DGEN

Dhaka, 26 January 2012:

The benchmark Index of Dhaka Stock Exchange, the DGEN plunged sharply by 77.90 points, -1.70% closing at 4486.98 points, touching its two years low, on investors speculation of a contractionary monetary policy to be announced today by the Central Bank. Besides, liquidity crunch, high rate of interest and thin participation by institutional investors amid a shaky confidence among investors have added to cause the index to slide sharply. Overall market PE has come down nearly to 11.

Out of 256 issues traded, 44 gained price while 203 issues declined and 9 issues remained unchanged. On DSE, total 43.06 Million shares traded, generating turnover of BDT 1896.288 mn and market capitalization to BDT 2347184.390 million.

The turnover leaders were Grameen Phone, RN spinning, Beximco Limited, United Air and SIBL. Among the top gainers, Modern Dye was up by +9.78% then followed by ICB AMCL 1st +9.76%, Reliance One MF +9.20%, Libra Infusion +8.73% and 1st Prime MF +4.86%. Among the top losers, Metro Spinning plunged by -9.78%, DESCO -7.67%, Heidelberg Cement -7.54%, 1st BSRS -7.48% and Dacca Dye -7.22%.

Based on the technical analysis RSI touched at 32 points, MFI at 10 points and current index is about 13.33% lower than the 50 days simple moving average.

Meanhwile, Balancing to choose between growth and inflation, the Jan-June monetary policy may attempt first to cut the double-digit inflation by cutting the private sector credit growth and by putting lending restrictions on consumer loans, auto cars, housing and luxury items. Simultaneously  the Central bank may move to minimize Government borrowing and seek the government\'s assistance to increase manpower exports to raise the inward remittancein flow, in the absence of foreign investments.



Macroeconomic View:

Bangladesh

18 January 2012:

To help the Government improve the governance of the stock exchange the Asian Development Bank (ADB) is identifying the reforms to be implemented to develop the country\'s stock market as part of ADB\'s country partnership strategy for Bangladesh for 2011-15. Demutualization being a key element to improve the system governance of the bourse. The ADB is also preparing to release this year a second financial assistance package -- capital market loan programmer -- for the development of the stock market in Bangladesh.

Meanwhile, The World Bank (WB) has proposed amendments to Bank Company Act and Financial Institute Act by adding risk management provisions and structural arrangement to deal with the local and global financial issues.  It has advised the Bangladesh Bank to redraft both the amendments to suit those well with the fundamental needs of the financial sector.

On the positive side a delegation from Russian Gazprom are in Dhaka to finalise a draft of the deal to drill 10 onshore gas wells in the country, which is expected to get Petrobangla additional around 300 million cubic feet per day (mmcfd) of gas once the 10-well drilling programme is successfully completed. In addition, the Country\'s once neglected garment wastes, popularly known as \'Jhut\', has emerged as a potential industry as it fetched $100 million in the financial year 2010-2011 by generating over two million employments, industry insiders said.

The garment leftovers in the recent years virtually turned into a foreign currency-earning sector as the demand for the cheap products have been increasing globally.

2 January 2012:

As the Petroleum products import of the country rose sharply by 162.26% to U$364.58 million in July 2011, from U$139.02 million of the previous fiscal year, the Government borrowing surged to Tk.69.32 billion till September 08,2011 as against Tk.2.99 billion in the same period of the previous year. The impact has led to an increased budget deficit, indicating that the target GDP growth rate of 7% for FY 2011-12 may not be achieved. An Increase in the local price in September 2011 of petrol, diesel, octane, furnace oil and even of CNG by Tk.5.00 per unit still left the Government burdened with a heavy subsidy amount of Tk.225 billion, while the immediate impact of the local price hike of petroleum products increased the price of local transportation, electricity rate and other basic materials. The rising inflation is now around 11.29% on an annual point-to-point basis according to the Bangladesh Bureau of Statistics.

The Annual Development Programme (ADP) implementation rate in the first five months (July-November) of the  current fiscal has been estimated at 20% equal  to  the  rate  achieved  during  the  corresponding  period  of  the previous fiscal year. The Annual Development Programme (ADP) for FY 2011-12 has been projected at Tk. 460 billion as 5.1 percent of the GDP. But it is estimated that only 66.73 percent of ADP might be implemented in FY 2011-12.

According to the first-ever Financial   Stability Report the Strength in terms of capital to losses of Bangladeshi banks is ranked the lowest among the major South Asian countries. The   Capital Adequacy Ratio (CAR) was 9.3 percent in Bangladesh at the end of 2010 while it was 14.6 percent in India as of end-March 2010 and 14.9 percent in Sri Lanka. The CAR has to go up to 14 percent under Basel-II requirements. The Financial Stability Report (FSR) advised the banks and non-banks to enhance capacity to absorb shocks. Meanwhile, fifty top bank loan defaulting companies of Bangladesh had Tk 40.82 billion in classified loans up to December 31, 2010. The amount was about 18 per cent of the total classified loans of the country\'s banking system, according to a report of Bangladesh Bank.

Under the present situation Bangladesh economy may be termed as under \'strain\'.However on the brighter side it is reported that the remittance sent by Bangladeshi expatriates marked a 9.25 per cent rise in the current year compared to 1.4 per cent in 2010.

Huge Export prospects are seem as   September,2011 reports confirm that 90% of Bangladesh products to get duty-free access to China, while an official notification of the Indian Government of 09.11.11 allows Bangladesh, as among the 5 least developed member nations of SAARC, duty free access of all its products export to India, except for wine and tobacco. A recent study conducted by McKinsey predicts that Bangladesh’s total garments exports would double by 2015 to potential exports of US $36- 42 billion in the next ten years as garments buyers moving out of China due to rising costs.

Added to the strong trade prospects, which Bangladesh entrepreneurs have time again successfully achieved, the government on 21st November, 2011 announced discovery of new reserve of an estimated 1.0 trillion cubic feet (tcf) of gas in Rashidpur gas field in northern region in a major boost to the country\'s ailing energy sector, with potential gas reserves of around 2.41 tcf in high risk category in the same \'eastern flank\' of the Rashidpur gas field.

Meanwhile attempts are being made to revive the stock markets; the central bank has introduced a new call money market, Islamic Interbank Fund Market (IIFM), for shariah-based banks and financial institutions.