Financial Experts

[Mani]

All,

I looked around the net to get some information on the banking system in SL. More I looked more confused I got. There are accounts with all kind of names but none is clearly explaining the pros and cons of each of those accounts.

Can someone give me some information on what is the best interest bearing account one can have in a Sri Lankan bank? Is it better to deposit the funds in US $ or Sri Lankan Rs? What kind of realistic returns can be expected? etc...

I'm trying to track down the best savings accounts available in SL.

Thanks for the help.

Mani.

[Watchman]

i'm not an expert but "best interest" might not be what you're looking for. thats what golden key investors were also looking for. And we all know how that turned out.

[JadeyBlitzen]

my advice is go for an fd. i'm sure there's some bank (or 2) offering upto 20% on fixed deposits. i'm not sure which one this is. its definitely not some scam. cos we never lost any money on them. i'll post some more info soon.

however i'm not sure whether you can deposit your money in foreign currency though. also you might have to pay some very unreasonable taxes on them even if you can.

[GTAm]

Hi Mani,

You can have an NRFC - Non resident foreign currency account in SL. The rupee is being devalued at the moment, so it might be better to hold onto your $$$ or Euros for now. That said interest rates over here are also on their way down so it could be advisable to lock in funds on a long term deposit.

The experts at banks will be able to forecast when and by how much and then advise you what exactly to do. Of course no one can predict the future 100% given so many variables in our economy especially at this critical stage. So it really depend on which is the most convincing opinion. For example if or when we get the IMF loan, Rupee interest rates will come down further. And the Rupee will be devalued further.

Hope I have not confused you even further .

My personal advice is to spread your risk. Lock part in rupees on High interest and part can be left in Foreign currency. If your talking large amounts you could even hedge (I know this is a dirty word to many) against future movements and make a load of money.

U might also want to put a small % of your funds in shares. The market has never been this under-valued........ And if the war is really over...........

[YALA]

my advice is go for an fd. i'm sure there's some bank (or 2) offering upto 20% on fixed deposits. i'm not sure which one this is. its definitely not some scam. cos we never lost any money on them. i'll post some more info soon.

however i'm not sure whether you can deposit your money in foreign currency though. also you might have to pay some very unreasonable taxes on them even if you can.

hi yeh i think i have to agree with the FD...you can lock in at about 20 or 21% interest if the amount is in Rupees...NRFC accounts would give you at approximately 5%. in theory the return you should get would be the same but we all the know the doller is some what controlled and because of the you might have a higher gain in rupee terms....and if im correct once the imf loan comes in the doller value is going to come down bit at which point if your investment matures you will be taking away for dollers...

[MeanGreenZ28]

We had a seminar on investing in SL just a few weeks ago here in DC. The Embassy organized it. I'll try to get you some info, but from what I heard (didn't attend), there were some good options and many were impressed with the returns expected (dependent on length).

[kotte mafia]

guess its always better to buy real-estate with ur funds ... buy some solid land in places where you will think there is growth in land value and let it be there for a while thats what alot of relatives and friend of mine are doing and one of our friends dad earned well over 60-100 mil srilankan money when the land value went up not so long ago ...

and I personally don't think its a good thing to do to put money in the bank and wait cos these days when prices are a bit realistic it always better to buy and buy and pile it up if your very sure about your incomes in the coming future that’s the best thing which cross my mind

and thankz mean green we will be waiting to see the details cos every one who's abroad is interested in investing solidly on some thing for the future short term or long term cos u will never know how things are going to shape out when you wake up in the morning ....

[Saturn]

Invest in a good bank, preferrably a reputed international one like HSBC - that way you know your money will be safe. HSBC have reasonable FD rates for rupee and foreign currency accounts (see hsbc.lk)

don't convert foreign currencies into rupees as the rupee may be devalued in the future

[Kavvz]

Am no expert by any means but when I last did the math on coverting $$ into Ruppees considering:

1. Rate of inflation vs interest being paid

2. Currency devaluation

it wasn`t profitable.

(As for stocks: I couldn`t find a single SL stock or fund that had financial fundermentals over and above the financial ratios on mutual funds and the popular blue chips in North America. If you guys know of any such stocks or funds, throw some bones my way will you... )

[JadeyBlitzen]

(As for stocks: I couldn`t find a single SL stock or fund that had financial fundermentals over and above the financial ratios on mutual funds and the popular blue chips in North America. If you guys know of any such stocks or funds, throw some bones my way will you... )

dialog was pretty profitable and i think it still is. when i tried to invest on them like 3 or 4 years ago a several thousand people beat me to it

[Devinda_Z]

dialog was pretty profitable and i think it still is. when i tried to invest on them like 3 or 4 years ago a several thousand people beat me to it

far from it i'm a afraid

thier recent financial performance has been worrying

afaik certain SBU's have been bleeding cash and sucking the life blood outta some others - this is reflected in thier current stock price which has tumbled to the Rs.5 mark from a high of close to 30 sometime back - do note that this is share with a Rs. 1 par value which sold at Rs 12 (if i recall right) at its IPO

and if i'm not mistaken Dialogs 10 year tax break runs out this year as well...

the Dialog share was never going to net anyone big bucks for the simple fact that its unlikely that a Rs.1 share is going to hit 3 figures - and evne if it did , the basis on which they allocated shares meant that no sigle individual would hold more than a few thousand shares - so when one does the math the returns will never be too great

[JadeyBlitzen]

far from it i'm a afraid

thier recent financial performance has been worrying

afaik certain SBU's have been bleeding cash and sucking the life blood outta some others - this is reflected in thier current stock price which has tumbled to the Rs.5 mark from a high of close to 30 sometime back - do note that this is share with a Rs. 1 par value which sold at Rs 12 (if i recall right) at its IPO

and if i'm not mistaken Dialogs 10 year tax break runs out this year as well...

the Dialog share was never going to net anyone big bucks for the simple fact that its unlikely that a Rs.1 share is going to hit 3 figures - and evne if it did , the basis on which they allocated shares meant that no sigle individual would hold more than a few thousand shares - so when one does the math the returns will never be too great

so i guess i saved myself from inevitable nothingness by procrastinating as usual

IMO investing on stocks is pointless in sl. but then again has anyone here invested on touchwood or similar establishments?

so far i've never heard anything good about them. for example most plots of trees have died thanks to some infection or something

anyone else had any better experience?

[GTAm]

Am no expert by any means but when I last did the math on coverting $$ into Ruppees considering:

1. Rate of inflation vs interest being paid

2. Currency devaluation

it wasn`t profitable.

(As for stocks: I couldn`t find a single SL stock or fund that had financial fundermentals over and above the financial ratios on mutual funds and the popular blue chips in North America. If you guys know of any such stocks or funds, throw some bones my way will you... )

Inflation has dropped a lot.

Yes the rupee will be devalued further.

As for stocks, I'm surprised that you have not come across great fundermentals. We don't have good funds but the stockmkt looks very tasty Could I know the parameters of the ratios you compared them with?

[Mani]

We had a seminar on investing in SL just a few weeks ago here in DC. The Embassy organized it. I'll try to get you some info, but from what I heard (didn't attend), there were some good options and many were impressed with the returns expected (dependent on length).

Mean,

If you can find that info, please post it.

[DevakaC]

As GTAM stated earlier an NRFC account would be a good bet taking the fact you can wire transfer money from any bank here in the US to SL. (well you can do that from other types of checking accounts too) If thats what you're looking for.

If your looking for high interest rates and a good return on investment its going to be another story.

High Intrest Rates = Greater Risk.

If your thinking of a long term investment consider T-Bills which are considered one of the safest investments, tax free too. Then we have the usual FD's which you can lock your money in. And the stock market is like playing Blackjack.

Dont ever chase high interest rates if you wish to lose you capital in the end. I have my own evaluation regarding the Golden Key crisis that has been coming up quite often in the forum and any conversation iv had with a fellow sri lankan. Please correct me if im wrong.

Here's my example hope you wont find it too silly sort of.

Eg: Lets say you invested Rs.1,000,000/= in GK funds. Their annual interest rate was 30%. Not taking inflation into account you are going to recover your entire investment in a period of 3.3 years. Assume you were a customer for 5 years taking the long period GK was in operation in SL markets. You are going to earn 1.5 million on "interest alone" on an investment that was only 1 million initially in a period of 5 yrs. If you were able to withdraw your capital right on time cosider you hit the jackpot. Humans in nature love high returns and our fellow sri lankan were nothing less. Everyone lived life lavishly thinkin their capital is safe in the Golden hands of GK only to find out they are about to find out their investments are floating in thin air. GK offered trips abroad, hotel packages and what not to keep their customers happy. Only for a temporary period. My arguement is most people who invested in GK have recovered their investment or more than what they invested through intrest by itself alone. I doubt people going to get their capital back. Now if you invested that money in a T-Bill, yes your going to have much less interest income but consider the fact your going to get your capital back. Which means 1,000,000 + (1,000,000*20%*5yrs) = 2,000,000. So the man who invested in T-Bills was the winner end of the day, holding on to his initial investment and the interest too.

And the stock market in sri-lanka is very volatile and not only in SL even the NYSE. I think the Dialog IPO was over rated. Consider John Keels or any other established company, if the war is over they "might" go up. Ending the war will have an impact on the CSE only upto a certain extent everything else depends on the economy, the company itself and the central bank..

Geez i hope this not too long and too irrelavent.

[Kavvz]

Inflation has dropped a lot.

Yes the rupee will be devalued further.

As for stocks, I'm surprised that you have not come across great fundermentals. We don't have good funds but the stockmkt looks very tasty Could I know the parameters of the ratios you compared them with?

Hey GTAm, I don`t dispute the fact that for well informed investors the CSE may be a profitable investment medium. Unfortunately, I`m merely an outsider looking in and just to make things clear I really have no access to additional information on SL companies other than corporate statements and press releases...

1. Inflation might have dropped, but at an adjusted rate of 18%, inflation is still really, really high.

2. Despite the recent scandals I have more faith in the N. American financial disclosures and the bodies that govern them vs. their SL counterparts and therefore think investments off the CSE to inherently carry higher risk levels. When trolling for investments in SL I looked at quick ratios, current ratios, ROE, Beta and industry outlook. I simply couldn`t find anything attractive over and above what`s available in the North American market to justify an investment.

3. In addition to the required regulatory filings it’s easier to obtain supplementary background information on companies and senior management operating out of N. America.

To sum up: Investments elsewhere offer lower risk levels and equal or better rates of return. I undersand your findings are different, and thats fine, but care to elaborate...?

[Devinda_Z]

so i guess i saved myself from inevitable nothingness by procrastinating as usual

IMO investing on stocks is pointless in sl. but then again has anyone here invested on touchwood or similar establishments?

so far i've never heard anything good about them. for example most plots of trees have died thanks to some infection or something

anyone else had any better experience?

that was not the onlu isseu Touchwood had - they changed thier accounting practices and that caused a few issues with the CSE resulting in a tumble in thier share price a few years ago

& todays paper reported that Dialog has had 300 staff take thier VRS

[Devinda_Z]

As GTAM stated earlier an NRFC account would be a good bet taking the fact you can wire transfer money from any bank here in the US to SL. (well you can do that from other types of checking accounts too) If thats what you're looking for.

If your looking for high interest rates and a good return on investment its going to be another story.

High Intrest Rates = Greater Risk.

If your thinking of a long term investment consider T-Bills which are considered one of the safest investments, tax free too. Then we have the usual FD's which you can lock your money in. And the stock market is like playing Blackjack.

Dont ever chase high interest rates if you wish to lose you capital in the end. I have my own evaluation regarding the Golden Key crisis that has been coming up quite often in the forum and any conversation iv had with a fellow sri lankan. Please correct me if im wrong.

Here's my example hope you wont find it too silly sort of.

Eg: Lets say you invested Rs.1,000,000/= in GK funds. Their annual interest rate was 30%. Not taking inflation into account you are going to recover your entire investment in a period of 3.3 years. Assume you were a customer for 5 years taking the long period GK was in operation in SL markets. You are going to earn 1.5 million on "interest alone" on an investment that was only 1 million initially in a period of 5 yrs. If you were able to withdraw your capital right on time cosider you hit the jackpot. Humans in nature love high returns and our fellow sri lankan were nothing less. Everyone lived life lavishly thinkin their capital is safe in the Golden hands of GK only to find out they are about to find out their investments are floating in thin air. GK offered trips abroad, hotel packages and what not to keep their customers happy. Only for a temporary period. My arguement is most people who invested in GK have recovered their investment or more than what they invested through intrest by itself alone. I doubt people going to get their capital back. Now if you invested that money in a T-Bill, yes your going to have much less interest income but consider the fact your going to get your capital back. Which means 1,000,000 + (1,000,000*20%*5yrs) = 2,000,000. So the man who invested in T-Bills was the winner end of the day, holding on to his initial investment and the interest too.

And the stock market in sri-lanka is very volatile and not only in SL even the NYSE. I think the Dialog IPO was over rated. Consider John Keels or any other established company, if the war is over they "might" go up. Ending the war will have an impact on the CSE only upto a certain extent everything else depends on the economy, the company itself and the central bank..

Geez i hope this not too long and too irrelavent.

hardly machan - insightful

but most sharesh ave taken a tumble - even JKH - that issue with the bunkering facility ended up with thier stocks taking a massive hit , so much so that they were paying a higher than mkt rate top buy back thier own shares that were being dumped - also helped on another fornt that move but still..

[kotte mafia]

jadey ... machang i have few frnds of my dad who did this tree planting thing sometime back and even my dad followed this .... we never invested the money with touchwood we directly went to the ministry of agriculture and bought our selfs mahogany plants from a local place ... and with the help of one of my dads frnds who is good in all this tree planting stuff we planted it in kegalle u can plant around 200 plants in 100 perches and it will take around 17 years to be good enough for timber if ur interested in such a thing i tell u the best thing to grow is mahogany ....

the stock market is like blackjack for true ... when u win u win alot and its the same way around .... the best thing is to buy at a IPO ... specially energy companies are my personal FAV ... it's a risky game to play but when u get inot the game its pritty nice ...

there was another system online currency exchange thing going on for all the doods who are really stucked infront of a PC and the returns were good but as the stock market you always have to keep in touch with the updates or else you will endup loosing your money ...

really interested on this topic and how its improving .... and waiting for Mr.Mean greens riply on the issue ....

so guys any other smart investment IDEAS ......

[JadeyBlitzen]

planting the trees yourself is a pretty good idea. plus you can lease the land for that period of time. but then again if there are so many companies and individuals investing on mahogany what are the chances of oversupply in say a decades time? inflation and currency rates might make the pay off somewhat insiginificant as well. but so far this seems like the best bet.

has anyone got a private power plant? sometime back this was all the rage. the initial cost is quite high. but i'm sure it'll pay it self over and over again at least a hundred times.

[Kavvz]

so guys any other smart investment IDEAS ......

Yeap, buy yourself the nicest car you can afford Its better than keeping the money in a savings acount and your purchase is going to appreciate rather than depreciate

Edited April 26, 2009 by Kavvz

[kotte mafia]

jadey .... U seems to know what you are talking about my man .... yap for around 30 to 50 mil you can build your own hydro power plant(there are smaller projects where you can do it for around 5mil but there's no benefit of doing so ) in some rural areas which makes a moderate amount of electricity according to the money you spend and connect it to the national grid to distribute .... Or I guess you can even sell it to the doods in the area through the electricity board but according to the srilankan law you cannot do any thing by your self in the electricity sector cos it's not privatized..heard some dood is the sole investor for the power plant in jaffna which is been build even when we speak right now and is gona run on diesel I suppose

The problem of this is you never get your payments on time.... some one we know closely is into this business of making electricity in kothmale region and making electricity poles hambanthota for the electricity board but he just does both business as charity Bcos the payments are so late if you think of getting your money to pay some loans or feed our family you will be long dead before you ever receive the first cheque

but it is a good & solid investment for all the ppl who have some extra buck in there pocket and are not dependent on there investments in terms of loosing your money is almost 0% because the need for energy keeps on growing by the day

there's the potentional of devaluing in the timber business as you pointed out in the coming decade but when you see the global timber market where Indonesia and Malaysia dominating the game the newer rules on timber passed by the local governments over there is hitting hard on the business market as well as the constant headache from the NGO's where the output s slowing down pretty fast in a yearly basis

Srilanka Philippines can become the new major players in the new timer world in the future bcos they started this forest growing programmes to fulfill the worlds timber need before anyone else started and have the potentional of going to the top in the business if carefully handled and marketed

But the above planting project is also good for the people who are not dependent on the investment and it's a safe house to dump the money for a good 15 to 20 years with out any headaches

KAWZ you are the man machang you remind me of lots of my friends who drive around in hot rides and who use the best phones ever imaginable but when it comes to calls and petrol he has to go begging for cash from his friends and parents .... ask most of the guys who drive in those and does all that a simple common question are you doing all this with your money and the answer is simple they will say no and wil top it up by telling you hey man i don't even work ... most of there parents are rich who had a hard time being rich and having a mentality to give every thing to there kids they never had but its not love i'll tell you instead of making strong people for the community they are making chocolate babies when someday they have to take care of the family fortune they will FU__ up big-time and loose everything cos of there ignorance.... i've seem alot of good exsamples but some parents never give there kids that kind of Luxury you talk about and they have to work there A$$ out to get something from there grownups, you have to go to work everyday at someone else's office and learn how to stand up by yourself Nothing personal machang but macho when it comes to money and earning i have a very different view on it which has passed over to me by my elders its always better to tight you belt today for a better tomorrow because someday the money will stop coming easily and you will suffer thinking on the wrong decisions you made with your life

[Kavvz]

KAWZ you are the man machang you remind me of lots of my friends who drive around in hot rides and who use the best phones ever imaginable but when it comes to calls and petrol he has to go begging for cash from his friends and parents .... ask most of the guys who drive in those and does all that a simple common question are you doing all this with your money and the answer is simple they will say no and wil top it up by telling you hey man i don't even work ... most of there parents are rich who had a hard time being rich and having a mentality to give every thing to there kids they never had but its not love i'll tell you instead of making strong people for the community they are making chocolate babies when someday they have to take care of the family fortune they will FU__ up big-time and loose everything cos of there ignorance.... i've seem alot of good exsamples but some parents never give there kids that kind of Luxury you talk about and they have to work there A$$ out to get something from there grownups, you have to go to work everyday at someone else's office and learn how to stand up by yourself Nothing personal machang but macho when it comes to money and earning i have a very different view on it which has passed over to me by my elders its always better to tight you belt today for a better tomorrow because someday the money will stop coming easily and you will suffer thinking on the wrong decisions you made with your life

Unfortunately I'm very much the working class, no free hand outs from my parents for me I'm afraid...But I was totally serious about splurging on a car . If I lived in Sri Lanka I'd carefully select the best car I could afford taking into consideration resale values etc. and buy it. So far the resale price on cars has been staying ahead of depreciation (due to the corresponding increase in taxation) and as long as you pick a model with good resale potential, it will act as a good hedge against currency devaluation as well. So why not drive around in your investment, enjoy it and then sell it off at a decent price when you're ready to trade up? The other option to beat inflation is maybe to live in your investment but that's simply not as fun...

Edited April 28, 2009 by Kavvz

[Kavvz]

Attn used car dealers: Will do a more complete write up of the above in lieu of a Rs. 50 donation to my "I want an RX8 fund"

(bank account details will be provided upon request)

Edited April 27, 2009 by Kavvz

[GTAm]

Hey GTAm, I don`t dispute the fact that for well informed investors the CSE may be a profitable investment medium. Unfortunately, I`m merely an outsider looking in and just to make things clear I really have no access to additional information on SL companies other than corporate statements and press releases...

1. Inflation might have dropped, but at an adjusted rate of 18%, inflation is still really, really high.

2. Despite the recent scandals I have more faith in the N. American financial disclosures and the bodies that govern them vs. their SL counterparts and therefore think investments off the CSE to inherently carry higher risk levels. When trolling for investments in SL I looked at quick ratios, current ratios, ROE, Beta and industry outlook. I simply couldn`t find anything attractive over and above what`s available in the North American market to justify an investment.

3. In addition to the required regulatory filings it’s easier to obtain supplementary background information on companies and senior management operating out of N. America.

To sum up: Investments elsewhere offer lower risk levels and equal or better rates of return. I undersand your findings are different, and thats fine, but care to elaborate...?

Your probably right, we cannot compare a developed mkt like the US with a tiny growth mkt like Colombo. But my view is that being a tiny growth mkt there's a lot more potential than a mature mkt...... Just my opinion. And let's face it the US is still in Sh*t street isn't it?

Anyway your right again about finding info in the US being easier than SL. But remember SL is still a grossly under-developed economy. The markets are still very very small even by Asian standards.

Btw I was alarmed at the dressing up about the Merril Lynch quarterly report. I had no idea that something like that could get through the SEC or accounting body. I can't recall the exact details but saw a report on it on the BBC.

I recall our early 90's boom very well...... And I feel we are preparing for another one again. All the signs are there.

I am in no doubt that there are loads of US companies with great ratios. But there are quite a few Sri Lankan companies sitting on cash, waiting. These should have reflected well in their Current and quick assets ratios. Also don't forget that our market P/E is 6.5!!!! It was in the high 20s during the early 90s during the Premedasa regime. So we know the potential an end of a military conflict can have on investor confidence.

Admittedly the Beta has been quite low for most stocks. There simply has not been any positive news at all until now.

Inflation can also be viewed as positive in the market, where replacement costs increase and so in turn do assets on the Balance Sheet. Devinda Z might not like this view I'm sure !?

In a growth market more emphasis is placed on the future and we have to consider that the macro environment will be changed with the drop in military operations. The country has to be viewed in a new perspective.

One thing for certain is that corruption will not cease. If at all it will increase. This is the biggest problem I have with SL. Especially as we know in the govt. sector. This could cheese off investors.

On the other hand. There's so much of reconstruction and development waiting to happen. Retail sales will increase because of relative normalcy returning. Export earnings are going to shoot up because of the devaluation, and general business confidence is on the way up. This last factor is what is MOST important for the market IMHO.

I agree totally our SEC and CSE are out-dated monuments and desperately need to be spruced up. The markets need to be developed a lot. But there's a LOT of potential I think on the SL Mkt.