Macro News

Islamic bonds' maturity period cut by half

http://www.thedailystar.net/business/islamicbondsmaturityperiodcutbyhalf39922
The central bank has cut the maturity period of Islamic bonds by half as it amended the guideline on their
issuance to make them attractive. A Bangladesh Bank official said the maturity period has been set at three
months, along with the existing six months, to help Islamic banks and financial institutions manage their
fund smoothly.


The profit of Islamic bonds will equal the profit of a three-month fixed deposit scheme of the issuing Islamic
banks, replacing the profits rate for savings deposits.

This will enhance profit of Islamic bonds and make them attractive, the BB official said.

The new guidelines will be known as Islamic Investment Bond Guidelines 2004 (Amended 2014), which
came into effect on August 18.

Now shariah-based banks and financial institutions will be able to use the bonds as an instrument for repo
operations.

The guidelines came on the back of a huge growth in Islamic banking in the country. There are seven full-
fledged shariah-compliant banks. Most other banks have also launched their Islamic banking wing in recent
years. However, officials said growth of Islamic banking has been dented in absence of a separate money
market for such banks. Inter-Islamic banks call money rate and repo rate, the two instruments used in day-
to-day liquidity management in the banking sector, were not introduced for them.

The return or profit on the only available Mudaraba Islamic bond, which Islamic banks use to meet the
mandatory liquidity ratio, is also low.

Islamic banks have created a fund under the central bank management to issue bonds and trade the
instruments among themselves, mainly for the purpose of maintaining statutory liquidity ratio.

The amount of money under the fund stood at Tk 10,977 crore as of August this year. Against the fund,
bonds worth Tk 2,582 crore have been created. The government, however, does not buy any Islamic
bonds.


Pharma exports in fast lane
http://www.thedailystar.net/business/pharma-exports-in-fast-lane-39917
Pharmaceutical exports rose 15.65 percent year-on-year to Tk 553.3 crore in fiscal 2013-14, riding on the
back of growing global demand, high quality products and competitive prices. Demand for Bangladeshi
pharma products is growing in Asia, Africa and European markets as manufacturers follow international
standards that ensure better quality, said Momenul Haq, senior vice-president of Bangladesh Association
of Pharmaceutical Industries.

Exports grew 24 percent to Tk 478.4 crore in 2012-13 from the previous year, according to data from the
Export Promotion Bureau.

Attractive packaging also helps attract foreign buyers, said Haq, who is also the managing director of
General Pharmaceuticals that exported about Tk 25 crore of products last year to Sri Lanka, Afghanistan,
Bhutan, Vietnam, Cambodia, Philippines and African nations.

Bangladeshi medicine makers meet 98 percent of domestic demand and export to 88 counties. The country
exported 30 pharmaceutical items in fiscal 2013-14.

Export figures would have been higher if the country had not gone through a political crisis, Haq said.

The sector incurred losses in the first six months of last fiscal year due to political unrest, which almost
broke the supply chain down, he added.

Most medicine makers are receiving new export orders as political setbacks subsided, said Haq.

We import raw materials due to a lack of an Active Pharmaceutical Ingredients Technology Park in
Bangladesh, Haq said.

Manufacturers in an API Park can produce raw materials needed by the medicine makers.

India has its own API Park and as a result, it can offer competitive prices in global markets compared to
Bangladesh, he added.

Bangladesh's only central API Park was supposed to be completed by 2012, but it is still uncertain, which
leaves the entire industry dependent on raw material imports.

Bangladesh pharma exports are driven by high standards in quality and affordability, said Shawkat Haider,
head of business development at Beximco Pharma.

Beximco set a 25 percent export growth target this year compared to last year. It exported Tk 80 crore of
medicines last year to European nations, Sri Lanka, Myanmar, Kenya and South Africa.

As Bangladeshi medicine is now being exported to Europe, which is known for stringent regulatory
standards, it gives impetus to our pharma industry and creates awareness among global customers,
particularly from emerging and developed markets.

Although Southeast Asia and Africa are traditionally Bangladesh's major markets for generic drug exports,
leading companies have now focused on advanced markets, said Haider.

At least five companies successfully entered the European market and received good responses from the
buyers, he added.

Top companies continue to explore new markets and in the current fiscal year have registered products
in countries like Netherlands, Latvia, Azerbaijan, Costa Rica, Estonia, and Lithuania.

Political setbacks in the last quarter of 2013 badly affected pharma exports and domestic sales, which
caused a loss of hundreds of crores of taka, he said.

Many companies delayed making any new investment or expansion projects, Haider added.

We need adequate support from the government to develop the API Park to make our medicines more
competitive in global markets, he said.

The API Park has already been delayed by years and we do not know when this will be completed.

We also need a central drug testing laboratory to strictly maintain the high standards of medicine and a
bioequivalence testing facility to do the clinical testing that is a prerequisite to register our products in the
regulated markets, Haider said.

Manufacturers also need an uninterrupted supply of power and gas to the production units, he said.

The country's pharma market is currently valued at Tk 12,000 crore. We need special economic zones for
the pharma industry with tax benefits. The API Park in Munshiganj must be completed without any more
delay.

He emphasised collaboration between the industry and universities to promote research activities,
particularly in developing specialised drug delivery systems.

A special chemistry course needs to be introduced in universities to strengthen the API capabilities, he said.

We also need improvements in pharmaceutical regulatory and legal affairs.


Seed market grows, led by private firms
http://www.thedailystar.net/business/seed-market-grows-led-by-private-firms-39920
The seed market is growing due to massive marketing campaigns by private companies and farmers' switch
to commercial farming for higher incomes, operators said. The market of quality seeds, supplied by public
and private sectors, stood at 2.67 lakh tonnes in fiscal 2012-13, though the amount was around one lakh
tonnes a decade ago, according to data from the agriculture ministry.

Industry insiders said the market grows by more than 10 percent a year with the share of the private sector
rising gradually.

"Farmers are shifting from subsistence farming to commercial agriculture. It is one of the main reasons
behind the growth of the market," said Asadul Amin Dadan, general secretary of Bangladesh Seed
Association, a trade body of 180 members.

Dadan said the private sector mainly contributes to the growth of the overall seed market worth more than
Tk 1,000 crore now.

The market began to grow gradually after the government had allowed the private sector to import and
sell hybrid seeds in 1998 to boost food production.

Since then many private businesses signed up for the trade as farmers were highly dependent on low-
quality seeds that were collected either from informal market or preserved by themselves.

Agriculturists and seed businesses say good seeds can increase crop yields by up to 20 percent.

Now private and public sectors together supply 20 percent of the demand for seeds.

Nearly a decade ago, the supply of seeds by private firms and state-run Bangladesh Agricultural
Development Corporation (BADC) was only 12 percent of the total requirements, according to the
agriculture ministry.

FH Ansarey, executive director of the agribusiness division of ACI Ltd, a private firm, said the overall market
for seeds grows 12 percent a year now.

"Farmers are getting the results of using quality seeds. They are getting better yields as they can also grow
winter vegetables off season," Ansarey said.

Growing consumption of vegetables and a sharp rise in the number of dealers amid massive marketing by
some companies also buoyed the seed market, he said. "Some seed companies are also operating in remote
areas."

Mohammad Masum, chairman of Supreme Seed Company, said the entry of some private companies
facilitated the market growth. Old companies have also increased their activities, he said.

Now, apart from BADC, more than 100 firms, including some non-governmental organisations, sell seeds,
mainly hybrids of rice, maize, vegetables and spice, through 18,000 registered dealers.

"The overall demand for quality seed has also increased," he said. The share of the private sector in seed
supply rose to 34 percent in fiscal 2012-13 from 23 percent in the previous year and only 11 percent in
2005-06, according to the agriculture ministry.

Private seed companies and traders have more than 90 percent stakes in the hybrid segment of seeds for
maize, vegetables and spices mainly because of the expansion of hybrid cultivation.

The private firms also raised their share in rice seed trade. The sector supplied 24 percent of the total
demand for rice seeds in fiscal 2012-13, up from only 4.31 percent in 2005-06.


Capital Market

Mixed reaction over charging of management fee by AMCs
http://www.thefinancialexpress-bd.com/2014/09/03/54059
Experts, asset management companies (AMCs), auditors and the securities regulator have expressed mixed
opinion regarding charging of management fee of mutual funds (MFs) without performance or giving
dividends to the unit- holders. As per the securities rules, an AMC charges the annual fee at the rate of
2.50 per cent on the weekly average NAV up to Tk 50 million, 2.0 per cent per on additional amount of
weekly average NAV above Tk 50 million to Tk 250 million, 1.5 per cent per on additional amount of weekly
average NAV above Tk 250 million to Tk 500 million and 1.0 per cent per on additional amount of weekly
average NAV over Tk 500 million.


Some of the AMCs said the management fee should be based on performance but others differed with such
an opinion saying that they realise the fee as per the securities rules to pay for office and staffs.

"We work as external auditors of the AMCs. But as per the securities rules, we have no scope to give
opinion on whether the management fee charged by the AMCs is justified for their performance," said M.
Munjurul Hassan, a partner of the Hoda Vasi Chowdhury & Co.



According to information available with the Dhaka Stock Exchange (DSE), around 60 per cent of the 41
closed-end MFs have failed to give dividends in 2011 and 2012.

The AMCs, however, gave nominal amount of dividends for the year 2013.

As per the DSE information, the management fees charged by the AMCs of those MFs stood up to Tk 269.83
million.

Faruq Ahmad Siddiqi, former chairman of the securities regulator, said the question of charging
management fee based on AMCs' performance is absolutely valid as they are handling investors' money.

"It's also true that most of the MFs were offloaded in 2010 and 2011 and they faced a troublesome situation
due to poor market situation. So, I think the securities regulator now should look into whether any AMC is
handling MF without having professionalism," Mr. Siddiqi told the FE.

He said the AMCs must have analysts for the sake of proper investment and returns.

Stressing the need for discipline, Mr. Siddiqi also questioned the regulatory action against an AMC which
recently reportedly invested in restricted sectors by breaching securities rules.

Yawer Sayeed, managing director of the AIMS of Bangladesh, said the management fee of the MFs should
be based on performance of the AMCs.

"I think, an AMC morally should not charge management fee if it fails to give dividend for more than one
year. Several times, I made the proposal of fixing the management fee based on the performances of the
AMCs," Mr. Sayeed told the FE.

He said the AMCs need to charge management fee to run their offices and pay salaries of the staffs. "An
AMC may face difficulties to give dividend during the disaster period. But it's not logical that an AMC will
charge management fees year after year without giving any dividend." Mr. Sayeed added.

Tareque Ismail, spokesperson of the AMCs, said the MFs have really performed during the bearish period
of the capital market but failed to give dividends due to bindings of provisioning.

"The MFs were squeezed by 10 to 20 per cent although the market went down by around 60 per cent after
the stock market debacle. Recently, a significant number of MFs disbursed dividends by 'repairing' their
funds. This is the moral ground of charging fees," Mr. Tareque said.

A policy maker of the Bangladesh Securities and Exchange Commission (BSEC) said the regulator presently
is not thinking of revising the management fee of the AMCs.

"We have relaxed the investment ceiling of the MFs for better returns following their demand. Nevertheless,
some of the AMCs breached rules while making investments. But not a single AMC now will be allowed to
manage the MF by breaching rules," the BSEC policy-maker said.

Another BSEC official said in future, the regulator may think to approve only the open-end MFs which need
the performance of the AMCs only.


Probashi Kalyan Bank to float shares in stock mkt
http://www.thefinancialexpressbd.com/2014/09/03/54065

Probashi Kalyan Bank (PKB), the specialised state-owned bank for expatriates' welfare, has initiated a
process of floating its share in the stock market for further expansion, sources said. According to the
sources, the authority of the bank is at the end of completion of all necessary procedures to raise a capital
worth Tk 4.0 billion through offloading shares in the stock market.

PKB's move is a part of the government's on-going initiative to offload shares of all the state-owned entities
(SoEs).

Earlier in 2011, the government declared to off-load shares of all the SoEs in the stock market to make the
loss making entities vibrant but due to some bureaucratic complexities the attempt did not come to effect
for long.

But, in May last the finance minister again declared offloading the shares within a year and the attempt of
PKB is a part of this declaration.

"We are making all necessary papers according to our ordinance to offloading shares of worth Tk4.0 billion,"
Managing Director of PKB, CM Koyes Sami told the FE.

"If everything goes accordingly, then we are hopeful to offload the shares within a year," he added.

'As per our research, due to huge demand of loans among the NRBs and the returnees, the bank will need
at least Tk6.5 billion more in the next five to disburse, so we need to collect the money from the stock
market," Mr Sami informed.

Mr Sami, however also informed that only non-resident Bangladeshis (NRBs) and returnees will only be
eligible for applying for issuing the shares of the PKB.

The government through enacting 'Probashi Kallyan Bank Act, 2010' has established the specialized bank-
-PKB with a paid-up capital of Tk1.0 billion and an authorized capital of worth Tk 5.0 billion.

According to the act, the PKB will only work for the welfare of foreign going Bangladeshi workers and
returnees along with their family members.

However, the PKB in a real sense started its activities from J anuary 2012 and given migration loans worth
Tk 420 millions to more than 4,118 overseas job seekers until 31st December 2013.

Besides, the bank has also provided loans to more than 100 returnee migrants for their rehabilitation.

Interest against the migration and rehabilitation loans is 9 per cent and 11 per cent respectively.

According to sources at the PKB, the bank processes any of the loan application within highest three days.

However, following a number of success story and huge demand among the foreign going and returnees
the PBK has taken a vast expansion plan which will be materialized within the year 2018.

Under the plan the bank will open 150 branch offices in 64 districts and 61 upazilas. At present the bank
has 38 branches in seven divisional cities and districts across the country.

The PKB provides loan amounting to Tk 84,000 for going with employment to Middle East, South-East Asian
countries and Malaysia and Tk 120,000 to Europe and African countries without any co-lateral.

Besides, the bank also provides co-lateral free loans to the returnees up to Tk 1.0 million based on type of
project.

Stocks see rally on DSE
http://www.thefinancialexpress-bd.com/2014/09/03/54060
Stocks witnessed sharp gain Tuesday with prime index of the Dhaka Stock Exchange (DSE) hitting four
months high as investors went for buying spree on large cap stocks. The market started with an upward
trend and the prime index of the DSE - DSEX surpassed the 'psychological' threshold of 4,600-mark and
ended at 4,602.43 points after surging 47.46 points or 1.04 per cent. It is four-month high level of DSEX
since April 28.

The DS30, comprising blue chips and the DSE Shariah Index touched at highest points of 1,746.00 points
and 1,083.57 points, respectively from the inception after gaining 23.31 points and 18.65 points on
Tuesday.

The total turnover improved to Tk 5.52 billion, registering an increase of 10.01 per cent over the previous
session's value of Tk Tk 5.01 billion.

Textile, pharmaceuticals and engineering grabbed the investors' attention - the sectors that, accounted for
16 per cent, 15 per cent and 11 per cent respectively of the day's total turnover.

"DSE went for a bullish outlook as investors finally overcome their recent indecisiveness and became
optimistic about the market's future prospects," commented International Leasing Securities, in its daily
market analysis.

Scrips across all major sectors enjoyed positive returns, particularly a couple of large cap like Lafarge Surma
and Square Pharma were among the top index mover, said the International Leasing.

"Stocks of Investment Corporation of Bangladesh (ICB) achieved maximum possible gain as the investors
showed their appreciation towards proposed Bill for ICB's licensing as a banking company," the
International Leasing Securities added.

Zenith Investments said: "DSE indices extended previous session's gains, as investors simultaneously
gathered to inject more funds into the stock market".

Overall health of the market looks quite positive, but investors should be careful in selecting and
differentiating between fundamentally sound issues and gambling issues, the Zenith Investments added.

LankaBangla Securities said: "Market roared hitting the day's close crossing over the 'psychological' level
4,600 points-mark".

In industry news, banks' overall capital base shrank 1.36 per cent in the second quarter of this year
compared to the first quarter as the asset quality of state banks deteriorated further, said the stock broker.

Local entrepreneurs are investing heavily in denim, as at least six new factories will come into operation
this year to meet growing global demand, the stock broker said.

"For investors, there are a couple of takeaways from all of these. Investors are focusing more on
multinational companies," the stock broker added.

"Clienteles were assessing valuation level of the market and re-positioning in lucrative blue chip scrips,"
said IDLC Investments.

Most of the mutual funds secured worst position in top ten losers list, due to post record date adjustment,
said the merchant bank.

Among the major sectors, food and allied lost the most 2.71 per cent while banks closed flat in red with
0.01 per cent loss.

The other major sectors closed higher - NBFIs posted highest gain of 3.23 per cent followed by
pharmaceuticals going up by 1.72 per cent. Fuel and power edged up by 0.77 per cent.

Gainers outpaced losers as out of 304 issues traded, 207 advanced, 67 declined and 30 remained
unchanged on the DSE floor.

Activities increased in the major bourse (DSE) where trade and volume were up by 1.61 per cent and 22.02
per cent respectively. A total of 0.131 million trades were executed with 148.08 million securities of trading
volume.

The total market capitalisation of the DSE stood at Tk 3,106.73 billion against Tk 3,047.29 billion in the
previous session.

The port city bourse, Chittagong Stock Exchange (CSE) also closed higher with its Selective Categories
Index - CSCX - gained 78.21points to close at 8,675.05 points.

International

Dollar, euro surge against yen in Asian trading
http://www.thefinancialexpressbd.com/2014/09/03/54054
The dollar and euro rallied against the yen in Asia on Tuesday as J apanese central bank policymakers
prepared to meet, under pressure to launch more economic stimulus as the economy falters. In afternoon
Tokyo trade the dollar jumped to 104.82 yen, its highest level since J anuary, and up from 104.27 yen in
Europe. The euro surged to 137.55 yen against 136.94 yen.

US markets were closed Monday for the Labor Day holiday.

The greenback also added to recent gains against the euro as the European Central bank heads into a
policy meeting this week. The single currency was at $1.3122 in Tokyo, down from $1.3133 in Europe.

J apan and the eurozone have both recorded poor economic data recently, boosting expectations of further
monetary easing which would tend to weaken their respective currencies.

At the same time the US Federal Reserve is being urged in some quarters to raise interest rates -- which
would lift the dollar -- as the economy shows regular signs of getting back on track.

Eyes are on the release Friday of US jobs data expected to show further improvement.