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Rumours, leakages in WebPages hurting stock market

Business Report 

 
The stock market has become everybody’s business especially in the media is doing a disservice to its recovery. All TV stations now deal with the titbits of the stock market. Commentators are speaking free style and print media publishing news and views. Some face books and websites have also recently joined the fray generating sensationalism by was of speculative news which are nothing but rumours sometime spread deliberately to hurt the market. 
Experts are of the view that it is time everyone should stop it.
Market players, stakeholders and experts have recently urged the authorities to take immediate measures against this trend and restrict such forecasting to regulators and experts.
The sources said some of the Web pages and online groups are even leaking data beforehand, saying which company will give how much dividends, how much would be the earnings per share or when right shares would be announced.
They are also circulating speculative rumours about the market indices, which surprisingly match reality in some cases.
”Spreading any sort of rumours and price-sensitive information about the market are punishable offences. However, how much the SEC is keeping an eye on such matter is what needs to be seen,” former chief of the securities regulator A B Mirza Azizul Islam told bdnews24.com. Also a former caretaker government advisor, Islam said that the SEC should keep close watch on the matter and take steps against those responsible.
The active groups and web pages dedicated to the capital market on the Facebook include BD Capital Market, Lost Memory Comes Back, Dhaka Stock Exchange for Public Discussion, Analysis for Investment, DSE and CSE Small and New Invest, DSE: Hot Item and Hot News Running With Current Market, ABC Share Consultancy and Centre For Investment And Stock Consultancy.
The administrator of BD Capital Market on Wednesday wrote, “The next week’s market is depending on tomorrow’s trading. If the turnover is not more than Tk 3 billion then losses are lying ahead.” On Feb 14, the same person wrote that the market would be fine until Feb 29. The group also advised investors to buy shares of a company after publishing price-sensitive information about their earnings per share and right shares.
Meanwhile, the Lost Memory Comes Back’s admin spread gossips throughout last week that the Bangladesh Bank will be giving Investment Corporation of Bangladesh (ICB) Tk 6 billion and that the Cash Reserve Ratio (CRR) would be lowered by 0.5 percent.
It advised investors to buy shares of a specific company claiming that, “The price would go up to Tk 180. ICB will buy these shares when they get the money.”
On the other hand, DSE: Hot Item and Hot News Running With Current Market’s admin advised its members on Saturday, “The market could plummet largely if the merchant banks [start forced selling], so [beware].”
“The SEC laws say circulating rumours is a punishable crime. The SEC should mark out those trying to manipulate the market by spreading rumours and speculations,” Bangladesh Merchant Bankers Association chief Mohammad A Hafiz in his reaction to the media on the leaks and rumours advised investors not to listen to such rumours and invest thoughtfully. 
The SEC itself is suspecting that the market is being manipulated by spreading rumours and making speculations.
At the end of a meeting with market stakeholders on Jan 31, the regulator’s spokesperson Saifur Rahman told newsmen: “We have discussed various rumours being spread by various quarters.” However, he declined to comment on the issue on Saturday. 

Comment

Business Report 

 
The stock market has become everybody’s business especially in the media is doing a disservice to its recovery. All TV stations now deal with the titbits of the stock market. Commentators are speaking free style and print media publishing news and views. Some face books and websites have also recently joined the fray generating sensationalism by was of speculative news which are nothing but rumours sometime spread deliberately to hurt the market. 
Experts are of the view that it is time everyone should stop it.
Market players, stakeholders and experts have recently urged the authorities to take immediate measures against this trend and restrict such forecasting to regulators and experts.
The sources said some of the Web pages and online groups are even leaking data beforehand, saying which company will give how much dividends, how much would be the earnings per share or when right shares would be announced.
They are also circulating speculative rumours about the market indices, which surprisingly match reality in some cases.
”Spreading any sort of rumours and price-sensitive information about the market are punishable offences. However, how much the SEC is keeping an eye on such matter is what needs to be seen,” former chief of the securities regulator A B Mirza Azizul Islam told bdnews24.com. Also a former caretaker government advisor, Islam said that the SEC should keep close watch on the matter and take steps against those responsible.
The active groups and web pages dedicated to the capital market on the Facebook include BD Capital Market, Lost Memory Comes Back, Dhaka Stock Exchange for Public Discussion, Analysis for Investment, DSE and CSE Small and New Invest, DSE: Hot Item and Hot News Running With Current Market, ABC Share Consultancy and Centre For Investment And Stock Consultancy.
The administrator of BD Capital Market on Wednesday wrote, “The next week’s market is depending on tomorrow’s trading. If the turnover is not more than Tk 3 billion then losses are lying ahead.” On Feb 14, the same person wrote that the market would be fine until Feb 29. The group also advised investors to buy shares of a company after publishing price-sensitive information about their earnings per share and right shares.
Meanwhile, the Lost Memory Comes Back’s admin spread gossips throughout last week that the Bangladesh Bank will be giving Investment Corporation of Bangladesh (ICB) Tk 6 billion and that the Cash Reserve Ratio (CRR) would be lowered by 0.5 percent.
It advised investors to buy shares of a specific company claiming that, “The price would go up to Tk 180. ICB will buy these shares when they get the money.”
On the other hand, DSE: Hot Item and Hot News Running With Current Market’s admin advised its members on Saturday, “The market could plummet largely if the merchant banks [start forced selling], so [beware].”
“The SEC laws say circulating rumours is a punishable crime. The SEC should mark out those trying to manipulate the market by spreading rumours and speculations,” Bangladesh Merchant Bankers Association chief Mohammad A Hafiz in his reaction to the media on the leaks and rumours advised investors not to listen to such rumours and invest thoughtfully. 
The SEC itself is suspecting that the market is being manipulated by spreading rumours and making speculations.
At the end of a meeting with market stakeholders on Jan 31, the regulator’s spokesperson Saifur Rahman told newsmen: “We have discussed various rumours being spread by various quarters.” However, he declined to comment on the issue on Saturday. 

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China’s foreign direct investment falters

 

Reuters in Beijing

 
China’s foreign direct investment shrank for the third consecutive month in January as firms in crisis-embroiled Europe slashed spending by over 40 per cent, casting another pall over the outlook of the world’s economic growth engine.
The gloomy trend was augmented by China’s trade ministry, which warned of grim times’ ahead and promised action to help struggling local exporters cope with lacklustre demand abroad. But Shen Danyang, the spokesperson for the trade ministry, cautioned investors against excessive pessimism, saying it was too early to predict that China’s import and export growth would shrink this year despite their shock contraction in January.
“Due to growing downward pressures in the world economy, the external environment for China’s imports and exports is getting tougher and overall, the situation remains grim,” said Mr. Shen from the Commerce Ministry. 
He said measures to aid exporters include relieving cash strains suffered by small firms, helping companies resolve trade disputes and improving credit insurance for exporters.
Mr. Shen’s comments came just after data from the Commerce Ministry showed China drew $9.997 billion (U.S.) in foreign direct investment in January, down 0.3 percent from a year ago. 
Underscoring the turbulence European companies faced as the 27-member European Union battles a stubborn debt crisis, inflows from the region plunged 42.5 per cent to $452-million. Investment from the United States rose 29 per cent to $342-million while that from 10 Asian countries including Japan edged up a mere 0.8 per cent to $8.586-billion. In contrast, China’s non-financial outbound direct investment in January leapt 60 per cent from a year earlier to $4.376-billion. 
“Previously, they had deep pockets but now, the funding is tight because of debt problems,” Ting Lu, an economist at Bank of America-Merrill Lynch in Hong Kong, said in reference to cutbacks by European firms in China. 
But he said the retreat should be temporary and that investors will return in droves to chase China’s heady growth rates, among the highest in the world, when the global economy steadies in the second half of this year. 
“For many years, China will be the world’s largest receiver of foreign direct investment,” Mr. Lu said. 
Investment inflows into China surged in the years after it joined the World Trade Organization in 2001, and have rebounded strongly after being hit hard by the 2008/09 global financial crisis. 
Indeed, China weathered Europe’s festering debt crisis last year to draw a record $116-billion worth of foreign direct investment, giving the Commerce Ministry confidence to target an average of $120-billion in inflows in each of the next four years. 
In contrast, China’s trade performance has been far more volatile. 
Data last week showed imports sank 15.3 per cent in January from a year ago — the lowest since August 2009 — while exports fell 0.5 per cent over the same period, the worst showing since November 2009. The Commerce Ministry said the real trend is not as dismal as the numbers suggest as the data was distorted by the Lunar Chinese New Year, which fell in January this year but was in February last year. 
Mr. Lu from Bank of America-Merrill Lynch agreed that work stoppages during the festive period had exaggerated the poor performance, but nonetheless expects China’s trade growth for 2012 to halve to 10 per cent, from last year’s 20 per cent. To that end, he said Beijing could ease risks faced by exporters selling in fiscally troubled European nations such as Greece and Portugal by insuring their credit. 
“Some banks in peripheral Europe are not so dependable. The Chinese government has deep pockets and if it can give insurance, that would be helpful.”

Comment

Reuters in Beijing

 
China’s foreign direct investment shrank for the third consecutive month in January as firms in crisis-embroiled Europe slashed spending by over 40 per cent, casting another pall over the outlook of the world’s economic growth engine.
The gloomy trend was augmented by China’s trade ministry, which warned of grim times’ ahead and promised action to help struggling local exporters cope with lacklustre demand abroad. But Shen Danyang, the spokesperson for the trade ministry, cautioned investors against excessive pessimism, saying it was too early to predict that China’s import and export growth would shrink this year despite their shock contraction in January.
“Due to growing downward pressures in the world economy, the external environment for China’s imports and exports is getting tougher and overall, the situation remains grim,” said Mr. Shen from the Commerce Ministry. 
He said measures to aid exporters include relieving cash strains suffered by small firms, helping companies resolve trade disputes and improving credit insurance for exporters.
Mr. Shen’s comments came just after data from the Commerce Ministry showed China drew $9.997 billion (U.S.) in foreign direct investment in January, down 0.3 percent from a year ago. 
Underscoring the turbulence European companies faced as the 27-member European Union battles a stubborn debt crisis, inflows from the region plunged 42.5 per cent to $452-million. Investment from the United States rose 29 per cent to $342-million while that from 10 Asian countries including Japan edged up a mere 0.8 per cent to $8.586-billion. In contrast, China’s non-financial outbound direct investment in January leapt 60 per cent from a year earlier to $4.376-billion. 
“Previously, they had deep pockets but now, the funding is tight because of debt problems,” Ting Lu, an economist at Bank of America-Merrill Lynch in Hong Kong, said in reference to cutbacks by European firms in China. 
But he said the retreat should be temporary and that investors will return in droves to chase China’s heady growth rates, among the highest in the world, when the global economy steadies in the second half of this year. 
“For many years, China will be the world’s largest receiver of foreign direct investment,” Mr. Lu said. 
Investment inflows into China surged in the years after it joined the World Trade Organization in 2001, and have rebounded strongly after being hit hard by the 2008/09 global financial crisis. 
Indeed, China weathered Europe’s festering debt crisis last year to draw a record $116-billion worth of foreign direct investment, giving the Commerce Ministry confidence to target an average of $120-billion in inflows in each of the next four years. 
In contrast, China’s trade performance has been far more volatile. 
Data last week showed imports sank 15.3 per cent in January from a year ago — the lowest since August 2009 — while exports fell 0.5 per cent over the same period, the worst showing since November 2009. The Commerce Ministry said the real trend is not as dismal as the numbers suggest as the data was distorted by the Lunar Chinese New Year, which fell in January this year but was in February last year. 
Mr. Lu from Bank of America-Merrill Lynch agreed that work stoppages during the festive period had exaggerated the poor performance, but nonetheless expects China’s trade growth for 2012 to halve to 10 per cent, from last year’s 20 per cent. To that end, he said Beijing could ease risks faced by exporters selling in fiscally troubled European nations such as Greece and Portugal by insuring their credit. 
“Some banks in peripheral Europe are not so dependable. The Chinese government has deep pockets and if it can give insurance, that would be helpful.”

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 Construction industry under severe stress

Business Report

 
Local construction companies are facing two severe problems. President of Bangladesh Association of Construction Companies (BACI) Shafiqul Alam Bhuiyan recently at a press conference at Jatiya Press Club said soaring inflation is making every financial calculation of project costs dysfunctional. There is a big need to readjust the cost now with the rising market price of construction materials and manpower cost. 
Old calculations are hardly working at this time of soaring inflation, he said. 
Secondly, the government must maintain the domestic preference system in awarding government contracts to companies having their origin in the country as against the growing pressure of builders trying to enter into the country’s construction industry from outside.   
And thirdly, he suggested that the government should develop a central warehouse from where the local construction companies can secure supply of construction equipment at specific charges instead of requiring them to import them every time they get a contract. 
Such equipment remains idle once the construction is over and it affects the contractors’ cost benefit ratio adversely. Through this mechanism other companies may benefit by hiring those equipment when they get a contract to build a public or private project without having to import them. It saves time too. 
Over the decades, he said construction industry has been playing a pivotal role in the country’s infrastructure development, adoption of new technology in building high rise structures without inviting foreign companies to lend support to build it for them. 
The construction industry’s contribution to GDP now stands at 2 to 14 per cent and ten million skilled and unskilled people are engaged in it. Shafiqul Alam Bhuiyan said “the industry has created employment for engineers, architects and also contributed to creating many sub sectors in which millions of peoples have also secured jobs.”
But this industry is now facing severe setbacks mainly resulting from high cost of construction materials over the last decade and particularly in recent times. Estimated cost projections become a nightmare because of price inflation.
Currently prices of materials have increased by about 40 per cent, wages for both skilled and unskilled labour rose by 25 per cent and interest rates on bank loans are hovering around 14 to 18 per cent, he said.
Increased prices of power and diesel are also hampering the sector’s growth. If this situation continues for some time, quite a few of the companies are likely to become defaulter soon. Besides, local firms also are unlikely to compete with the foreign firms as the government is not applying the domestic preference system in awarding contracts. 
In the neighbouring countries, Bhuiyan said domestic preference system is strictly maintained by their governments to support local construction industry. He urged the government to adjust project costs with the inflation and also the need to maintain the PPR clauses properly to support the local industry.
He also laid emphasis on proper implementation of the domestic preference in the international tendering process.
The BACI chief further said that a central warehouse for construction equipment should be maintained. It is important because even for a single project, a contractor has to import specialized equipments and after completion of the project they become scarp.
Currently some of the top contractors have made huge investment to procure heavy machinery and equipments necessary in the construction industry but after the completion of their projects, such costly equipments are kept idle. So a central warehouse could help all contractors – large and small. We can use them round the year by leasing to parties who need them.

Comment

Business Report

 
Local construction companies are facing two severe problems. President of Bangladesh Association of Construction Companies (BACI) Shafiqul Alam Bhuiyan recently at a press conference at Jatiya Press Club said soaring inflation is making every financial calculation of project costs dysfunctional. There is a big need to readjust the cost now with the rising market price of construction materials and manpower cost. 
Old calculations are hardly working at this time of soaring inflation, he said. 
Secondly, the government must maintain the domestic preference system in awarding government contracts to companies having their origin in the country as against the growing pressure of builders trying to enter into the country’s construction industry from outside.   
And thirdly, he suggested that the government should develop a central warehouse from where the local construction companies can secure supply of construction equipment at specific charges instead of requiring them to import them every time they get a contract. 
Such equipment remains idle once the construction is over and it affects the contractors’ cost benefit ratio adversely. Through this mechanism other companies may benefit by hiring those equipment when they get a contract to build a public or private project without having to import them. It saves time too. 
Over the decades, he said construction industry has been playing a pivotal role in the country’s infrastructure development, adoption of new technology in building high rise structures without inviting foreign companies to lend support to build it for them. 
The construction industry’s contribution to GDP now stands at 2 to 14 per cent and ten million skilled and unskilled people are engaged in it. Shafiqul Alam Bhuiyan said “the industry has created employment for engineers, architects and also contributed to creating many sub sectors in which millions of peoples have also secured jobs.”
But this industry is now facing severe setbacks mainly resulting from high cost of construction materials over the last decade and particularly in recent times. Estimated cost projections become a nightmare because of price inflation.
Currently prices of materials have increased by about 40 per cent, wages for both skilled and unskilled labour rose by 25 per cent and interest rates on bank loans are hovering around 14 to 18 per cent, he said.
Increased prices of power and diesel are also hampering the sector’s growth. If this situation continues for some time, quite a few of the companies are likely to become defaulter soon. Besides, local firms also are unlikely to compete with the foreign firms as the government is not applying the domestic preference system in awarding contracts. 
In the neighbouring countries, Bhuiyan said domestic preference system is strictly maintained by their governments to support local construction industry. He urged the government to adjust project costs with the inflation and also the need to maintain the PPR clauses properly to support the local industry.
He also laid emphasis on proper implementation of the domestic preference in the international tendering process.
The BACI chief further said that a central warehouse for construction equipment should be maintained. It is important because even for a single project, a contractor has to import specialized equipments and after completion of the project they become scarp.
Currently some of the top contractors have made huge investment to procure heavy machinery and equipments necessary in the construction industry but after the completion of their projects, such costly equipments are kept idle. So a central warehouse could help all contractors – large and small. We can use them round the year by leasing to parties who need them.

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