DSE key index reaches 15- month high

The Dhaka market witnessed steady gains yesterday, with the benchmark
index of the premier bourse reaching its highest in 15 months. The
benchmark index of Dhaka Stock Exchange, DSE General Index, rose to 3
, 123.23 , up 39.35 points, or 1.27 percent. The index closed at 3
, 179.54 on June 6 last year. The market rallied as all sectors
except insurance companies gained. The market climbed up steadily
throughout the trading session. The broader DSE All Share Price Index
increased 32.4 points, or 1.25 percent, to 2 , 624.87. Advancers
beat the losers 178 to 61 with three securities remaining
unchanged. A total of 4 ,63 ,33 ,979 shares and mutual fund units
worth Tk 798.55 crore traded on the DSE. Navana CNG topped the
turnover leaders with 15 ,90 ,300 shares worth Tk 32.23 crore
being traded on the DSE. HR Textile, which increased 16.51 percent,
was the largest gainer. Apex Spinning, which declined 4.01 percent,
was the biggest loser. Chittagong stocks however closed mixed
yesterday. The CSE Selective Categories Index declined by 38.6
points, or 0.56 percent, to 6 , 734.97. The CSE All Share Price
Index increased 105.03 points, or 0.98 percent, to 10 , 755.68. A
total of 62 ,21 ,299 shares and mutual fund units worth Tk 64.49
crore changed hands on the Chittagong Stock Exchange. Of the traded
securities, 126 advanced, 44 declined and two remained unchanged.
The biggest gainer Safko Spinning Mills advanced 19.87 percent.
Central Insurance Company declined 9.33 percent to finish as the
largest loser. Navana CNG topped the turnover leaders with 2 ,16 ,800
shares worth Tk 4.39 crore being traded on the port city bourse.

Export target aims high

The government announced yesterday the export target for the current
fiscal year at $17.6 billion, which is 13 percent higher than that
of the previous year. The commerce ministry revealed the figure
delaying three months. The export target was supposed to be announced
in July, the first month of the new fiscal year. The delay was caused
due to unavailability of data from different government departments
and agencies, said Joint Secretary to the ministry Monoj Kumar Dhar
after a post-meeting briefing at the secretariat. He said Bangladesh
earned $15.18 billion last fiscal year from exports against the
target of $16.29 billion, marking a 4.5 percent shortfall. "The
export target for the current fiscal year is not ambitious. It is
rational as the whole world is showing signs of recovery from
recession," Dhar said. He said the government has set the target
analysing the global recession. Knitwear export target has been set at
41.46 percent, while 38 percent for woven garment products and the
rest for other products, the ministry official said. "The present
export trend indicates that it is possible to achieve the target,"
Dhar said. He said exports of knitwear, woven garment, terry towel,
handicrafts, textile fabrics, chemical products, footwear products,
home textile, computer services and agricultural products increased
in fiscal 2008-09 compared to the previous year. On the downside,
exports of tea, raw jute, jute goods, electronics, leather, ceramics
and frozen foods declined year-on-year, Dhar said. Vice Chairman of
Export Promotion Bureau ( EPB) Mohammad Shahabullah said although all
the missions abroad could not achieve the target separately, the
average achievement was satisfactory. At present, there are 44
overseas missions. Commerce Minister Faruk Khan at the meeting with
exporters, manufacturers, entrepreneurs, traders and leaders of
different trade bodies and government high- ups discussed the export
target for the current year.

Column - Jaspal Bindra Asian giants lead the way out of recession

Six months after leaders from the world's leading economies joined
hands at the G20 meeting in London, the global economy is slowly but
certainly emerging from the slump, led by the resurgent economies of
Asia. For the first time in the modern era, countries with diverse
political ideologies and at different stages of economic and social
development have made common a cause to tackle the world's first
truly global economic crisis and prevent a repeat of the Great
Depression of the 1930 s. They have done so by keeping interest rates
low and by taking concerted steps to provide unprecedented amounts
of financing to banks, businesses and consumers. China is recovering
from its most severe slowdown in decades to report a 7.9 percent
growth in the second quarter from a year earlier, up from 6.1
percent in the previous quarter. India has reported a 6.1 percent
growth in the same quarter. All the major Asian economies have
returned to growth, including Japan. Even Germany and France are back
on the growth path. Yet, this is no time for complacency. The US
economy, the world's biggest and still the main engine for global
commerce, remains in recession -- its deepest and longest since the
1930 s. Companies are still shedding jobs and millions have been
forced back into poverty. Meanwhile, financial institutions worldwide,
after writing off credit losses worth more than $1.6 trillion, are
still cautious about making loans and investments. These are red
flags, which should provide enough reasons for global policy makers
to carry on with the well-orchestrated fiscal and monetary stimuli
embarked upon less than a year ago. Governments and central banks
will need to map out an equally well- coordinated exit route to
reabsorb the unprecedented levels of liquidity when the global
economy is securely out of the woods. That time has not arrived yet.
Indeed, the follow-up G20 meeting in Pittsburgh could not have come
at a better time. Global leaders must know that the ongoing global
recovery will remain fragile as long as rising unemployment in the
US, Europe and Japan is reversed and until consumers in those
economies start loosening their purse- strings after repaying some of
their debts and rebuilding their savings. Any move at this stage to
tighten monetary and fiscal policies, especially in the developed
world, risks the world economy repeating Japan's mistakes during the
1990 s when a hurried rise in tax rates, without simultaneously
loosening of monetary policy, triggered a financial crisis and
eventually led Japan into the path of quantitative easing in 2001
which lasted for five years. The resulting surplus of liquidity
amassed by Asia's export-oriented economies found their way to the
west, through investments in western government bonds, helping keep
global interest rates low and perpetuating the excessive spending
patterns of consumers in the US and western Europe. Although
exporters in Asia have seen their trade surpluses shrink dramatically
this year as consumers in the west cut back on spending following the
onset of the economic and financial crisis, it will be some time
before we see a substantial pick up in consumer demand in the east,
enough to offset the slump in western consumption. Paving a
consumption-led growth path for Asia is essential but it will take
years to implement. It will require Asian governments to provide
social safety nets and healthcare guarantees for its citizens so that
consumers do not have to save excessively for the rainy days. It
will also require Asian governments to carry on with economic reforms
to create jobs and increase overall efficiency and productivity. It
will require deepening and broadening of the region's capital markets
to prepare them to absorb large amount of capital generated by the
region's own savers. Asia's reliance on equity capital markets to
fund corporate investments often leads to excessive volatility and,
in some cases, asset bubbles. Meanwhile, the lack of deep and liquid
corporate debt markets prevents the companies from accessing
long-term capital. It is clear by now that the west will take a long
time to repair the damage to its economies caused by the financial
and economic crisis and return to a sustainable growth path. The
onus for engineering a relatively quick recovery now largely rests
with China, India, Korea, Indonesia and the other large emerging
markets. Indeed, these emerging economies have played their new roles
with aplomb so far. It is perhaps pertinent to remember that the
leading emerging economies in Asia -- G20 members China, India, South
Korea and Indonesia -- are largely driven by domestic demand. The
comparatively low levels of consumer debt, high savings and large
populations mean that these economies could surprise on the upside as
they move to a consumption-led growth model. Asia's biggest economies
have also pledged to further the Doha round to give a much- needed
fillip to world trade. This is a welcome development as protectionist
sentiment, particularly in the west, risks stifling growth and
perpetuating global poverty. Meanwhile, China and India have both
pledged to play a constructive role in limiting the damage caused to
the environment from their growing economies at the UN climate
change talks in Copenhagen later this year. Developed economies among
the G20 member nations have a particularly important role to play
in Asia's efforts to curtail greenhouse gases while maintaining the
region's growth trajectory. Japan and Korea are already thinking of
innovative ways to share their advanced technology and to finance
their use in the rapidly developing countries of Asia. The emerging
powers deserve greater control over international financial
institutions such as the IMF and World Bank, reflecting their
increased economic contribution and role in international trade. As
the world recovers back to health, policy makers should not succumb
to the temptation to undo the gains achieved since London. The need
of the hour is to maintain the pro- growth fiscal and monetary
stimuli, keep working at restoring confidence in the financial
markets by reducing complexity and leverage and fixing the imbalances
that caused the biggest economic turmoil in our lifetime.

No more margin loan for junk shares

Shares with weak fundamentals will no longer be considered as
marginable securities, meaning margin loan facilities will not be
given against the under-performing companies' stocks. Also, shares of
the companies, which will fail to submit their annual reports within
stipulated time, will not be treated as marginable securities.
Marginable security means a stock that can be purchased on margin
loan provided by brokerage houses and merchant banks. Stock market
regulator took the decisions at a meeting yesterday as a part of
tightening the existing margin rule, which allows a broker or a
merchant bank to provide loans against any company's shares. "The
margin rule has been tightened for weak-performing companies, as loan
on such companies often makes the stocks overpriced and creates
disturbance in the market," said Anwarul Kabir Bhuiyan, executive
director of Securities and Exchange Commission (SEC). "Notifications
to this effect will be issued next week," he said. Market operators
said they do not offer margin loan facilities against junk or Z
category shares except those for some companies, which are actually
fundamentally strong but remain in the Z category either for legal
issues or for not giving dividends. Although the SEC earlier asked the
stock exchanges to make a list of marginable securities, the bourses
could not do so. "As the bourses failed to make the list, we as a
regulator are doing it," Bhuiyan said. The SEC also decided not to
give margin facilities for the first 30 trading days to any newly
listed companies, and securities that will be upgraded or downgraded.
The commission initiated a move to prepare margin rule for merchant
banks, which are now following their own guidelines to provide loans.
The existing margin loan is applicable only for brokerage houses. The
SEC has also eased the existing refund warrant system. From the next
IPO (initial public offering), the issuer company will send the
refund warrants to the unsuccessful IPO applicants' bank accounts
directly. Under the existing system, the refund warrants are sent to
the IPO applicants' mailing addresses. The SEC also formed a
three-member probe committee to investigate transactions of Marico
Bangladesh, which made debut on the bourses on September 16. "The
commission did not feel comfort at the higher prices of Marico share
and transactions," Bhuiyan said. On its debut, each Marico share of
Tk 10 was traded as high as Tk 368. However the company in
addition to the face value took Tk 80 per share as premium. Each
Marico share rose as high as Tk 459 yesterday before closing at Tk
450.20 on Dhaka Stock Exchange. The SEC asked the probe body to
submit its report within the next 15 working days. The watchdog has
also selected 48 companies, whose trading is now suspended, for
over-the-counter (OTC) market, a separate trading floor for trading
junk shares introduced on DSE on September 6. "We will direct the
stock exchanges within one or two working days to transfer 48
companies to the OTC market," Bhuiyan said.

World economy shows signs of life IMF projects Bangladesh growth at 5. 4 pc for 2010 , points to inflationary pressure

International Monetary Fund (IMF) has projected 5.4 percent economic
growth for Bangladesh in 2010 , accompanied by marginal inflationary
pressures next year. IMF's economic growth projection for 2010 is
the same as for this year. It predicted that inflation pressures would
reach 5.6 percent in 2010 , rising from 5.3 percent projected for
2009. The forecasts were published in 'the World Economic Outlook'
released yesterday, five days prior to the IMF-World Bank annual
meetings in Istanbul, Turkey. In previous publications, IMF forecasted
Bangladesh GDP growth at 6 percent and 6.3 percent for 2008 and
2007 respectively. After deep global recession, the Washington- based
institution said, economic growth has turned positive, as
wide-ranging public intervention supported demand and lowered
uncertainty and systemic risks in financial markets. Following a
sharp decline in the first quarter of 2009 , output in the second
quarter has begun to expand in some advanced and many emerging
economies -- led by Asia -- but in much of the world, activity
remains depressed, says the IMF report. "Recovery is expected to be
slow, as financial systems remain impaired. Support from public
policies will gradually have to be withdrawn and households in
economies that suffered asset price busts will continue to rebuild
savings while struggling with high unemployment," says the report.
The key policy requirements remain to restore financial sector health
while maintaining supportive macroeconomic policies until recovery
is on a firm footing. However, policymakers need to begin preparing
for an orderly unwinding of extraordinary levels of public
intervention, says the report. The global economy may shrink 1.1
percent in 2009 and is expected to increase 3.1 percent in 2010.
The estimates were higher than forecasts put out in July of 2.5
percent expansion next year and a 1.4 percent contraction in 2009.
IMF projected a negative 3.4 percent GDP growth for the advanced
economies, which is expected to recover with 1.3 percent growth in
the next year. However, the IMF warned that the data shows the
rebound will be sluggish and "for quite some time" it would be slow
to generate jobs. Meanwhile, credit would remain tight. The US, the
world's largest economy, may not recover from the downtrend this
year. IMF projected a 2.7 percent decline in GDP growth for the US
economy this year and a 1.5 percent increase in 2010. Growth is
expected to turn positive in the second half of 2009 , reflecting the
continuing fiscal boost and turns in both the inventory and the
housing cycles. However, although financial conditions have improved
significantly in recent months, markets remain stressed and this will
weigh on investment and consumption, the IMF report says of the US
economy. Unemployment in the US is expected to peak at above 10
percent in the second half of 2010 , while rising economic slack
should keep core inflation below 1 percent through most of next
year. In Europe, the pace of decline was moderating, with the 16-
nation eurozone seen returning to growth of 0.3 percent in 2010 ,
instead of the 0.3 percent fall projected in the IMF's previous
forecast in July. The IMF forecast indicated that emerging Asian
countries as a whole are on the road to recovery from the global
economic downtrend. However, Korea, Taiwan, Hong Kong, and Singapore
are expected to face economic growth declines in 2009 , with
possibilities of recovery next year. Developing Asian countries such
as China and India are expected to continue strong economic growth.
The projection said China would grow 9 percent and India 6.4
percent in 2010 , which was 8.5 percent for China and 5.4 percent
for India in the current year. Although Asia's export-oriented
economies were battered by the abrupt global downturn, the economic
outlook for the region improved markedly in the first half of 2009 ,
IMF said. "Recent developments point to strengthening of domestic
demand and exports, but questions remain about whether rebound can
become self-sustaining -- ahead of stronger growth pickup in the rest
of the world," the IMF report says. The recent, swift turnaround of
economic fortunes is remarkable. At the onset of the crisis, Asian
exporters were hit hard by the collapse of external demand. The
deterioration of activity was especially rapid for the more
export-oriented economies. In Asia, manufacturing-oriented economies
like Korea, Singapore and Taiwan slumped and by the end of 2008 ,
recorded peak declines in industrial production of about 25 percent.
Only China, Indonesia and India escaped severe recession, the result
of a large policy stimulus and, in the case of India, less
dependence on exports. A fundamental challenge in the aftermath of the
economic crisis will be to sustain solid global growth given the
damage caused by the crisis to productive potential and balance
sheets, says the IMF report. The financial system's capacity for
efficient intermediation and innovation will need to be restored to
support growth, while safeguarding financial stability. From the
demand side, the global economy faces a difficult rebalancing act --
shifting the sources of growth from public to private demand and from
internal to external demand, in external deficit countries affected by
pronounced credit and housing cycles, matched by counterpart
adjustments in surplus countries that have been heavily reliant on
export-led growth. Even with improving financial market conditions,
many households and firms in both advanced and emerging economies
will continue to face difficult conditions. In particular, bank loans
to the private sector are still stagnating or contracting in the US,
the Euro area and the UK, consistent with surveys among bank loan
officers that point to a continuation of very tight credit
conditions.