiny of Saudi Arabia
Tue Oct 16, 2018 7:24 am by The Invisible

» චීන සංවර්ධන බැංකුවේ සරණින් රුපියල අළු ගසා නැගිටියි
Mon Oct 15, 2018 6:11 pm by serene

» Will take care of debt issues of Belt and Road projects: China
Mon Oct 15, 2018 6:07 pm by serene

» සිංගර් ඉතුරු කොටස ධම්මික අද මිල දී ගනී
Mon Oct 15, 2018 4:57 pm by The Invisible

» ලංකා හා මහජන බැංකු කොටස් අලෙවියක්
Mon Oct 15, 2018 12:23 pm by nihal123

» රුපියල ශක්තිමත් කිරීමට අතේ ඇති ඩොලර් විසි කිරීමේ අවාසිය
Mon Oct 15, 2018 9:32 am by The Invisible

» Global stocks stumble as Trump attacks Fed
Mon Oct 15, 2018 9:29 am by The Invisible

» අහිමි වෙන ඉරාන තේ වෙළෙඳපොළ වෙනුවට රජය විකල්ප සොයාගෙන නෑ
Mon Oct 15, 2018 9:28 am by The Invisible

» Sri Lanka apparel exports up 7.8-pct in Aug despite Brexit hit
Mon Oct 15, 2018 9:25 am by The Invisible

» 'Shock not over' as Asian stocks extend slide
Mon Oct 15, 2018 9:24 am by The Invisible

» "The unreasonable man" - Rohan Pallewatte
Sun Oct 14, 2018 10:55 am by කිත්සිරි ද සිල්වා

» අනං මනං! #/+?.<>
Sat Oct 13, 2018 7:09 pm by Yin-Yang

» Investing in stocks - how to find the best time to buy or sell
Sat Oct 13, 2018 5:15 pm by nihal123

»  How To Identify Stock Market Direction (Trends) Part 1
Sat Oct 13, 2018 5:06 pm by nihal123

» Backroom moves over Sri Lanka Chief Justice pick
Sat Oct 13, 2018 12:22 pm by කිත්සිරි ද සිල්වා

» Sri Lanka makes second forced bond sale, yields up
Sat Oct 13, 2018 8:31 am by The Invisible

» Sri Lanka stocks end 0.40 percent lower, rupee in sharp rebound
Sat Oct 13, 2018 8:30 am by The Invisible

» Sri Lanka's Lion Brewery regrets leaving Indian market
Sat Oct 13, 2018 8:28 am by The Invisible

» Sri Lanka looks to shed massage parlour image for billion dollar wellness industry
Sat Oct 13, 2018 8:22 am by The Invisible

» ලෝක වෙළඳපොලේ තෙල් මිල ඉහළට
Fri Oct 12, 2018 5:32 pm by nihal123

October 2018
SunMonTueWedThuFriSat
 123456
78910111213
14151617181920
21222324252627
28293031   

Calendar Calendar

Disclaimer


Information posted in this forum are entirely of the respective members' personal views. The views posted on this open online forum of contributors do not constitute a recommendation buy or sell. The site nor the connected parties will be responsible for the posts posted on the forum and will take best possible action to remove any unlawful or inappropriate posts.
All rights to articles of value authored by members posted on the forum belong to the respective authors. Re-using without the consent of the authors is prohibited. Due credit with links to original source should be given when quoting content from the forum.
This is an educational portal and not one that gives recommendations. Please obtain investment advises from a Registered Investment Advisor through a stock broker

Delay in 2017 Budget move locks billions of capital in listed firms

Go down

Delay in 2017 Budget move locks billions of capital in listed firms

Post by Backstage on Mon Oct 23, 2017 10:21 am

Delay in 2017 Budget move locks billions of capital in listed firms

Monday, 23 October 2017 01:19

Govt. urged to gazette previously-announced lifting of restrictions imposed on foreign-controlled PLCs via Land (Restrictions on Alienation) Act of 2013
Further delay may impact $ 13 b investment projects envisaged in Port City; divestiture of Hilton and Hyatt and execution of PPPs
Steradian Capital says CSE’s market capitalisation of $ 20 b is equivalent to value of only four-and-a-half-square kilometres of Colombo
Colombo’s market capitalisation four times less than regional peers due to policies discouraging foreign investors
Capital of companies and family wealth offices stuck in land and building; 2017 Budget move implementation will free up billions, fund next phase of economic value creation


By Nisthar Cassim

A near year-long delay in gazetting a 2017 Budget-approved liberalisation move is locking up billions of capital in listed firms and discouraging a higher inflow of foreign investment into the country, according to property sector experts.

In November last year, the Government via the 2017 Budget promised to introduce laws which would enable Public Limited Companies (PLCs) even with 51% foreign ownership the freehold right to land.

However, despite almost a year having passed, it hasn’t been gazetted yet and the delay and continuing ambiguity has jeopardised the country›s chances of attracting a higher inflow of foreign investments and additional economic value creation across various business sectors.

“Ideally, if Sri Lanka is keen to draw higher foreign investments for every economic or business sector, those which are best-in-class globally must be encouraged to take controlling stakes. This cannot be done at present because most of listed companies have land and property in them and under the Land (Restrictions on Alienation) Act of 2013 there are prohibitions on transfer of land of a company where foreign shareholding is direct or indirectly 50% or above. This 49% foreign ownership limit discourages foreign investors who are looking to buy a controlling stake in a listed entity,” Real Estate specialists Steradian Capital said.

“The current ambiguity is a big concern and discourages real higher foreign investment not only in real estate but in other economic sectors too,” Steradian Capital Co-Founders Hardy Jamaldeen and Archie Warman told the Daily FT.

“This issue needs to be fixed soon if work to be started on promotion of Port City projects, estimated to generate $ 13 billion investment. It has a bearing on effective implementation of much-discussed Public-Private Partnerships policy of the Government and the planned divestiture of non-strategic State assets such as Hotel Developers (Hilton), Hyatt, etc., which have a portion of freehold land,”they added.

“In the Port City, the office space envisaged is 70% of Singapore office space. If the Government is keen to attract FDIs and make Port City a success as well as harness Sri Lanka’s strategic hub status benefits, then some of the archaic restrictions must be eased,” they emphasised.

They noted that CSE’s market capitalisation of $ 20 billion was equivalent to the value of only four-and-half-square kilometres of Colombo. Market capitalisation of regional peers is at least one time the GDP, which is $ 80 billion, so Colombo›s market capitalisation is four times less.

“Why we are of that shape and size is due to because of the lack of foreign participation due to the absence of encouraging policies. At the moment foreigners are only taking passive stakes in companies and that too as a means of diversification of geographical portfolio/exposure,” they said, adding that “higher market capitalisation and greater liquidity will attract big foreign funds and investors».

“As a country we must bring in higher quality technology, best-in-class processes and improve the skill set of our talent pool to be internationally competitive. If this is our aspiration we must pave the way from a regulatory perspective to enable world leaders in specific industries to either setup in Sri Lanka or take controlling stakes in listed companies to develop our local companies and take them to the next level. At present one of the options is a very slow burn whilst the controlling stake is not an option at all.

“If you look at the top 10 listed companies, how many people can buy or sell control? Maybe a very few. To improve size and shape and productivity, Sri Lanka needs to have a bigger cluster. Singapore transformed Marina Bay by easing restrictions and attracting a host of like-minded companies to develop that infrastructure in terms of property assets.”

Another point stressed by Hardy and Archie was that the capital of companies, conglomerates and family wealth offices on their balance sheet is tied up in land and buildings. Given the fact that borrowing cost is around 16-17%, the balance sheets are stretched.

“They don›t have the capacity or new capital for the next growth phase. If these segments can do a sale and long lease back arrangement, instead of borrowing at high cost, they can free up capital for expansion and next growth phase. This will trigger a wider economic growth scenario with more jobs and income to people, which the Government is keen to ensure. For this to happen we need a higher degree of foreign investors.”

The duo also pointed out that whilst free hold land issue remained very sensitive politically, “it is the exact point which the Government needs to decide whether it sincerely wants FDIs or not to usher greater development”.

“The sensitivities may be valid if small plots of land from individuals are being grabbed by foreigners, but via a new listed entity or existing listed entities, foreign investment will be for larger development purpose such as socio-economic infrastructure including affordable to mid-tier housing, leisure, mixed developments office space and industrial warehouses,» they emphasised.

“Sri Lanka is a very compelling destination within emerging markets. This is most certain for long-term property development, especially infrastructure in the property space such as office space, industrial warehouses, for which existing locked-up capital must be freed,” Steradian Capital co-founders added.

They dismissed the notion that the property sector is experiencing a bubble. Steradian is of the view that from a critical evaluation Sri Lanka remains underdeveloped, hence scope for further growth in the property market is logical.

“For the envisaged demand 10 years from now, we will need more capacity – be it office or industrial warehouse space, leisure properties or affordable housing,” they added.
avatar
Backstage
Top contributor
Top contributor

Posts : 3288
Join date : 2014-02-24

Back to top Go down

Re: Delay in 2017 Budget move locks billions of capital in listed firms

Post by Ethical Trader on Mon Oct 23, 2017 11:37 am

Thanks Back for sharing.
avatar
Ethical Trader
Top contributor
Top contributor

Posts : 4425
Join date : 2014-02-28

Back to top Go down

Back to top


 
Permissions in this forum:
You cannot reply to topics in this forum