Bangladesh Bank buys USD 1.8 billion from banks in July-October
The central bank has directly purchased USD 1.8 billion from the commercial banks in the first four months of the current fiscal year (FY), 2016-17, to help keep the inter-bank foreign exchange (forex) market stable. The amount was slightly lower than that of the same period in last fiscal year (FY 16), when the Bangladesh Bank (BB) bought nearly USD 1.9 billion, according to its latest statistics. The central bank, however, did not sell any single US dollar in the market during the period (July-Oct) under review due to lower demand for the greenback. The central bank is continuously maintaining a market-based exchange rate policy to avoid excessive volatility, he further said, while explaining the main objective of its intervention in the market. The BB official also said the central bank has purchased the greenback from the banks to protect the interests of exporters and migrant workers by keeping the exchange rate of the Bangladesh Taka (BDT) against the US dollar stable. The country’s foreign exchange reserve rose to USD 32.08 billion on Sunday, from USD 32.05 billion on the previous working day.
The country’s merchandise shipment in October grew by 14.4% to USD 2.7 billion compared to the year-earlier period, according to official data released Sunday. The earnings also surpassed the target set for the month by 2.8%. The export income in October of 2015-16 was USD 2.4 billion. The overall export earnings during the first four months of current fiscal year of 2016-17 grew by 6.5% to USD 10.8 billion compared to that of the corresponding period of FY 2015-16, the data from the Export Promotion Bureau shows. Export earnings stood at USD 10.1 billion during the same period of the last fiscal. The earnings, however, fell short of the target by 6.84% set for the July-October of 2016-17 fiscal. Export earnings from readymade garments, including knit and woven, in July-October period of the fiscal 2016-17 grew by 7.1% to USD 8.8 billion from USD 8.2 billion in the same period of last fiscal, according to data. The earnings from readymade garment exports were 7.3% lower that the target of USD 9.5 billion set by the government for the July-October period of the current fiscal. Knitwear fetched USD 4.53 billion in July-October period, recording a 8.8% growth compared to the corresponding period of the last fiscal. It surpassed the target by 2.23%.
Government earning from Dhaka Stock Exchange falls 17.0% in four months
The government’s revenue earnings from the prime bourse fell 17.0% year-on-year in the first four months of the current fiscal year (FY) as trading volume was on the decline. Market insiders said in tandem with the falling trade volumes, the government earnings from the premier bourse fell as earnings is related to trading volume. The government bagged tax worth about BDT 459.0 million in the first four months for July-October period of the FY 2016-2017, which was BDT 553.0 million in the corresponding period of the previous fiscal, according to statistics from the Dhaka Stock Exchange (DSE). The government earned the amount on TREC (trading right entitlement certificate) holders’ commission and share sales by sponsor-directors and placement holders. Of the total revenue earnings of BDT 459.0 million in the first four months of the FY 2016-17 for July-October, BDT 353.0 million came from the TREC holders’ commission and BDT 106.0 million came from the share sales by sponsor-directors and placement holders, the DSE data showed.
The regulator moves to pave the way for direct filing of stock-related cases with the special tribunal on bourses to avert delays in trial. To ‘expatiate’ tribunal jurisdiction, officials said, the Bangladesh Securities and Exchange Commission (BSEC) has finalized a draft of amendment to the Securities and Exchange Ordinance (SOE) 1969 under which the special tribunal on capital market was set up in July 2014. As per existing legal provision, the special tribunal can only conduct trial of the cases transferred from other courts. An official of the securities’ regulator said it was not possible to include some relevant provisions in the latest amendment as it was finalized and came into effect in a short span of time. According to him, in the proposed amendment the regulator has also included six-month timeframe for completing judgment procedure along with the right of filing appeal with higher court against the tribunal verdict. The special tribunal on capital market has almost been sitting idle since last May as there is no case to try. The tribunal sources said a total of 24 cases, including some related to the 1996 stock-market scam, were transferred to the tribunal for trial.
Small-cap firms get separate platform to raise funds
Small-cap companies have got a separate trading platform to raise funds from the capital market, which is good news for small enterprises that look for alternative sources of financing. Companies with a minimum paid-up capital of BDT 50.0 million are eligible to raise funds by using the platform — Small Capital Platform. But they will have to raise at least BDT 50.0 million from ‘qualified investors’ through listing on the platform, while the post-issue paid-up capital would not cross BDT 300.0 million, according to a new rule, a gazette of which was published last week. Qualified investors mean institutional investors and high net-worth individuals with adequate knowledge on investment. The institutional investors include merchant bankers and portfolio managers, asset management companies, mutual funds and other collective investment schemes, stock dealers and brokers, banks and financial institutions. Bangladesh Securities and Exchange Commission in August approved the new rule — Qualified Investor Offer by Small Capital Companies Rules, 2016 — to facilitate the growth of small-cap companies that have potential but do not have enough funds. According to the rule, the Central Depository Bangladesh Ltd will create separate beneficiary owner’s accounts for the qualified investors. General investors will not be allowed to take part in the trading of small-cap companies after their listing on the new platform. Also, small-cap companies cannot use the initial public offering method to raise funds, as existing rules allow a company with minimum paid-up capital of BDT 300.0 million to go for IPO. If the paid-up capital of a small-cap company exceeds BDT 300.0 million after listing on the separate platform, it can apply for listing on the main board of exchanges.
Bangladesh experienced the worst ebb tide in annual capital inflows, both in equities and bonds, in the last calendar year. Low yields on bonds and comparative higher stock returns from other global equity markets were believed reasons for such slowdown in foreign fund inflows both into bond and equity markets in 2015. The net fund inflows were negative in the past year in both the cases. The bond market saw net inflow at (minus) USD 19.1 million and equity market at (minus) USD 55.6 million, according to the US-based EPFR Global. The financial agency tracks the global fund movements. The country drew positive foreign funds in 2014 in the bonds at USD 8.7 million. However, the equity market saw a negative USD 16.3 million fund that year. The equity market net inflows in four years since 2010 had been in the positive domain, the global research firm told the FE. However, a number of economists conversant with the financial market told the FE that many of the foreign investors resorted to parking their money in more profitable markets in 2015, leading to fall in the investment in the local capital market. Government and some financial institutions usually buy government bills and bonds. The government is borrowing less than expectation with the borrowing tools.
Bangladesh Power Development Board (BPDB) to offload 10.0% of its stake in DESCO
The Bangladesh Power Development Board (BPDB) will offload 10.0% of its total stake in Dhaka Electric Supply Company (DESCO), according to Dhaka Stock Exchange (DSE). A declaration posted on the website of the premier bourse said the shares would be offloaded as per ‘instruction’ from the government. The BPDB is a corporate sponsor of the DESCO which was listed on the stock markets in 2006. “As per Government instruction, the BPDB is to off-load/sale 10.0% shares of DESCO out of its total holding of 293,104,259 shares which is 73.72% of total shares of the Company,” the DSECO said through a declaration posted on DSE website. According to DSE information, out of 397,569,804 securities of DSECO, government holds 75% shares, institutes 17.69% shares, foreigners 0.57% and public 6.74%.
The telecom regulator yesterday asked Grameenphone to pay BDT 300.0 million in fine within the next 10 days for providing broadband internet service by flouting rules through its sister concern Go Broadband. Bangladesh Telecommunication Regulatory Commission slapped the fine last week. In April 2014, Grameenphone launched Go Broadband, a Wi-Max service provider, in partnership with ISP operators ADN Telecom Ltd and Agni Systems Ltd. And in December of that year, Go Broadband signed an agreement with Sonali Bank to provide internet service to 551 branches. But in the actual documents that were signed, there was no mention of ADN Telecom Ltd and Agni Systems Ltd. In fact, the agreement was signed between Grameenphone and Sonali Bank, though Grameenphone does not have the permission to provide broadband service. Mobile operators are allowed to build optical/wired backbone transmission network only if the nationwide telecommunication transmission network operators do not have the infrastructure. But Grameenphone built optical/wired backbone transmission network while providing service to Sonali Bank and violated the infrastructure sharing guideline, BTRC said in a letter to the operator yesterday.
Major Currencies Exchange Rates Movement in Last Seven Days
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