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Besides a large depreciation of taka against dollar by about nine per cent, two new phenomena emerged in the country’s foreign exchange market, which ended a topsy-turvy year.
   In their annual currency review, two foreign banks stated that the local currency saw its biggest downslide against the greenback towards the end of the calendar year 2005.
   Nationalised commercial banks, traditionally big suppliers of dollar, turned dollar buyers in the face of growing demand for dollar for official import payments.
   ‘Despite a record increase in wage earners’ remittance to $3.84 billion in FY 05 (15 per cent increase over FY 04), higher growth in export earnings($8.57b in FY 05, 11 per cent rise over FY 04) and commendable FDI commitment - the demand-supply gap of foreign currency widened on the back of rising import growth,’ said Standard Chartered Bank in its yearly roundup for 2005.
   Imports, which registered about 20.5 per cent growth in FY 05 was mainly led by higher import of petroleum, capital machinery and textile items. Spiralling global fuel inflated Bangladesh’s petroleum import bill by 57 per cent, while imports from China became costlier as the Asian giant appreciated its currency, the SCB analysis said.
   Citigroup identified three major features in the Bangladesh forex market.
   Other than higher depreciation—trading against third currencies and state-owned banks turning to dollar buyers from sellers, are two important phenomena, the report mentioned.
   ‘Though taka remained relatively stable in the previous two years, it depreciated by almost 9 per cent in 2005,’ the Citigroup said in its annual update. The depreciation was the highest in the first quarter when the local currency depreciated by a whooping 5 per cent, it said.
   Large foreign currency requirements for oil and other government imports forced the NCBs, traditionally big suppliers of dollar in the market, to buy dollars in the local inter-bank market, it pointed out.
   The volatile tendency in the market was, however, a roll-on effect from the last half of the previous fiscal 2004-05.
   The Citigroup report said as taka became vulnerable to huge downward rides, a part of the market routed higher price of the US dollar through the trading of third currency like euro, pound sterling yen. ‘It was partly due to fear of regulatory interventions,’ observed the report.
   Citigroup’s analysis also said the effective taka-dollar rate in this new market was highly sensitive to country’s foreign currency supply and demand situation, thus the third currency market experienced larger price shocks.
   Citigroup estimation showed that taka depreciated by almost 12.8 per cent against dollar, if the price movements in the third currency market are taken into account.
   On inter-bank money market, call rates stayed at a relatively high level until May this year. The overnight rates ranged from 10 per cent to 20 per cent in most of the trades during that time. The Citigroup update said call rates stayed at a relatively high level until May this year. The overnight rates ranged from 10 per cent to 20 per cent in most of the trades during that time. However, the rates cooled off in June and remained stable till December. Even during the Eid-ul-Fitr, when the market experienced liquidity tightening through cash withdrawals out of banking sector, the rates did not show any unusual upward movement, which we had seen in the past.

Political tensions and bomb blasts, coupled with changes in the government’s monetary policy have eaten into the capital market turnover and share prices in the later period of 2005, analysts and market observers said.
   But overall market situation looked good throughout the year, showing some signs of maturity and stability, they said.
   Though stock market’s seesaw movement left small investors nervous on several occasions, insiders and market officials claimed that there were not much cases of abrupt fall or rise in prices and the market proved resilient to external shocks.
    The increase in the interest rate on savings certificates and the political tensions weighed down on the market sentiment taking some tolls on turnover values and share prices in the later period of the year, said economist Abu Ahmed.
   ‘But the overall situation was good,’ he said.
   The Dhaka University professor of economics said the government’s failure to offload some much-expected public sector shares was ‘very disappointing’ for the capital market.
   While a good number of new issues entered the market last year, some insurance companies with weak fundamentals also made their way into the market, said Ahmed, who is the chairman of state-run development financing institution, Bangladesh Shilpa Bank.
   The Securities and Exchange Commission chairman, Mirza Azizul Islam, said the day-to-day market statistics revealed that the share market as a whole behaved in a more matured manner than ever without any abrupt fall or rise in share prices.
   Increase in yields of savings instruments had a negative impact on capital market as the step inspired many investors to divert their investment to savings certificates, causing downslide in the turnover towards the end of 2005.
   The Dhaka Stock Exchange chief executive officer, Salahuddin Ahmed Khan, said the unanticipated change in the monetary policy led to liquidity crisis in the share market as it lured significant number of investors into the saving certificates, seen as safer mode of investment by small savers.
   Earlier, Bangladesh Bank raised the Cash Reserve Requirement for the scheduled banks in two phases to 5 per cent from 4 per cent while the Statutory Liquidity Ratio was raised from to 18 per cent from 16 per cent.
   The measures, said to be taken for containing inflationary pressure, were seen disincentives for the capital market as banking sector, the major player in the share market, faced a temporary liquidity crisis after complying with the central bank’s requirements.
   Buying spree of the initial public offering also caused a snooze in the secondary market, the DSE chief executive pointed out.
   Spate of bomb blasts overshadowed the otherwise good features, like encouraging corporate performances, in the last quarter of 2005, he said.
   The secondary bond market, introduced in the bourse on January 1, remained dysfunctional all the year round, depriving the market from intended benefits, he said.
   The Chittagong Stock Exchange executive stationed in Dhaka, Ghulam Faruque, said though banking stocks showed some good performance, other sectors remained flat last year.
   General investors alleged that syndicated activities influenced the market prices when small players got unnerved by political tensions and incidents of bomb blasts.
   The SAR Securities Ltd managing director, Sharif Ataur Rahman, said that share market went through a series of longer-than-usual vacation as well as trade suspension due to general strikes and other unforeseen reasons last year, which slowed down the capital market activities and increased operational cost of brokerage houses last year.
   The DSE traded 259 days in 2005 while it had 268 trading days in the year before.
   The DSE General Index lost 322 points or 16.12 per cent to close at 1677.35 on Thursday, the last trading day of 2005. The Index, which excludes Z category shares, reached to its peak on the very first day of the year at 1999.71 while it dipped to its lowest of 1434.65 points on May 2.
   The daily average turnover at the DSE was Tk 25.04 crore last year which was 26.21 per cent up from that of the previous year.
   A total of 17 companies raised about Tk 126.56 crore from the public through IPOs, with subscription totalled about Tk 1579.50 crore in 2005. A total of 14 companies made their debuts in the market, highest in five years.
   The CSE all share price index lost 259.07 points or 7.12 per cent from the opening day of last year to close at 3378.68 on the last trading day of the last year.

The United States will be able to deny duty-free access of 85-90 per cent of Bangladesh’s export items under the declaration adopted in the WTO ministerial conference in Hong Kong, a local research organisation said in a study.
   If all products under eight-digit tariff lines of the US Harmonised Tariff Schedule are taken into account, the US authorities would be able to block duty-free access of products under 339 tariff lines out of 412 currently going from Bangladesh, said the study of Unnayan Onneshan.
   “The EU and Canada had already given the duty-free and quota-free market access to Bangladeshi products, although a chunk of its exports was not able to avail of the facility due to EU’s stringent rules of origin,” said Rashed Al Mahmud Titumir of Unnayan Onneshan while releasing the report.
   He said the effectiveness of 97 per cent duty-free and quota-free market access is subject to scrutiny in the US market, which is considered as the single largest destination of Bangladeshi products.
   Bangladesh’s exports ranged between 385 and 402 product lines as per US tariff schedules.
   Since 2001, over 60 per cent of Bangladesh’s exports to USA were subject to 15 per cent duty or above.
   Given the scenario, Bangladesh would not have much benefit from the availed duty-free and quota-free market access provided in the WTO declaration, as its exports concentrated mainly to few products and very limited number of destinations, the report said.
   The Unnayan Onneshan analysis showed that bulk of the exports faced tariffs between the range of 15 and 20. On the other hand share of exports that faced tariff range of between 25 and above had also been increasing over the years, implying that products that Bangladesh has comparative advantages face higher tariff in the US market, it said.

Investment in the country is likely to slow down in the coming year as prospective investors would prefer to see how political situation develop ahead of the next general election.
   ‘Businessmen feel reluctant to go for new investment before any general election,’ the Board of Investment executive chairman, Mahmudur Rahman, a business executive turned policy maker, told the news agency on the country’s investment prospect in 2006.
   ‘The present upward trend of investment might slow down in the coming days as the country is heading for a general election,’ said Rahman, who is also the adviser for the ministry of energy and mineral resources.
   ‘Normally businessmen prefer to wait for the next government and then take decision on investment,’ he said.
   He also suggested that the trend in investment would continue to go up if there is no major political turmoil before the election.
   Rahman claimed that the country has attained 228 per cent investment growth in last six months of the previous fiscal year (January-June, 2005).
   ‘This is the highest growth in the investment history of Bangladesh,’ he said.
   The BoI chief cited Bangladesh Bank figures that said the country received $553 million in investment during the period. ‘This huge volume of investment took place despite terrorism and bomb blasts.’
   He said a strong confidence has been created among foreign investors about the country’s economic strength that resulted in the investment growth.
   Economist Dr Ananya Raihan does not see any major shock in the investment scenario in the short term, but apprehended that the new entrepreneurs would not be willing to come up for investment in the wake of political upheaval.
   He, however, said seasoned businessmen, who showed their resilience to cope with even 300 days of hartal, are unlikely to remain idle as they would try to capitalise the opportunities being created by the gradual opening up of international market with preferences for countries like Bangladesh.
   BoI figures say entrepreneurs registered investment proposal worth $13 billion in the first five months of the current fiscal (2005-06), including $12 billion in foreign investment.
   The investment proposal in 2004-05 fiscal was worth $3.2 billion against a figure of $2.8 billion in 2003-04.
   There was a 50 per cent growth of inflow of foreign direct investment in 2004.
   According to the 4th FDI Inflow Survey Report of the BoI, the investment inflow was 10 per cent higher than the strategic FDI target set by the BOI under its Mid-term Strategic Plan 2003-06. The target for the year 2004 was $600 million.
   Among the three main components, re-investment accounts for the highest share (47.7 per cent) of the total FDI inflow followed by equity (46.5 per cent) and intra-company borrowings (5.8 per cent).
   The highest FDI came for telecommunication sector in 2004, followed by manufacturing, energy and power. The telecommunication sector got 36 per cent investment while the percentage is 31 for manufacturing, 20 for energy and power and 13 for other sectors.

Special steps have been taken to increase ginger production in the northern region of the country to reduce import of the commodity and to meet the increasing local demand.
   Meanwhile, huge quantities of the newly harvested commodity have flooded the local markets reducing its price to Taka 36 per kilogram on an average now, officials and market sources said.
   According to sources in the Department of Agriculture Extension, a target of producing 66,360 tonnes of ginger from 5,530 hectares has been fixed during the current 2005-06 Rabi season in 12 northern districts which is 20 per cent higher than that of the previous season.
   The districts of Nilphamari, Lalmonirhat, Chapainawabganj and Natore are not included in the fixed ginger farming target this season though a substantial quantity of the crop will also be produced in these four districts, the sources said.

The year 2006 is considered to be crucial for the country’s apparel industry to prepare and devise strategies to face the possible aggressive competition from China after 2008.
   The existing EU quota restriction on Chinese apparel import will go in 2008, triggering a fierce competition between Chinese and Bangladeshi garment products to dominate the international market.
   Country’s apparel entrepreneurs are considering the year 2006 as much more ‘crucial’ as well as ‘important’ for the $6417.67 million RMG industry in terms of expanding and exploring its markets worldwide.
   ‘Our importers are in apprehension as 2006 is the election year. The prospects or problems of the RMG sector will largely depend on domestic political situation,’ said Tipu Munshi, the Bangladesh Garment Manufacturers and Exporters Association president.
   Referring to the latest WTO summit in Hong Kong, the BGMEA chief said the country can overcome the summit’s negative outcome but it cannot make up the losses to be caused by anarchism due to domestic politics.
   ‘Political parties have to consider how much the apparel sector is contributing to the national economy,’ Tipu Munshi said adding, ‘The year 2006 should be the year of restoring discipline in our politics and the whole industry, keeping in mind that China is going to emerge stronger with the withdrawal of EU embargo in 2008.’
   Voicing grave concern, the president of the apparel sector apex body said further rise in militancy or so on ahead of the election might prompt the foreign buyers to leave Bangladesh forever. ‘So, everything to take the RMG sector forward in 2006 depends on the level of maintaining law and order,’ he said.
   The Bangladesh Knitwear Manufacturers and Exporters Association president, M Fazlul Hoque echoed the same sentiment expressing his worry about possible political unrest in the coming year due to the general election.
   ‘We have only two years in hand to get ready to face the ensuing challenges of the Chinese products. Whatever we want to do we must do it in 2006,’ he said.
   The country has no other alternative to exploring and expanding its apparel market in the coming year to compete with the Chinese finished products, he pointed out.
   Explaining why the year 2006 will be so crucial, the BKMEA president said the reason is that this is the election year.
   He, however, hopes that the political parties will keep the RGM industry, the country’s highest foreign currency-earning sector, out of their programmes in the new year.
   ‘We want the elections to be held in a credible manner because this is the democratic process and there will be no anarchism ahead of the polls,’ he said.
   The Bangladesh Textile Mills Association chairman, MA Awal said that Bangladesh’s garment sector has earned a place on the global export market map as a strong and mature industry as its apparels are known for their quality and price competitiveness. ‘But, any wrong strategy of the government may make the country lose part of its international textile market,’ he added.
   Although the industry people have already got mentally prepared about a possible unrest over the election next year, the political parties should approach positively for the betterment of the economy, he suggested.
   ‘There may be a rise in militancy before the elections… political unrest may force the industry people to close down their industrial units, may linger lead-time that eventually will hurt the productivity,’ he apprehended.

The thriving coal business at Bhairab Bazar has opened up a vast prospect.
   Coal businessmen are happy that their time and money have been saved. The once discarded Meghna ferry ghat has got back its life again as the coal business has started thriving.
   This area is now a buzz everyday with thousands of businessmen and labourers.
   Hundreds of tonnes of coal imported from India arrive by boat at the Meghna ghat through Barachara and Chargaon LC station of Taherpur upazila in Sunamganj.
   From there coal is carried by trucks and boats to different areas of greater Dhaka, Mymensingh, Naryanganj and Comilla for sale.
   Businessmen said besides fire, about Tk 1400 to Tk 1500 is saved if coal can be purchased from Bhairab instead of Sunamganj.
   More than 100 trucks carry coal to different destinations day and night.
   About six thousand people are indirectly benefited through this business that has given them food. Shops, hotels and restaurants have sprung up due to the coal business and have created employments for around 800 people.
   Local coal businessmen alleged that the government was not taking any initiative for development of this business.
   Everyday they face various problems. Moreover, there is lack of proper space for business. If the local administration can make arrangement by using the barren land adjacent to river bank, it can become country’s biggest wholesale market of coal.

Hong Kong retail sales in November probably grew 5.0 per cent by value from a year earlier, accelerating slightly from October and helped by stronger employment and booming tourism, the news agency survey showed.
   The five economists in the survey estimated the volume of retail sales in November had been 3.9 per cent higher than a year earlier. That growth would be higher than seen in October, when sales were up 4.8 per cent by value from a year earlier and 3.7 per cent in terms of volume.
   The statistics office adjusts the value of retail sales for price changes to produce its volume estimate.
   Growth in retail sales by value peaked in April at 8.6 per cent and has gradually lost its steam since September, as rising interest rates have undermined consumers’ ability and desire to spend.
   Lifted by a tourist boom led by visitors from mainland China, retail sales in the first 10 months of this year were up 7.0 per cent by value.
   Hong Kong’s tourism authority said on Thursday that about 2.06 million visitors had arrived in November, 5.6 per cent more than a year earlier and on track to meet its 2005 target of 23 million.
   However, retail sales are likely to ease further in the first quarter of 2006, economists said.
   ‘I would expect consumption to go into a soft patch because of rising interest rates and also the relatively sluggish property market,’ said Tai Hui, an economist at Standard Chartered.

Indian gold futures moved in a tight range Friday on thin trading volumes as traders stayed away during the holiday season, while sugar slipped in anticipation of buoyant supplies.
   February gold on the Multi Commodity Exchange rose 15 rupees to 7,610 rupees per 10 grams. April gold was up 8 rupees to 7,656 rupees.
   ‘The market is moving on individual buy and sell transactions, because of the thin trading volumes. Most of the traders are away for the holiday season and trading will pick up only next week,’ said an Ahmedabad-based trader.
   He said the international spot gold price was likely to hover above $500 an ounce for the next three to four days.
   Gold prices in India, the world’s largest importer and consumer of gold, usually track those in the international market.
   Sugar futures slipped on expectation of higher supplies in the market in January, when cane crushing is at its peak.
   January sugar futures fell 8 rupees to 1,828 rupees. April sugar was down 14 rupees to 1,899 rupees.
   ‘Sugar prices will go down further over the next fortnight as the supplies are expected to peak during that time,’ said another trader.
   Soyoil futures extended their fall in India, the world’s leading edible oil importer, as traders expected the government to lower base import prices of oils.

Bird flu cemented itself as one of the world’s major health concerns in 2005 with dozens more deaths in Asia and the spread of the virus to Europe, sparking massive vaccination programmes and other emergency measures.
   Although the much-feared threat of a global pandemic that could kill millions of people failed to materialise, experts continued to warn the H5N1 virus remained capable of a global assault in 2006.
   ‘The world is now closer to another influenza pandemic than at any time since 1968, when the last of the previous century’s three pandemics occurred,’ the World Health Organisation said in its latest summary.
   The WHO reported at least 38 deaths from more than 90 cases of the H5N1 strain in 2005, with all of the deaths in Asia and Vietnam again bearing the brunt of the disease.
   Since late 2003, 43 people have died in Vietnam out of 93 reported infections there.
   Elsewhere across Asia, China, Thailand, Indonesia and Cambodia reported human bird flu fatalities in 2005, while the virus spread to Europe with it detected in birds from Russia to Turkey.
   The WHO’s total death toll across Asia stands at 73 from 141 cases since late 2003, although it had not officially updated the latest reported death in China announced on Thursday.
   Although China was seen to have escaped relatively lightly in terms of the human impact in 2005, with three fatalities from seven cases, the Asian giant remained a feared flashpoint for a potential global pandemic.
   With an annual production of 14 billion poultry, and most of the birds raised in ‘backyard farms’ in close contact with humans, experts warned China provided the right conditions for a potentially disastrous mutation of the virus.
   The virus is currently spread among animals and from animals to humans. The global pandemic would occur if H5N1 becomes easily transferable between humans. Close contact between people and infected poultry raises that danger.
   ‘We have to step up improvement of the primitive farming practice in China’s rural regions, especially the backyard feeding of chickens and ducks in many rural households,’ WHO regional director Shigeru Omi said this month.
   However the WHO generally praised China’s intense approach to tackling the virus, which included the ambitious attempt to vaccinate the nation’s entire poultry stock and the culling of more than 22 million birds.
   In China and across the globe, governments also raced to stockpile inhibitor drugs such as Tamiflu, made by Swiss pharmaceutical giant Roche, that experts hope will be able to protect humans in the event of a pandemic.
   However even as millions of Tamiflu and other retroviral drugs were produced around the world, concerns were raised about their effectiveness.
   A study published in the New England Journal of Medicine this month warned the strategy of stockpiling Tamiflu to guard against a possible flu pandemic could lead to drug resistance, insufficient dosages and inadequate therapy.
   The WHO also warned that, due to the cost of the drugs and the lack of manufacturing capacity, the world’s poorest countries may not be able to receive the potentially life-saving drugs in time.
   ‘On current trends ... most developing countries will have no access to a vaccine during the first wave of a pandemic and perhaps throughout its duration,’ the WHO said in a report in November.
   Meanwhile, the debate over whether a pandemic would occur raged fiercely in 2005.
   Bradford Frank, president of The Frank Group, a Lakewood, New York-based business contingency planning consulting firm, said a pandemic sometime soon was almost certain.
   The increase in cases of H5N1 in both animals and humans and the geographic spread accelerated dramatically in 2004 and 2005, while the number of species that became infected also increased significantly, Frank told the news agency.
   ‘Given the virulence of the current H5N1 subspecies, coupled with the basic high rate of mutations of the virus, the fact that the virus didn’t go ‘human-to-human’ (in 2005) was the biggest surprise,’ he said.

China has granted approval for 13 foreign and domestic banks to act as pioneering market-makers for yuan trading, marking another step towards greater flexibility for the currency, banking sources said.
   China said in November it would launch a long-awaited market- making system for yuan trading against foreign currencies, a move that will start early next year. Such a system, which promotes liquidity, is seen by economists as an important basis for a freer-floating yuan.
   Shanghai-based banking sources said that the 13 banks included the Big Four state-owned commercial lenders, as well as number-five ranked Bank of Communications.
   Other domestic lenders included Beijing-based CITIC Bank Co, top Shanghai-listed Merchants Bank Co Ltd and Fujian-based Industrial Bank Co.
   The foreign banks include Standard Chartered Plc, Citigroup Inc, HSBC Holdings Plc, ABN AMRO and the Bank of Montreal, banking sources said.
   HSBC said in a statement late on Thursday that it had been approved as a market-maker. The world’s largest financial services provider Citigroup issued a similar statement. Asia-focused Standard Chartered also confirmed its inclusion Friday.
   The launch of a market-making system for the yuan is part of a slew of economic and currency reforms that has taken place this year, from the creation of a commercial paper market to allowing currency swaps and forwards on interbank markets.

A Citigroup-led consortium has won the right to buy 85 per cent of China’s Guangdong Development Bank for $3.2 billion, beating rival groups led by ABN AMRO and Societe Generale, three sources close to the deal said.
   The purchase would grant the world’s top financial services company unusually large influence over a single medium-sized Chinese lender, at a time when local interests complain that foreign firms are acquiring stakes in Chinese banks on the cheap.
   Six officials from the bank regulator, the central bank and the Guangdong provincial government made their decision during a closed-door meeting at Guangdong Bank’s headquarters in Guangzhou late on Thursday, a source close to the Chinese bank and a second source familiar with the deal told Reuters on Thursday.
   Bidders had been informed of the group’s decision in Beijing on Friday, which now awaited final cabinet approval, said a third source who attended meetings in the capital aimed at briefing the parties involved.
   The six-person group would submit minutes of Friday’s meeting to the cabinet, or State Council, within days.
   Citigroup will kick off exclusive negotiations with Guangdong Bank as early as next week on technical areas including staff benefits, IT support and new management, two sources said.
   ‘Unless the exclusive negotiations fail unexpectedly, or the cabinet refuses to approve the deal, there’s no longer any chance for other bidders,’ a senior executive close to Guangdong Bank told Reuters on condition of anonymity.

The Serbian government on Thursday withdrew the operating licence of the leading domestic mobile phone company Mobtel over a deal with a Kosovo business that it said threatened national security.
   The move came after the government, which is a minority shareholder in Mobtel, discovered the company had signed a ‘secret’ contract with a Kosovo mobile operator, the Serbian economy minister, Predrag Bubalo, said.
   The Kosovo company, Mobikos, owned by ethnic Albanian businessman Ekrem Lluka, had therefore ‘illegally used resources of the state of Serbia, which was against the interest of Serbia,’ Bubalo told reporters.
   ‘The contract caused two types of damage—a financial one but also a security one as Lluka’s company had had unauthorised access to information of users in Serbia,’ said Dragan Jocic, Serbia’s interior minister.
   This meant that the ‘control of communications could have been done from Kosovo for the entire territory of Serbia,’ as well as for himself, Jocic said.
   The government found out about the contract after the United Nations mission that runs Kosovo contacted the Serbian interior ministry’s unit for organised crime, requesting an investigation of the matter, Jocic said.
   The government authorised Serbia’s only other mobile company—MTS, which is run by state-owned Telekom Srbija—to be the administrator of the Mobtel network until new mobile operators are chosen in a tender.
   ‘The state monopoly will last for a short period of time, until the situation is settled,’ said Serbian Capital Investments Minister Velimir Ilic.

After a tepid holiday shopping season, US retailers are hoping that an earlier launch of full-price spring apparel will attract shoppers with gift cards in hand and break the industry’s recent reliance on discounting.
   Apparel retailers from AnnTaylor Stores Corp to Abercrombie & Fitch, Guess Inc and retail leaders like Federated Department Stores Inc, are showcasing new clothes at full prices earlier than ever, hoping to entice shoppers on the lookout for the new and fashionable.
   ‘Retailers are banking on the fact that the consumer has been shopping ... and they’re bored with fall (merchandise). And they’re coming in with their gift card and (are) willing to pay full price,’ for new items, said Marshal Cohen, chief analyst at market research firm NPD Group.
   The trend of starting the full-price season earlier is shaking up an industry that has historically focused on reducing inventories in December and January before launching spring apparel in February.
   ‘The retailer now counts January as a month to get business, it’s no longer a throw-away month,’ Cohen said. The mid-January season—known as ‘resort’ and featuring dressy clothing originally intended for winter cruises—has faded in importance among retailers and has been supplanted by the growing interest in hastening the arrival of spring, he said.
   Cohen estimated that fewer than 10 per cent of apparel retailers are embracing the new trend. But if successful, the number could jump to more than a quarter of US retailers.
   Driving the trend is the popularity of gift cards, sales of which the National Retail Federation estimated would total $18.48 billion this holiday, a 6.6 per cent increase over 2004.
   ‘Everyone wants to capture that full-price selling that you get from gift cards after Christmas,’ said Brean Murray analyst Eric Beder. ‘This is a perfect way to do it. Since it’s ‘found’ money, (consumers) will pay full price for something that’s kind of cool.’
   The phenomenon is also being embraced by discounters. Both Target Corp and Wal-Mart Stores Inc, which set the tone of aggressive discounting among all retailers this season—have already restocked with full-price goods.
   In a research note this week, Merrill Lynch analyst Mark Friedman wrote that teen-oriented and higher-end stores, in particular luxury handbag retailer Coach Inc would be most successful with ‘spring transition’ merchandise, since their customers would have gift cards in hand as they look for the latest trends.
   Bringing in new merchandise earlier also makes sense for national chains that have stores throughout the Sunbelt regions, where shoppers ignore cold-weather items like coats and sweaters in January.
   And analysts say there is room for creativity. While some retailers will simply move up the launch of spring merchandise in stores, the more ‘clever’ will incorporate spring colours with slightly heavier fabrics, creating a new, pre-spring line, NPD Group’s Cohen said.
   But introducing new products early has its pitfalls. Still, as Beder noted: ‘If you have a material gift card business, it’s a risk you have to take.’
   ‘The problem with being aggressive in January and February is if you don’t sell it, you’ll start to clog up the spring season,’ leading to sales and profit misses in the first and second quarters of the fiscal year, Beder said.
   But if the fashions are spot-on and shoppers are receptive, he said, Wall Street will take notice of retailers who have successfully created a new season of high-margin apparel that boosts the fiscal fourth and first quarters.
   ‘This will be a concept that will change the way we look at retail next year,’ said Cohen. ‘There is no question about it.’

The Indian prime minister, Manmohan Singh, Friday inaugurated New Delhi’s longest metro line, emphasising the importance of public transport for India’s congested cities.
   The new line, is expected to ease the commute for the city’s 14 million people and to reduce pollution.
   ‘Our cities have to become more liveable and more people-friendly. All this can be possible only with rapid public transport,’ Singh said at a metro stop in Connaught Place in the capital’s centre. ‘In the absence of good reliable and affordable public transportation, private vehicles will dominate the roads, leading to congestion, pollution, more accidents and, of course, more fuel consumption.’

A wrangle over slaughtering methods which saw Malaysia suspend beef imports from Australia has been resolved, with an Islamic body endorsing the Australian technique, a report said Friday.
   The National Fatwa Council ruled that thoracic sticking, which was an issue of contention in imports of halal meat from Australia, is permissible under Islamic rules, the Star newspaper said and quoted Islamic Development Department (Jakim) director- general Mustafa Abdul Rahman, as saying the council made the decision on Nov 24 and that Jakim had also set a standard for carrying out the procedure.
   Malaysia had suspended beef imports from several Australian abattoirs amid concerns over the slaughtering method.

The dollar eased slightly against the yen in slow year-end trade in Asia Friday, hit by profit- taking in the run-up to the release of a survey on the US manufacturing sector, dealers said.
   The dollar declined to 117.16 yen in Tokyo afternoon trade from 117.81 yen in New York late Thursday. The euro rose to $1.1883 from 1.1844, while slipping to 139.28 yen from 139.52.
   The Institute for Supply Management will issue its influential monthly report on the manufacturing sector on January 3.
   Sales of existing US homes dropped 1.7 per cent in November, while the stock of unsold homes on the market climbed to a 19-year high, the National Association of Realtors said Thursday. While emerging caution over the upcoming data weighed on the dollar, interest rate differentials between the United States and Japan remain a factor drawing investors to the US unit, dealers said.
   Dealers are also waiting the December meeting minutes from the Federal Reserve and an employment report for December both due next week.
   In afternoon trading, the dollar fell to 32.823 Taiwan dollars from 32.970 Thursday, to 9,835 Indonesian rupiah from 9,839, and to 1.6648 Singapore dollars from 1.6657.
   The dollar also fell to 1,010.9 South Korean won from 1,013.2 and held steady at 53.08 Philippine pesos. It rose to 41.07 Thai baht from 40.945.

Oil prices eased Friday but headed towards the end of 2005 above $60 after two days of gains driven by lower US fuel stocks and expectations that OPEC will cut output when it meets in January.
   The US light crude for February slipped 14 cents to $60.18 a barrel Friday, after gaining over $2 in the previous two trading days. London Brent crude was 15 cents down at $57.92 a barrel.
   The market was boosted by US government data on Thursday that showed a larger-than-expected 9,00,000 barrel drop in the US distillate inventories, including heating oil, and a surprise 1.2 million
   fall in gasoline stocks last week.
   Fuel supplies in the world’s largest oil consumer fell as demand held firm and foreign shipments slipped, the US Energy Information Administration said in its weekly report.
   Gasoline stocks are now 13 million barrels or nearly seven per cent below last year’s level, raising concerns over low levels at a time when refiners normally build inventories ahead of peak summer demand in the northern hemisphere.
   Oil and natural gas output from the storm battered Gulf of Mexico is slowly recovering, but about 27 per cent of the Gulf’s 1.5 million barrels per day of crude production remained shut on Thursday, the US Minerals Management Service said.

Japanese shares rounded off 2005 with an annual gain of 40 per cent Friday after riding a wave of interest
   by foreign investors as the world’s number two economy pulls out of a decade-long slump.
   Tokyo shares eased back 1.42 per cent Friday in a quiet, half- day session as investors locked in profits
   a day after the key index ended above 16,300 points for the first time in over five years, dealers said.
   In the holiday-shortened session, the Tokyo Stock Exchange’s benchmark Nikkei-225 index fell 232.77 points to close at 16,111.43.
   The broader TOPIX index of all first-section shares lost 13.99 points or 0.84 per cent to 1,649.76.

Singapore Airlines to add new flights
Singapore Airlines is adding flights on some routes to address the traditional peak in demand during next month’s Lunar New Year holiday season, the carrier said Friday. The airline said it will add five flights on the Singapore- Taipei route between January 21 and February 6, in addition to the 17 weekly flights already scheduled. On the Singapore to Penang leg, 10 supplementary flights will be added between January 24 and February 7, the airline said. The route is currently served by 18 weekly flights. If demand warrants, Singapore Airlines said it will add an extra flight from Singapore to Kuala Lumpur on January 26 and 27. It currently operates 42 flights a week to the Malaysian capital.
— AFP

Goldman Sachs to battle global
warming
Goldman Sachs Group thinks it can battle global warming, not by hugging trees, but by doing what comes naturally to a Wall Street powerhouse: trading. Goldman last month joined a growing list of investment banks, under pressure to withhold funds from projects that boost greenhouse gasses, which have promised to help protect forests and fend off global climate change. Yet while advocates for the environment usually talk of curbing development, Goldman Sachs insists it can promote ‘green’ policy through the capital markets and investments. ‘The big part of our policy is the things we can do ourselves, which has to do with being at the centre of capital markets, and finding market-based solutions to environmental problems,’ The Goldman chief executive, Henry ‘Hank’ Paulson, told the news agency at groundbreaking for the firm’s headquarters last month.
— Reuters

GM shares sink to
20-year low, then rebound
General Motors Corp’s shares touched their lowest price in more than 20 years on Thursday, in keeping with the rough road the world’s largest automaker has travelled in 2005 and uncertainty about the future. An expected weak end to GM’s US sales year, a possible change in pension accounting that could erase most shareholder equity and investors taking their losses in the stock to offset gains in other investments depressed GM stock on Thursday before it bounced back, analysts said. GM shares slipped as low as $18.33, but rebounded as ‘bottom fishing’ investors took advantage of the decline to snap up the stock, according to Standard & Poor’s analyst Efraim Levy. Shares were trading up 45 cents, or 2.4 per cent, at $19.06 in late afternoon trading on the New York Stock Exchange. ‘We have today and tomorrow as the last trading sessions of the year. With the stock being down so far, you would be looking at a little bit of tax selling to harvest those capital losses to offset gains in other areas,’ Argus Research analyst Kevin Tynan said in the morning when the stock was down.
— Reuters

Sovereign Bancorp investor seeks
SEC probe
The largest shareholder of Sovereign Bancorp Inc on Thursday said it asked the US Securities and Exchange Commission to investigate the No 3 US savings and loan for misleading investors. Relational Investors LLC accused the Philadelphia-based bank of failing to disclose its ties with brokerage Ryan Beck & Co when it mailed to shareholders an article written by that firm’s chief executive, Ben Plotkin, which called attacks on the bank puzzling and short-sighted. It said Sovereign has paid Ryan Beck more than $20 million in fees over three years. Relational has led a revolt among some shareholders over Sovereign Chief Executive Jay Sidhu’s decision in October to sell a 19.8 per cent stake in the bank to Spain’s Banco Santander Central Hispano for $2.4 billion, and use proceeds to help buy New York’s Independence Community Bank Corp for $3.6 billion.
— Reuters

HealthSouth hopes to be profitable in 2006
Embattled rehabilitation company HealthSouth Corp said on Thursday it intends to file its annual report in the first quarter of 2006, and said it aspires to be profitable in 2006. The Birmingham, Alabama-based company on Wednesday said it sued founder Richard Scrushy seeking millions of dollars in punitive damages related to an accounting scandal that led to the company’s misfortunes. On Thursday it held its annual meeting and re-elected its slate of directors. The government had accused Scrushy of directing a $2.7 billion fraud, but a jury found him innocent in June. ‘In 2006, we hope to be a regular filer of 1OKs. We hope to address the capital structure that was hampered by the previous management and hope to be listed again on one of the national exchanges,’ HealthSouth chief executive officer Jay Grinney said. Grinney added that the company is generating a good cash flow.
— Reuters

Air freight growth seen slowing
sharply in ’05
International air freight growth, a prime indicator of the health of world trade, looks set to have slowed sharply in 2005 after a massive surge last year, the airline industry body IATA reported on Thursday. But passenger traffic performed better during the year and cargo was likely to pick up next year, it said. IATA, the Geneva-and Montreal-based International Air Transport Association, said cargo carried by its 265 member airlines by the end of November was only 2.8 per cent up on the first 11 months of 2004.This figure, which industry analysts said could be boosted slightly by December traffic as companies rushed to meet holiday period orders, contrasted with the 15.8 per cent freight growth for the whole of last year compared to 2003. IATA Director General Giovanni Bisignani, in a comment issued with the figures, blamed the 2005 drop on a decline in trade in information technology products—for the past decade a major component of air cargo business.
— Reuters

Novartis rises as FDA approves new
Femara use
Shares in Novartis AG rose on Thursday, outperforming the Swiss blue-chip index, after US regulators approved its drug Femara for use by some women with early breast cancer immediately after surgery. The decision allows Novartis to market Femara to post-menopausal women with early, hormone-positive breast cancer—or patients whose cancer depends on estrogen to grow—as soon as they have had surgery. This is also known as the early adjuvant setting. Novartis’s stock, which has risen about 20 per cent so far this year, gained 1.2 per cent to 69.20 francs by 1018 GMT. The Swiss blue-chip index was up 0.8 per cent.
— Reuters