Daily News Recap

Daily News Recap
Tuesday
September 2, 2014
Analyst:
Faiza Farah Tuba
[email protected]
Industry
Banks' overall capital base shrank 1.36
Banks' capital falls
as defaults pile up
percent in the second quarter of this
year compared to the first quarter as the
asset quality of state banks deteriorated
further. On June 30, the banks' capital
was Tk 63,694 crore, which is 10.68
percent of their total risk-weighted assets. The amount was Tk 64,575 crore
on March 31, or 11.32 percent of their
risk-weighted assets. In line with international standards, banks have to maintain a capital adequacy ratio (CAR) of
10 percent against their risk-weighted assets. State-owned commercial banks' capital fell by
around 9 percent in June and stood at Tk 9,250 crore mainly due to a rise in default loans. As
capital went down, their CAR now stands at only 8.05 percent, which is embarrassing in the
context of a commercial bank. Bank officials said if CAR is low, various charges go up in international business. State-owned specialised banks, except Bangladesh Development Bank, had
no capital at the end of June, rather they had negative capital, which rose by around Tk 600
crore in three months to stand at Tk 4,338 crore.
According to central bank statistics, capital position deteriorated mainly in Sonali, Rupali,
BASIC, Bangladesh Krishi and Rajshahi Krishi Unnayan Bank. At the end of June, Sonali
Bank's capital shortfall was Tk 1,511 crore against the requirement of Tk 3,539 crore. The deficit was Tk 278 crore at the end of March. Zaid Bakht, a director of Sonali Bank, said capital
shortfall rose due to a mistake in the accounting system. Actually, the bank's risk-weighted assets decreased and capital increased in June compared to March, he said. Bangladesh Krishi
Bank's capital shortfall was Tk 5,996 crore at the end of June and that of Rajshahi Krishi Unnayan Bank Tk 650 crore, according to the central bank. Khondkar Ibrahim Khaled, a former chairman of Bangladesh Krishi Bank, said agriculture-based banks give loans to farmers at low interest rates. Besides, during any natural calamity these banks cannot realise loans from farmers.
As a result, income of the agricultural banks is not as high as that of the commercial banks and
hence they always face a capital deficit. So, the government has to provide them with capital as
they work to boost agricultural economy, Khaled said. He also said the failure of the management of the state banks is the main reason behind the capital shortfall of these banks. He said
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Daily News Recap
the managing directors and deputy managing directors of the state banks should be appointed
on the basis of their professionalism, honesty and efficiency.
Capital shortfall of BASIC Bank, another state-owned bank, also increased further to Tk 1,675
crore in June from Tk 1,037 crore three months ago. An official of the banking division under the
finance ministry said the government plans to provide capital to all state banks, including
BASIC. As BASIC Bank has got a new board and management, it may be provided with capital,
he said. He said the banking secretary will meet the finance division secretary soon and take a
final decision on which bank will get how much capital. However, the private banks have gone
further ahead in raising their capital and the amount rose by 2 percent to Tk 50,148 crore in
June. Only three private banks had a capital shortfall -- Bangladesh Commerce Bank Tk 40
crore, Premier Bank Tk 56 crore and ICB Islamic Bank Tk 1,415 crore. Except one bank, the
foreign banks' capital situation was healthy. On an average, their CAR was 20.64 percent.
News Source: http://www.thedailystar.net/business/banks-capital-falls-as-defaults-pile-up-39755
Denim makers all
set for expansion
Local entrepreneurs are investing heavily in denim, as at least six new factories will come into
operation this year to meet growing global demand. “We will start producing an additional one
million yards of denim fabric a month in the next three months,” said Kutubuddin Ahmed, chairman of Envoy Group. It produces three million yards a month at present. “I know that five to six
other groups have already installed machinery to produce the fabric,” Ahmed added. Currently,
he purchases 60 tonnes of yarn a day from local yarn makers to produce denim. “To meet
growing demand, we are now establishing a new spinning mill at a cost of $30 million to produce 50 tonnes of yarn a day. Production at the new factory is scheduled to begin in the next 18
months.” In the middle of 2013, denim lost much of global demand to jeggings, a kind of stretch
fabric. “But people rejected it later due to poor quality. Western buyers now returned to denim,"
Ahmed said. Bangladeshi entrepreneurs supply denim to major retailers and brands, including
H&M, Uniqlo, Levis, Nike, Tesco, Wrangler, s.Oliver, Hugo Boss, Puma, Primark, JC Penney,
C&A, Tommy Hilfiger, Inditex, Walmart, M&S, Calvin Klein, Diesel, Gap, Channel and Dior and
G-Star. Bangladesh exports denim fabric and denim garments worth more than $600 million a
year to the $60 billion global market, industry insiders said.
Bangladesh has 25 denim factories that produce around 20 million yards of denim fabric a
month. Total investment in the sub-sector stands at Tk 6,500 crore. Bangladeshi firms meet 40
percent of demand for fabric by the local denim makers and exporters; imports account for the
rest. Demand for denim fabric is high worldwide, as denim garments are comfortable and fashionable, said entrepreneurs. “The sector is maintaining slow but steady growth. The country will
definitely perform better if the political environment remains stable,” said Showkat Aziz Russell,
managing director of Partex Denim. Denim makers have to be creative in design, said the chief
of one of the largest denim makers in Bangladesh. “They should be passionate about the products, customers and markets, as the business is linked to both local and international
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Daily News Recap
markets.” “There are some denim makers who are facing troubles with bank loans," Russell
said.
News Source: http://www.thedailystar.net/business/denim-makers-all-set-for-expansion-39753
The government banks are lagging behind private and
State banks slow to
go online
foreign banks in introducing online banking for customers, Bangladesh Bank data shows. BB's quarterly report as of June 2014 shows that all 75 branches of foreign banks and 3,632 branches or 99.94 percent of
private banks have introduced online banking, gaining
an edge over the state banks. A mere 858 branches or
24 percent of the total 3,540 branches of state-owned
commercial banks offer online coverage. The situation
is more depressing with the state-owned development
banks; less than nine percent of their branches have an
online facility. “The government's procurement system
is stringent and it takes a lot of time to execute a contract,” said SM Aminur Rahman, former
managing director of state-owned Janata Bank. He served the bank for six years before his
contract expired on July 27. He pointed at an excessive number of branches and poor locations
for the state banks' lagging in adopting automation and online facilities. Many of the branches
are located in places with no internet coverage, he added.
Online banking is an electronic payment system that enables a customer of a financial institution to conduct transactions on a website operated by the institution, such as a bank or a nonbank financial institution. Online banking is also known as internet banking, e-banking, or virtual
banking. Bangladesh is relatively late in introducing online banking. The trend gained momentum in the last five to six years. Now, 46 out of 47 banks scheduled before 2013 have adopted
the concept to deliver prompt services to its customers. Under online banking, banks offer services like checking account balances and recent transactions, downloading bank statements
and periodic account statements, ordering cheque books, fund transfers between customers'
linked accounts, and paying third parties, including bill payment. Pubali Bank has the largest
online banking network in the country with all its 427 branches now offering such services.
“There is no alternative to modern and technology-driven services that have made our tasks
easier,” said Helal Ahmed Chowdhury, managing director of the bank. Pubali has brought all its
branches under the online system by using software developed by the bank's own human resources. Chowdhury said Pubali yesterday signed an agreement with Oracle and Aamra Technology to install the latest technology of Oracle Exadata that offers improved online banking
services. “It is tough in today's world to survive without online banking services,” said Touhidul
Alam Khan, deputy managing director of newly established Modhumoti Bank that introduced the
system from its inception last year.
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Daily News Recap
Khan, who is also the first Certified Sustainability Reporting Assurer in Bangladesh and a pioneer in initiating green banking activities in Bangladesh, said online banking not only serves
promptly but also promotes green banking. Masodul Bari, head of IT of Al-Arafah Islami Bank,
said online banking helps both bankers and customers. “A banker can take prompt decisions by
analysing data, while a customer can get many services without going to the bank branches.”
Online services are also cost-effective, he said. If a manual transaction costs a bank Tk 10, it is
only Tk 0.10 for an online transaction, he added.
News Source: http://www.thedailystar.net/business/state-banks-slow-to-go-online-39752
Banks cut interest
rates further
Scheduled banks further cut rate of interest on their deposit products in July due to an increasing trend in excess liquidity in the banking sector, according to the latest Bangladesh Bank data.
The BB data showed the weighted average interest rate on the deposit in the banking sector
declined to 7.71 percentage points in July from 7.79 percentage points in June this year. The
weighted average interest rate on the deposit was 8.01 percentage points in May. The BB data,
however, showed that the weighted average interest rate on the lending also declined to 12.84
percentage points in July from 13.10 percentage points in June. The weighted average interest
rate on the lending was13.23 percentage points in May. Against the backdrop, the interest
spread rate, the gap between the interest rates on credit and deposit, declined to 5.13 percentage points in July from 5.31 percentage points in June. A BB official told New Age on Monday
that the interest spread rate had declined in July, but it was still high as the central bank had
earlier asked the banks to maintain the limit below five percentage points. The central bank has
recently asked the banks at a bankers’ meeting to cut their rate of interest on their industrial
credit for the interest of entrepreneurs. The BB official said that the majority of the banks had
recently cut their interest rates on deposits as they were now reluctant to collect funds due to a
lower credit disbursement amid political uncertainty. The business community has adopted a
‘wait and see’ approach to expansion of their business by taking loans from the banks due to
political uncertainty.
The political uncertainty has put an adverse impact on the private sector credit growth. The year
-on-year credit growth rate in the private sector stood at 12.27 per cent in the recently concluded financial year against the central bank target of 16.50 per cent. For this reason, the BB set a
lower private sector credit growth of 14 per cent in its monetary programme for June-December
2014. The BB official said that the excess liquidity excluding the statutory liquidity ratio in the
banking sector had recently crossed Tk 1,20,000 crore. The BB data showed that the weighted
average rate on deposit in the state-owned commercial banks stood at 7.23 percentage points
in July from 7.26 percentage points in June, that in specialised development banks at 9.31 percentage points from 9.39 percentage points, that in private commercial banks at 8.04 percentage points from 8.13 percentage points and that in foreign commercial banks at 4.34 percentage points from 4.49 percentage points. The weighted average rate on lending in the stateowned commercial banks stood at 10.75 percentage points in July from 11.04 percentage
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Daily News Recap
points in June, that in specialised development banks at 12.29 percentage points from 13.11
percentage points, that in private commercial banks at 13.48 percentage points from 13.68 percentage points and that in foreign commercial banks at 12.32 percentage points from 12.45
percentage points.
News Source: http://newagebd.net/44662/banks-cut-interest-rates-further/
#sthash.sHB6CDfE.dpbs
BJMC in cash
crunch for jute purchase: chairman
Bangladesh Jute Mills Corporation on Monday claimed that it could not purchase raw jute due
to fund crisis though the season of purchasing jute is running out. At a view-exchange meeting
with journalists, BJMC chairman Humayun Khaled said that they were not getting funds despite
repeated requests made to the higher authorities including jute and textile ministry. ‘It will not be
possible to keep 26 jute mills operational in coming days if the situation continues,’ he said.
BJMC, a state-owned corporation, set a target of buying a total of 26 lakh quintal raw jute this
year costing Tk 800 crore to Tk 900 crore and the purchase will have to be completed within the
season starting from August to November, he said. He said, ‘This is the pick season for purchasing jute and I went to the ministry, to the parliamentary standing on jute and textiles ministry, wrote letters frequently seeking funds for buying jute.’ BJMC is yet to get any fund for the
purpose though the season of purchasing quality jute is running out, he said. He also pointed
out some reasons including indifference of the government, conspiracy of unscrupulous groups,
non-implementation of mandatory jute packaging act, reduction of production capacity of mills
equipped with age-old machineries, absence of bank loans for jute cultivation for the poor condition of country’s jute sector. He, however, said that still there was a huge demand of jute
goods in international market and Bangladeshi exporters would have to produce diversified
products to tap a good share of the market. At the meeting, BJMC secretary ANM Al Firoz,
among others, was present.
News Source: http://newagebd.net/44636/bjmc-in-cash-crunch-for-jute-purchase-chairman/
#sthash.nc53O30I.dpbs
ICB to be turned
into banking company
The Investment Corporation of Bangladesh (ICB) Bill, 2014 was placed in parliament Monday
with a proposal to set up a corporation to be named as ICB, reports BSS. Finance Minister AMA
Muhith introduced the bill in the House. According to the bill, the corporation would be considered as a banking company after having license under the Bank Company Act. The bill proposed for making specific rules on setting up its head office and branch offices, formation of
board of directors and executive committee, appointment of managing director and directors,
eligibility of shareholders and conducting audit. Later, the bill was sent to the Parliamentary
Standing Committee on the Ministry of Finance for scrutiny.
News Source: http://www.thefinancialexpress-bd.com/2014/09/02/53871
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Daily News Recap
Economy
Incentives being
finalised to help
snare investors in
EZs
The government is set to offer a slew of incentives including tax holiday for economic zones
(EZs) to foster investment in the country, which can spur higher economic growth, officials said.
The planned incentives will be extended in the forms of tax holiday, duty waiver, and capital
subsidy, they said. A high-powered committee led by senior secretary of the Prime Minister's
Office (PMO) will sit Tuesday to finalise the incentive package, which will encourage developers
and investors to make investment in the EZs. Bangladesh is placing importance on such zones
to help accelerate the country's economic growth and boost employment. The state-run Bangladesh Economic Zones Authority (BEZA) has carried out a comparative analysis of incentives
and services given to special economic zones in India, economic zones in the Philippines and
Export Processing Zones in Bangladesh to make the proposed incentive package "attractive,"
officials said. The BEZA recommended that the developers and investors of Bangladeshi EZs
will enjoy a five year income tax holiday. In the first two years, the investors will enjoy 100 per
cent income tax holiday, 50 per cent waiver during the third and fourth year, and 25 per cent
waiver in the fifth year. It also suggested offering duty-free import facility of raw materials, construction materials and capital machinery for the investors of EZs. They will also be given exemption from dividend tax, the facility of full repatriation of capital and dividend, quota-less foreign direct investment, and sale of 100 per cent backward linkage raw-materials and accessories to export-oriented industries in domestic tariff areas.
Besides, the EZ investors will also be allowed to do sub-contracting business with industrial
units in domestic tariff area. They will be offered exemption from 50 per cent stamp duty and
registration fees for registration of leasehold land or factory space. The BEZA also recommended that all purchase excluding petroleum product from domestic tariff area shall be exempted
from value added tax (VAT) and sales tax, ten years VAT and tax waiver on electricity generation or self generated or purchased electric power for use in EZs, and one time capital subsidy
up to 50 per cent of cost incurred for setting up of central effluent treatment plants. Officials said
the BEZA will also allow duty-free export of all goods from EZs, waiver of double tax after signing bilateral agreements, permission for the sale of 10 per cent finished goods of EZs to domestic tariff area, and income tax waiver on salary of foreign nationals. During Prime Minister
Sheikh Hasina's recent visits to China and Japan, she had discussions with her counterparts
about establishment of separate economic zones for Chinese and Japanese investors. Besides,
foreign businessmen from many other countries also sought economic zones to facilitate their
investments.
They said considering the interests from different countries to establish EZs in Bangladesh and
making significant investment, the government has come forward to offering all-out cooperation. The government has planned to provide 8,000 acres of land in Chittagong to Japanese
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Daily News Recap
investors for setting up a special economic zone (SEZ) as pledged by PM. Providing land to
Chinese investors for setting up economic zone is also under consideration, officials said. The
government has already finalised the private economic zone policy, allowing individuals to set
up such zones across the country. Several numbers of EZs from government, private sector
and foreigners is likely to be set up in the near future. The World Bank recently proposed that
the government should enable the development of 40,000 acres of land for creation of new
industrial zones across the country to facilitate both foreign and local investment.
News Source: http://www.thefinancialexpress-bd.com/2014/09/02/53824
PM asks PC to
come up with remedies
The prime minister has asked the Planning Commission (PC) officials to find out the reasons
for inordinate delays in the implementation of some power sector projects and suggest appropriate measures in this connection, according to sources. A number of these projects have
been struggling for many years. Officials said Monday that apart from procedural complexities,
hard terms binding the use of donor funds stood in the way. Planning Commission (PC) officials said PM Sheikh Hasina had given them the directive during the last meeting of the Executive Committee of the National Economic Council (ECNEC) as many projects of the power
division have missed their execution deadlines. The Implementation Monitoring and Evaluation Division (IMED) has been assigned to identify the projects in coordination with the PC and
the Power Division, said one official. "We have already started work to identify the projects
struggling for implementation delays. After identifying those we will find out the impediments,"
said a senior PC official. The PC would prepare a recommendation to overcome the hurdles
facing those development works. Different implementing agencies under the Power Division
have been implementing 47 investment projects. The implementation of some of those is being delayed for various reasons. A Power Division official said some projects are facing delays
due to inadequate release of funds, land-acquisition problem, procurement complexities, and
harder terms and conditions of the development partners binding receipt of foreign assistance
against those projects.
If the PM takes initiative to overcome the problems, he said, Bangladesh's power development (generation to distribution phase) would get a much-needed shot in the arm. A PC official said the projects that hit snags include Tk 42.39 billion Siddhirganj 335-megawatt powergeneration unit, Tk 6.53 billion Installation of Aminbazar-Old Airport 230kv transmission line
and associate substations, Tk 5.07 billion 10-town power-distribution-line- improvement project, and Tk 1.80 billion emergency rehabilitation expansion of urban areas and powerdistribution system under Chittagong zone. He said Bangladesh Power Development Board
(BPDB) undertook the 10- town electricity-distribution-improvement projects in 2003 and the
project was still not completed due to complexities involving the release of fund by a donor. A
development partner among the three co-financers for the Tk 5.07 billion power-distribution
project withdrew its financing plan. It affected the project implementation severely, the PC
official said. An IMED official said they would sit with the PC and the Power Division to find out
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Daily News Recap
the reasons behind the delays in implementation of the power-development projects. "After
identifying those, we will work out details on the possible measures to overcome those problems. Then we will make a recommendation for removing the complexities," he added. The
remedial plan will be presented before the ECNEC meeting soon.
News Source: http://www.thefinancialexpress-bd.com/2014/09/02/53924
Foreign assistance
slightly up in July
The foreign assistance inflow slightly increased by 4.63 million in July, first month of the current fiscal, compared to corresponding month of the last fiscal. Different development partners disbursed $175.95 million during the month against on going projects while it was
$171.32 million in July last fiscal. Some $167.39 million of the total assistance was in credit
and $8.57 million in grants while it was $117.91 in credit and $53.41 million in grants in
prevpous fiscal. However, the country received fresh foreign assistance commitment of only
$1.43 million in July while it was nil in last fiscal. The government made repayment of $87.91
million during this month. Some $68.39 million of the repayment was in principal and $19.58
million in interest. During the corresponding period in last fiscal the government made repayment of $79.11 million in the last fiscal. Among the development partners World Bank disbursed $44.12 million, Asian Development Bank $57.36 million and JICA $37.48 million.
News Source: http://www.theindependentbd.com/index.php?
option=com_content&view=article&id=228485:foreign-assistance-slightly-up-injuly&catid=108:business-finance&Itemid=152
Many fear policy to
woo FDI may boomerang
A change in the foreign exchange policy to attract foreign investment is feared to widen further
the scope of money laundering as Bangladesh Bank relaxed the repatriation rules. Bangladesh Bank Senior Adviser Allah Malik Kazemi admitted the chance of capital flight still remains though the central bank decided to relax the rules on consideration the country would
gain much than what it might lose due to money laundering. “There is scope of money flight
but not much as being feared,” he told the Dhaka Tribune yesterday. “We have more chance
of becoming gainer as foreign investment will build fresh industry in the country.” Bangladesh
Bank relaxed the fund repatriation rule when the country is trying to curb money laundering
through enacting laws and joining international anti-money laundering bodies. The central
bank on Sunday relaxed the forex policy allowing repatriation of foreign investment from
Bangladesh by selling their shares of equity that they owned in unlisted companies. The valuation of shares would now be estimated through a “fair value” method instead of net asset
value. The fair valuation of shares would be estimated on a combination of three valuation
methods – net asset value approach, market value approach and discounted cash flow approach depending on the nature of the company.
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Daily News Recap
Senior executives of Bangladesh Bank considered it to open the exit door of funds foreign
investors earned through their business in the country. Kazemi said the central bank lifted the
restriction on fund repatriation in order to encourage the long term foreign investment in the
country. The restriction had, however, been maintained fearing the money flight. But now, he
said, the restriction has been lifted in response to demands by some foreign investors who
have already invested in the country. He said long-term foreign investment has slowed down
due to the strict exit policy. But some foreign investors had invested here relying only on
Bangladesh Bank’s commitment it would relax the condition for repatriation of funds. He said
the net asset value was not a fair approach as the process might be applicable for a closed
company, but not for a running company. Another senior executive, preferring anonymity,
said the foreign investors were earlier allowed to entry in the country for investment, but with
strictly restricted repatriation rules the central bank had imposed fearing money laundering. As
a result, foreign investors have been deprived of the income, brand value of the companies,
and do not get the real value, making them reluctant to invest for a long time in the country. He said though the relaxed rule would contribute to increase long term foreign investment
in the country, it would also create a great scope of money laundering.
“Capital flight could take place through manipulation of the valuation process of the shares,”
he said. He, however, defended that the central bank has the option to justify the value, but
still having the scope of being biased. “There is a chance of capital flight,” said Mamun Rashid, banker and economic analyst. However, he said the auditors have huge responsibility to
protect the capital flight. On the other hand, he said, private equity investors would be encouraged due to the new rule. According to the circular, application for repatriation of sale proceeds of shares will have to be submitted to the foreign exchange investment department of
the central bank with a valuation certificate, issued by a merchant bank or a chartered accountant. The valuation certificates will have to be supported by full explanation justifying the
fair value. Audited financial statements of the company will also have to be submitted along
with the application for remittance approval, the BB said. The central bank, however, can scrutinise the valuation by another chartered accountant, if it is not satisfied about the appropriateness of the valuation of shares.
News Source: http://www.dhakatribune.com/banks/2014/sep/02/many-fear-policy-woo-fdi-may
-boomerang-0
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Daily News Recap
Govt to issue Islamic bonds
The government has revised its Islamic Investment Bonds Regulations, 2004 to allow itself to
borrow from the Shariah-based banks and non-bank financial institutions by floating Islamic
investment bonds. The government will borrow from the Shariah-based banks and NBFIs to
implement its Shariah approved projects. The regulations were revised on August 18 so that
the government can take loans from the Shariah-based banks and NBFIs to implement its
large projects like Padma Multipurpose Bridge, a Bangladesh Bank official told New Age on
Monday. The BB on Monday issued a circular to managing directors and chief executive officers of all scheduled banks and NBFIs saying that it would arrange auctions to complete the
bids of Islamic investment bonds in line with the revised regulations of the government. The
central bank will declare the auction date of Islamic investment bonds before 10 days. The
Shariah-based banks and NBFIs earlier invested in the Islamic bonds issued by the government without any auction while the government could not take the funds as those were kept
attached with the Islamic Bond Fund in the central bank. The Shariah-based banks and NBFIs
will be able to take loans from the BB and other Islamic banks and NBFIs through the repurchase agreement by using the bonds, according to the revised regulations.
Some Islamic banks and NBFIs earlier faced severe cash crunch as they were not allowed to
take loan from the BB through the REPO. The BB will set profit sharing ratio at the auction for
the Islamic investment bonds and the Shariah-based banks and NBFIs will avail the profit in
accordance with the PSR. The Islamic banks and NBFIs will keep the bond at the central bank
to fulfil its statutory liquidity requirement. Private companies and general people along with the
foreign companies and non-resident Bangladeshis will be able to invest their fund in the Islamic investment bond. But, they will have to purchase the bond from the Shariah-based banks
and NBFIs. The BB official said that the government had revised the regulations on Islamic
investment bond as it would need huge amount of fund from the banking sector in the coming
months to implement its mega projects like Padma Multipurpose Bridge. Due to the revision of
the regulations, the government will issue different tenure of Islamic bonds to borrow from the
Shariah-based banks and NBFIs.
News Source: http://newagebd.net/44673/govt-to-issue-islamic-bonds/
#sthash.2o7P6CLp.dpbs
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Daily News Recap
Capital Market
Portfolio investment
dips 84 per cent
Net foreign investment in the Dhaka Stock Exchange (DSE) fell drastically by 84 per cent in
August from July, 2014 as foreign investors were in selling mood. The overseas investors
bought shares worth Tk 1.64 billion in August and sold stocks worth Tk 1.52 billion, taking
their net investment to Tk 124.56 million, according to data from the Dhaka Stock Exchange
(DSE). In July, net foreign investment was Tk 796.42 million as they bought shares worth Tk
1.66 billion and sold shares worth Tk 868.09 million, the DSE data showed. It was also the
lowest single-month net foreign investments in DSE for the last three years since 2010, so far.
However, total foreign turnover increased by 25 per cent in August from a month ago. Total
turnover stood at Tk 3.17 billion in August which was Tk 2.53 billion in July. "The net foreign
investments in DSE fell drastically in August as foreign fund managers were in selling mood
throughout the month," said a DSE official. An analyst said that the foreign investors always
want to see a peaceful and stable political environment for their investment. Perhaps, they
followed a 'wait-and-see' policy. "The foreign investors thought that the country's political situation may deteriorate again. They went to sideline as an anticipatory move, as political instability would affect profit of the listed companies," he said.
He stressed for political stability, improvement in power and infrastructure, macro-economic
equilibrium and foreign investor-friendly policies to attract more foreign portfolio investment in
the market. Prices of the fundamental stocks were high, and business performance of most of
the listed companies was not as good as expected, which did not attract the foreign investors,
said a stock broker. Also known as portfolio investment, foreign investment accounts for
around 2.0 per cent of DSE's total market capitalisation which was Tk 3047.29 billion on Monday. The foreign investors preferred power and energy sector. But non-bank financial institutions, pharmaceuticals, multinational companies, telecom and IT also caught their attention,
brokers said. In 2013, foreign investors bought shares worth Tk 26.52 billion and sold stocks
worth Tk 7.09 billion, taking their net investment for the year to Tk 19.43 billion.
News Source: http://www.thefinancialexpress-bd.com/2014/09/02/53868
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Daily News Recap
UK groups want to
advocate for foreign
investments in
DSE, CSE
A UK-based investment association and a development finance institution also based in UK
have expressed interest in initiating global advocacy to bring foreign investment into Bangladesh’s stock markets. However, they have identified five barriers into attracting foreign investment to the country’s two markets - Dhaka and Chittagong stock exchanges. Emerging Markets Private Equity Association (EMPEA) and CDC Group are willing to take the move. Commercial Counselor of Bangladesh in the United Kingdom Sharifa Khan sent a letter to Finance
Secretary Mahbub Ahemd in this regard. It said the CDC and EMPEA are keen to invest in the
country as well as launch the global advocacy. The letter mentioned some barriers which include restriction on repatriation of the capital from Bangladesh and three-year lock-in periods
following initial public offerings of securities (IPOs). Business integrity and corporate governance are also of concerns for foreign investors willing to step in the Bangladeshi stock markets. Besides, Bangladesh Securities and Exchange Commission (BSEC) has only made a
limited adherence to international accounting standards, the letter said. It said there also exists a lack of private equity regulatory guidelines for investment in the two stock exchanges.
Commercial counselor said the intention of EMPEA and CDC Group is to highlight the potentials for private equity development within Bangladesh and how regulatory enhancement could
attract capital into the country. EMPEA is a global industry sector association for private capital in emerging markets. It is an independent non-profit organisation. As EMPEA celebrates its
10th anniversary in 2014, the association has over 300 member firms, comprising institutional
investors, fund managers and industry advisers, who together manage more than $1tn of assets and have offices in more than 100 countries across the globe. The association members
share EMPEA’s belief that private capital is a highly suited investment strategy in emerging
markets, delivering attractive long-term investment returns and promoting the sustainable
growth of companies and economies, the letter cited. The association supports their members
through global authoritative intelligence, conferences and events, networking, education and
general and regulatory advocacy. Last April, the CDC Group invested $28m in private sector
lender Ratnakar Bank in India, a transaction that made the British development financial institution picking up a 4.8% stake in the Kohlapur-based and private equity-backed bank.
News Source: http://www.dhakatribune.com/business/2014/sep/02/uk-groups-want-advocateforeign-investments-dse-cse
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Daily News Recap
LankaBangla Securities launches trading software
LankaBangla Securities has soft-launched trading software with Chittagong Stock Exchange
to provide direct market access to dealers and investors, it said in a statement yesterday. The
software known as Order Management System, launched for the first time in Bangladesh, is
different from the exchange-provided application. The system is an open platform to integrate
with other stock exchange trading engines. LankaBangla led the market into a new dimension
with the software as dealers and inventors can now place orders using real-time technical
analysis and risk management, said Muinul Islam, chief technical officer and director of LankaBangla. Mohammed Nasir Uddin Chowdhuary, managing director of LankaBangla Finance,
inaugurated the new trading system. The system offers multi-channel e-trading to its customers (web, mobile and client server).
News Source: http://www.thedailystar.net/business/lankabangla-securities-launches-tradingsoftware-39775
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Daily News Recap
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