INVEST IN SRI LANKA
Sri Lanka Stocks Fall Most in 4 Months on Rajaratnam Arrest
By Anusha Ondaatjie and Sumit Sharma
Oct. 19 (Bloomberg) -- Sri Lanka’s benchmark stock index dropped, set for its biggest decline in four months, after Raj Rajaratnam, one of the south Asian island’s largest investors, was detained in the U.S. on insider trading charges.
The Colombo All-Share Index slumped 1.6 percent to 3,082.91 at the close, the second-biggest retreat among benchmark indexes worldwide after Pakistan. John Keells Holdings Plc, the country’s No. 1 listed company that counts Rajaratnam as its second-biggest shareholder, fell the most since March.
Asia’s best-performing stock market this year is paring gains after Sri Lankan-born billionaire Rajaratnam, 52, was told he faces a decade in prison if convicted at trial. The arrest prompted the country’s securities regulator to review Rajaratnam’s transactions in Colombo.
“This is bad news without a doubt,” Channa Amaratunga, who advises on stock and bond investments at Colombo-based C.T. Capital Pvt., said by phone. “He was one of the biggest foreign equity investors in Sri Lanka, both in his personal capacity and through Galleon,” Rajaratnam’s hedge fund firm.
Rajaratnam’s funds also hold stakes in People’s Merchant Bank Plc, DFCC Bank Ltd., National Development Bank Ltd. and Commercial Bank of Ceylon Plc, according to data compiled by Bloomberg.
Rajaratnam faces 13 fraud and conspiracy counts, many of which carry 20-year maximum sentences. Under federal sentencing guidelines, he faces 10 years in prison if convicted, Assistant U.S. Attorney Josh Klein said in court on Oct. 16.
Keeping Market ‘Clean’
Sri Lanka’s Securities and Exchange Commission said it will “collaborate” with foreign governments in their investigations.
“We don’t want a market glazed with investors of this reputation and will make every attempt to keep the Sri Lankan market clean,” Channa De Silva, director general of the commission, said in an interview today.
The All-Share index reached a record high on Oct. 13 on optimism that lower borrowing costs will boost earnings as the economy grows after a 26-year civil war ended in May.
Sri Lanka’s $41 billion economy may expand as much as 6 percent in 2010 from about 3.5 percent this year, the central bank forecasts. The benchmark interest rate is at a three-year low, and half of the Colombo All-Share Index’s gains came after the government defeated the Liberation Tigers of Tamil Eelam.
‘Sustain the Momentum’
Rajaratnam’s funds held a 9.2 percent stake in John Keells, 12.98 percent of People’s Merchant Bank Plc, and 9.8 percent of DFCC Bank Ltd. as of March 31, according to data compiled by Bloomberg. As of Dec. 31, his Galleon Diversified Fund had 10 percent in National Development Bank Ltd. and 5.21 percent in Commercial Bank of Ceylon Plc, the data showed.
John Keells fell 3.3 percent to 148 rupees. National Development lost 2 percent to 197 rupees and DFCC Bank dropped 3.2 percent to 159 rupees.
“There may be skittish sentiment initially but there are other economic forces such as falling interest rates to sustain the momentum,” said Murtaza Jafferjee, who oversees $20 million as managing director at JB Securities Pvt. in Colombo and previously managed an endowment fund for one of Rajaratnam’s charities. “Sri Lanka is the flavor of the month and there are a lot of local and overseas investors keen on investing.”
Galleon, which started as a hedge fund firm focusing on technology and health-care stocks, grew to more than $5 billion in 2001 from its start in January 1997. Rajaratnam founded Galleon with three colleagues from Needham & Co., an investment bank that focused on technology and health-care companies.
Galleon Management, the company’s advisory business, oversaw more than $2.6 billion at the end of March, mostly on behalf of hedge funds, according to regulatory filings it submitted to the U.S. Securities and Exchange Commission at the time. Rajaratnam held a 50 percent to 75 percent controlling stake, according to the documents.
Rajaratnam, a graduate of the University of Pennsylvania’s Wharton School, was identified this year by Forbes as the 559th richest person in the world, with a net worth of $1.3 billion.
To contact the reporters on this story: Sumit Sharma in Mumbai at [email protected]; Anusha Ondaatjie in Colombo at [email protected]
Last Updated: October 19, 2009 06:04 EDT
Oct. 19 (Bloomberg) -- Sri Lanka’s benchmark stock index dropped, set for its biggest decline in four months, after Raj Rajaratnam, one of the south Asian island’s largest investors, was detained in the U.S. on insider trading charges.
The Colombo All-Share Index slumped 1.6 percent to 3,082.91 at the close, the second-biggest retreat among benchmark indexes worldwide after Pakistan. John Keells Holdings Plc, the country’s No. 1 listed company that counts Rajaratnam as its second-biggest shareholder, fell the most since March.
Asia’s best-performing stock market this year is paring gains after Sri Lankan-born billionaire Rajaratnam, 52, was told he faces a decade in prison if convicted at trial. The arrest prompted the country’s securities regulator to review Rajaratnam’s transactions in Colombo.
“This is bad news without a doubt,” Channa Amaratunga, who advises on stock and bond investments at Colombo-based C.T. Capital Pvt., said by phone. “He was one of the biggest foreign equity investors in Sri Lanka, both in his personal capacity and through Galleon,” Rajaratnam’s hedge fund firm.
Rajaratnam’s funds also hold stakes in People’s Merchant Bank Plc, DFCC Bank Ltd., National Development Bank Ltd. and Commercial Bank of Ceylon Plc, according to data compiled by Bloomberg.
Rajaratnam faces 13 fraud and conspiracy counts, many of which carry 20-year maximum sentences. Under federal sentencing guidelines, he faces 10 years in prison if convicted, Assistant U.S. Attorney Josh Klein said in court on Oct. 16.
Keeping Market ‘Clean’
Sri Lanka’s Securities and Exchange Commission said it will “collaborate” with foreign governments in their investigations.
“We don’t want a market glazed with investors of this reputation and will make every attempt to keep the Sri Lankan market clean,” Channa De Silva, director general of the commission, said in an interview today.
The All-Share index reached a record high on Oct. 13 on optimism that lower borrowing costs will boost earnings as the economy grows after a 26-year civil war ended in May.
Sri Lanka’s $41 billion economy may expand as much as 6 percent in 2010 from about 3.5 percent this year, the central bank forecasts. The benchmark interest rate is at a three-year low, and half of the Colombo All-Share Index’s gains came after the government defeated the Liberation Tigers of Tamil Eelam.
‘Sustain the Momentum’
Rajaratnam’s funds held a 9.2 percent stake in John Keells, 12.98 percent of People’s Merchant Bank Plc, and 9.8 percent of DFCC Bank Ltd. as of March 31, according to data compiled by Bloomberg. As of Dec. 31, his Galleon Diversified Fund had 10 percent in National Development Bank Ltd. and 5.21 percent in Commercial Bank of Ceylon Plc, the data showed.
John Keells fell 3.3 percent to 148 rupees. National Development lost 2 percent to 197 rupees and DFCC Bank dropped 3.2 percent to 159 rupees.
“There may be skittish sentiment initially but there are other economic forces such as falling interest rates to sustain the momentum,” said Murtaza Jafferjee, who oversees $20 million as managing director at JB Securities Pvt. in Colombo and previously managed an endowment fund for one of Rajaratnam’s charities. “Sri Lanka is the flavor of the month and there are a lot of local and overseas investors keen on investing.”
Galleon, which started as a hedge fund firm focusing on technology and health-care stocks, grew to more than $5 billion in 2001 from its start in January 1997. Rajaratnam founded Galleon with three colleagues from Needham & Co., an investment bank that focused on technology and health-care companies.
Galleon Management, the company’s advisory business, oversaw more than $2.6 billion at the end of March, mostly on behalf of hedge funds, according to regulatory filings it submitted to the U.S. Securities and Exchange Commission at the time. Rajaratnam held a 50 percent to 75 percent controlling stake, according to the documents.
Rajaratnam, a graduate of the University of Pennsylvania’s Wharton School, was identified this year by Forbes as the 559th richest person in the world, with a net worth of $1.3 billion.
To contact the reporters on this story: Sumit Sharma in Mumbai at [email protected]; Anusha Ondaatjie in Colombo at [email protected]
Last Updated: October 19, 2009 06:04 EDT
