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The Bangladesh Bank is planning to make bond market vibrant and attractive to investors by putting pressure on nine primary dealers to play more active role.
   Despite offering higher returns on investment than long-term bank deposits, bond market has failed to get desired response from potential investors, central bank officials said.
   They partly blamed the financial institutions engaged as primary dealers for the poor response. Since bonds are not easily convertible like other assets, investors might have been less enthusiastic about them, they also felt.
   The primary dealers — Sonali, Janata, Agrani, Prime, Uttara, National Credit and Commerce Bank, Jamuna and Southeast banks and International Leasing — are not considering the bond market as another earning window, a central bank official said.
   These financial institutions have so far taken little initiative to lure investors into bond trading although it offers return ranging between 10.5 and 13.88 per cent in five to 20 years’ time.
   So far, only one person bought Tk 3 crore bonds from the primary market, central bank data showed.
   Any individual is allowed to buy government bond, which pays interest or coupon after every six months and it is of Tk 1 lakh denomination or its multiplier, from the primary or secondary market through any bank.
   ‘Bond should be attractive to long-term investors as it gives more return than that of the fixed deposits in banks,’ another central banker said.
   Illiquid nature and lack of awareness and knowledge make bond less popular among potential of investors.
   ‘One cannot sell bond easily like shares on the market,’ he said.
   It is difficult to calculate bond price as coupon payment is made in future while principal amount is given at the end of maturity.
   ‘Value of money decreases due to inflation and a person without very good knowledge about finance cannot calculate the prices of bonds,’ he explained.
   Bond market is very suitable location for life insurance fund as it can invest money for policy period and earn interest and principal both until the bond is matured, the official said.
   The central bank sells bills to overcome short-term cash mismatch of the government. The mature periods for bill are 28-day, 91-day, 182-day and 364-day, which all divisible by 7.
   The treasury bonds are sold to meet budget deficit and long-term government financing. The mature periods are 5 years, 10 years, 15 years and 20 years.
   The range of yield or profit for 5-year bond is 10.50 per cent to 10.65 per cent, for 10- year bond 11.72 per cent to 11.74 per cent, for 15-year 12.93 to 12.94 per cent and for 20-year 13.87 to 13.88 per cent.
   The central bank holds auction for treasury bonds every week and anybody can bid for it through any bank. The auction committee fixes bond interest rate and it is applicable throughout the bond’s life, which means that buyers will get interest payment at the rates fixed by the committee.

The government on Wednesday asked the authorities concerned to offload, within three weeks, 30 per cent shares of Jamuna Oil Company and Meghna Petroleum Ltd and 1,20,000 government-owned shares in the IFIC bank.
   An inter-ministry meeting, headed by finance adviser Mirza Azizul Islam, also directed the Dhaka Electric Supply Company and Power Grid Company of Bangladesh to offload 15 per cent more of their shares by March. Both the companies have so far offloaded 25 per cent of their shares through the capital market.
   The meeting, which discussed offloading of the shares of state-run power and gas companies and IFIC bank, also asked Titas Gas Transmission and Distribution Company to offload 25 per cent of its shares by March.
   It also asked Bangladesh Gas Fields Company Ltd and Gas Transmission Company to offload some shares by June, and Bakhrabad Gas Systems Ltd by September. The amount of the shares that will be offloaded initially will be decided later.
   The state-run oil marketing companies, Jamuna and Meghna, were supposed to offload 30 per cent of their shares, worth Tk 13.5 crore and Tk 12 crore respectively, by November but the process has been delayed as the companies are yet to submit the required documents. The meeting was told that they would be ready to offload shares by the middle of December. The Investment Corporation of Bangladesh’s officials told the meeting that the paperwork for offloading 1,20,000 government shares in the IFIC bank were almost complete and the shares would be offloaded by the middle of December. The government owns 35 per cent of IFIC bank.
   Regarding offloading 15 per cent additional shares of Power Grid Company, power officials advised the government not to offload any more shares as it would not be strategically sound for the major electricity transmission company to do so.
   Power officials said that the PGCB holds the key to the national electricity grid and the government should control 75 per cent of its shares as the grid is very important, which was proved in the aftermath of Sidr when country went without electricity for a whole day.
   Mirza Azizul and power and energy adviser Tapan Chowdhury, however, brushed aside their advice and said that participation of private investors would boost the power sector.
   The meeting also discussed the offloading of the shares of Rural Power Company Ltd, Electricity Generation Company of Bangladesh and Ashuganj Power Station Company but decided that those companies were not ready to offload shares at present.

Country’s capital market requires more quality shares to cope with the recent demand-driven surge in the market, said Faruq Ahmad Siddiqi, chairman of the Securities and Exchange Commission on Wednesday.
   He said private sector entrepreneurs did not come forward at expected level for offloading shares of their companies in the capital market.
   ‘We have supply-side constraints in the capital market,’ said SEC chairman as chief guest at the closing ceremony of a workshop on ‘Bangladesh Capital Markets-Engine of Economic Growth’ at Sheraton Hotel in Dhaka.
   The Asian Development Bank and Citigroup Global Markets Bangladesh Private Ltd jointly organised the day-long workshop which was attended by regulators, financial market intermediaries, and listed and non-listed corporate houses. The SEC chief said government at the request of the SEC recently had come forward to offload shares of state-owned enterprises in the capital market. A number of SoEs of oil, power and telecom sectors are under process of being listed with the stock exchanges soon, he said.
   It is encouraging that a number of private sector telecom companies are mulling to enter the country’s capital market, he said.
   ‘The offloading of shares of SoEs and telecom companies will certainly improve the supply-side at the stock market, which is somewhat overheated at present,’ said Faruq Ahmad.
   He said the SEC was working on changing initial public offering pricing system to encourage profit-making local and multinational firms, which want proper prices of their IPOs.
   Hua Du, country director of the Asian Development Bank, called the country’s policy makers and private entrepreneurs to support the development of capital market with a view to mobilising local resources.
   ‘Channelling of surplus resources is required as Bangladesh currently needs heavy investments in services and manufacturing industries to boost exports and to diversify product lines,’ said Hua Du.
   She said the development in information communication technology and e-governance was also required for brining more transparency in the country’s capital market.
   The ADB country director, however, said although the stock exchanges experienced significant surge in turnover and capitalisation in recent months, the capital market in Bangladesh remained thin, compared with those of its regional peers.
   ‘The increase in capitalisation and index values in Bangladesh is mostly demand-driven, which is somewhat risky, it must be backed by quality shares with strong economic fundamentals,’ she said.
   Mamun Rashid, managing director of Citibank and Citi country officer-Bangladesh said, ‘The workshop is held at a time when Bangladesh capital market is attracting a lot of interest, both locally and from abroad, as it is now one of the most rapidly growing bourses in Asia.’ He said citi’s first-ever locally incorporated vehicle CGM Bangladesh Pvt Ltd had already started its merchant banking operation in Bangladesh.

A nine-member delegation of Japan-Bangladesh Joint Committee for Commercial and Economic Cooperation, led by its chairman Koji Nojima, met the Federation of Bangladesh Chambers of Commerce and Industry president, Mir Nasir Hossain, at the FBCCI office in the city on Wednesday.
   They discussed the potentialities and problems of cooperation between Bangladesh and Japan under the umbrella of JBCCEC which was established by the Japan Chamber of Commerce and Industry and FBCCI in 1980, a press release of FBCCI said.
   Nojima is now visiting Bangladesh to attend the inaugural ceremony of the 3rd Japan Trade Fair that begins in the city today with the aim to promote new products of Japan, it said. The trade fair will be organised by the Japan-Bangladesh Chambers of Commerce and Industry in association with the embassy of Japan and Japan External Trade Organisation.
   Masayuki Inoue, ambassador of Japan, Hideo Ueno, vice-president, JBCCI, Abdul Haque, vice-president, JBCCI, AKM Moazzem Hossain, secretary general, JBCCI, Yoshiteru Honda of Itochu Corporation and Momohiro Kinomoto of JETRO were present.

Vietnam president Nguyen Minh Triet voiced hope Wednesday for sealing a free-trade pact next year with Japan, his country’s largest aid donor and one of its leading investors.
   Japan, the world’s second largest economy, has been seeking a growing number of bilateral pacts amid a stalemate in global trade liberalisation efforts. It agreed in October last year to open talks on a trade deal with Vietnam.
   ‘Personally, I hope that we can reach an agreement at our first meeting next year,’ Triet told a news conference as he wrapped up the first state visit to Tokyo by a president of the communist country.
   ‘Japan is one of the most important economic partners for Vietnam. We have compromised a lot so far and the remaining problems are very small. Most of them are just a matter of tariff ratios,’ he said.
   Japan and Vietnam established bilateral ties in 1973, when the Southeast Asian nation was still at war. Today the developing country is a fast-emerging economy that last year recorded over eight per cent economic growth.

China and Europe confronted each other over their long-running trade dispute here Wednesday, with the EU calling for a level playing field and Chinese Premier Wen Jiabao insisting on gradual reform.
   ‘The EU exports less to China than to Switzerland, a country of seven million people,’ European Commission president Jose Manuel Barroso told a business forum on the sidelines of annual summit between the two sides.
   ‘Our ultimate goal is to create a level playing field for both sides.’
   EU trade commissioner Peter Mandelson spoke out at the same forum about China’s trade surplus, which has put the focus on the Chinese currency, the yuan, with critics arguing it is being kept artificially weak.
   ‘Our trading relationship with China started as we know in a balanced way,’ Mandelson said, with Wen in the audience.
   ‘Now it is less balanced. Indeed in my time in China these last five days, it has grown by over two billion euro,’ he said, referring to the trade surplus.
   In reply, Wen told the audience of European and Chinese business chiefs that China would continue with its policy of gradual reform of the yuan, also known as the renminbi or RMB.
   ‘China will continue to reform the RMB exchange rate regime in a gradual, proactive and manageable manner,’ he said, while insisting the Chinese currency was not the only reason for their trade dispute.
   ‘The exchange rate is a cause to some extent, but not the sole decisive factor behind the trade deficit.’
   Amid the dispute, European representatives said they wanted to avoid protectionist measures.
   ‘We... need to identify a solution to solve this question, and I hope that it is a cooperative one,’ Serge Abou, the EU’s ambassador to China, said in an opinion piece in the China Daily newspaper published Wednesday.
   ‘Protectionism is not a winning option. So let us unite our efforts to resist protectionist trends.’
   The EU, China’s largest export market, ran a trade deficit of 128 billion euros ($175b) with China last year — which is likely to balloon to 170 billion euros in 2007, according to EU statistics.
   The main argument from the EU, and other trading partners such as the United States, is that the artificially weak yuan makes Chinese products cheaper on the overseas market.
   Ahead of their speeches to the summit, Barroso held talks with Chinese president Hu Jintao.
   A European delegation headed by Barroso also met with Li Keqiang, a member of the ruling Communist Party’s nine-member Politburo Standing Committee.
   ‘Since 1975, this relationship has come a long way,’ said Li, widely considered a rising political star among the next generation of leaders slated to assume power in five years.
   ‘I particularly want to mention our fast growing business ties,’ Li told the European visitors.

Brazil and Canada have both asked the World Trade Organisation to investigate subsidies given to US farmers, trade sources said on Tuesday.
   Brazil first filed its complaint in July. Since then it has been involved in bilateral discussions with the US, but as these have not yielded any progress, it has taken its complaint to the WTO’s Dispute Settlement Body.
   Canada has also made its first request at the DSB.
   Canada claims Washington has violated WTO commitments on subsidies for a wide variety of crops, including corn, wheat, soybeans, sugar, peas and beans.
   Canada accuses the US of exceeding its commitments on subsidies by billions of dollars in 1999, 2000, 2001, 2002, 2004 and 2005.
   Brazil’s complaint covers subsidies over the same period. In 2005, the DSB ruled that US farm subsidies gave US cotton an unfair advantage in the world market, seriously harming Brazil’s cotton growers.
   On Tuesday, the US said it was ‘disappointed’ about both cases, saying the disputes distracted from the ‘essential task of completing the Doha Development Round negotiations.’
   ‘We strongly disagree with Brazil’s claim that the United States has provided domestic support in excess of our WTO commitments,’ said a statement from the US trade delegation submitted to the DSB meeting.
   Regarding Canada, it claimed that some of the measures identified in the complaint have already ceased to exist.
   ‘Not only do we fail to see what legal basis there is for a panel to review such expired measures, but we also fail to see what Canada could hope to gain by making such a request,’ the US said.
   The Doha round of WTO talks were launched in the Qatari capital in November 2001 aimed at concluding a global deal to free up trade to the benefit of poor countries.
   The talks are currently deadlocked over disputes between rich and poor nations and differences between the EU and US on agricultural subsidies.

EU and Indian leaders will seek to push forward plans for a free trade zone, at a summit in New Delhi on Friday, and further boost a burgeoning relationship between the regional powers.
   Also high on the agenda when European Commission president Jose Manuel Barroso and Portuguese prime minister Jose Socrates meet with prime minister Manmohan Singh and other Indian leaders will be the problems in neighbouring Pakistan and Afghanistan.
   The 8th EU-India summit comes at a ‘symbolic time’ according to an EU spokesman in Brussels, referring to the 60 years since Indian independence from Britain, 50 years since the EU’s founding Rome Treaty and 45 years since the start of bilateral diplomatic relations.
   EU-India trade has come a long way since those political landmarks, and is currently running at one billion euros ($1.5b) a week.
   European Commission delegation chief Daniele Smadja told a news conference in Delhi on Monday that it was seeking ‘fast’ agreement on the free trade deal.
   ‘We are negotiating a free trade agreement and negotiations are going very well. We hope during this summit to bring impetus to these negotiations,’ added Portuguese ambassador Luis Filipe Castro Mendes.
   EU foreign ministers gave the green light in April for the talks to start with India. But neither side was predicting when an agreement will be struck.
   An Official at India’s Brussels embassy echoed that bilateral relations were strong ‘but has not reached their full potential’.
   ‘We’d like a trade deal at this summit, or the next one, as soon as it is possible,’ he told AFP on Tuesday. The EU is already India’s largest trading partner, and a major source of investment. Last year the 27 EU nations invested 1.6 billion euros in India.
   The south Asian giant’s 1.1 billion strong population and fast-growing middle class represent a huge market for EU companies.
   The European Union is increasingly looking towards the massive growth potential of Asian markets.
   European leaders will use meetings this week in Beijing, including an EU-China summit on Wednesday, to pile fresh pressure on Chinese authorities over the Asian economic giant’s booming exports and state-controlled exchange rate.

Polish prime minister Donald Tusk on Tuesday made good on his pledge to improve ties with Russia, promising to drop Warsaw’s opposition to Moscow’s bid to join the Organisation for Economic Cooperation and Development.
   ‘I informed the Russian side that Poland abandoned its block on these talks,’ imposed because of long-standing political grievances, Tusk told reporters.
   ‘The goal of this step is to have an impact on the improvement of Polish-Russian relations,’ said Tusk, who has said he wants to mend fences with Poland’s eastern and western neighbours alike since winning office last month.
   ‘It is a first step,’ he added.
   Tusk’s liberal Civic Platform defeated the conservative Law and Justice party in a snap election on October 21.
   Relations between Warsaw and Moscow have been at their lowest ebb since Poland broke free from the communist bloc in 1989, notably because the Kremlin was riled by what proved to be crucial Polish support for the pro-Western ‘Orange Revolution’ in Ukraine in 2004.
   The 30-member OECD, which tries to coordinate policies among industrialised countries, has acknowledged that it must adapt to a changing global economy, and in May invited Russia, Estonia, Chile, Israel and Slovenia to begin membership talks.
   The OECD operates by consensus, so Polish opposition meant Russia’s membership moves were on ice. Warsaw’s change of heart does not mean Russia will be able to join the organisation overnight, however, because membership talks can last for years.

The World Trade Organisation said on Tuesday it would rule on a complaint by the United States over Chinese import restrictions on cultural goods such as books, music and DVDs.
   The US believes the restrictions encourage illegal piracy of cultural goods and other violations of intellectual property rights, and that China is bound to drop them under the terms of its WTO accession agreement.
   The case focuses on Chinese laws that prevent US companies in China from importing books, music, videos and other protected goods on their own and requires them instead to work through state-approved or state-run companies.
   Last month, China blocked a request by the US for the WTO to rule on the complaint, but the WTO’s Dispute Settlement Body automatically took up the matter on Tuesday following a second US request, in accordance with WTO rules.
   China said it was ‘disappointed’ with the US move given what it claimed was ‘the ample market access that China grants to foreign publications, films and audiovisual products and services.’
   ‘China has showed good faith to find a positive solution to this dispute throughout the consultation process, but we fail to see that same spirit by the complainant,’ it added.
   China and the US are increasingly at loggerheads at the WTO with Washington engaged in four separate disputes with the Asian economic giant.
   Washington requested its first WTO case on China in September 2006 to examine barriers against imported autos and auto parts.
   In July 2007, the US requested a case to examine several industrial subsidy programmes it believes are prohibited under WTO rules.

US consumer confidence sank for the fourth month in a row in November to its lowest level in more than two years amid uncertainty about the US economy, the Conference Board said Tuesday.
   The private business research group said its consumer confidence index fell to 87.3 points, from a revised 95.2 points in October.
   The drop in consumer confidence was much steeper than the Wall Street consensus forecast of a 91.5-point reading.
   The index is at its lowest level since October 2005, when it stood at 85.2 points, Lynn Franco, the Conference Board’s research director, told AFP.
   The October index reading was revised slightly lower to 95.2 points from a previous estimate of 95.6 points.
   The Conference Board’s confidence index is closely watched by the markets as an indicator of consumer spending, which accounts for roughly two-thirds of US economic activity. The two sub-indexes in the Conference Board survey also slumped. Consumers’ assessment of present conditions dropped to 115.4 points from 118.0 points in October.
   The forward-looking sub-index that measures expectations for the next six months plunged in November to 68.7 points from 80.0 points in October.
   ‘This month’s deterioration in confidence was due primarily to the sharp decline in the Expectations Index,’ Franco said in a Conference Board statement.
   Consumers anticipating business conditions to worsen increased to 16.7 per cent from 13.9 per cent, and those expecting them to improve declined to 12.4 per cent from 14.0 per cent.
   On present conditions, consumers claiming conditions are ‘good’ decreased to 22.3 per cent from 23.2 per cent. Those saying conditions are ‘bad’ increased to 19.1 per cent from 16.6 per cent.
   ‘Consumers’ apprehension about the short-term outlook is being fueled by volatility in financial markets, rising prices at the (petrol) pump and the likelihood of larger home heating bills this winter,’ Franco said.
   ‘Despite this rather bleak outlook, consumers have not lost their holiday spirit and anticipate spending more on gifts this season than they did last Christmas,’ Franco said.

The United States views its year-old ‘strategic economic dialogue’ with China as useful, despite the sluggish pace of Chinese reforms, a top US diplomat said Tuesday.
   ‘Is progress occurring as fast as we prefer or as fast as is in China’s interest? No,’ said Alan Holmer, special envoy for China and the Strategic Economic Dialogue, according to the text of a speech released in Washington.
   ‘But is progress occurring faster than would have been the case without the SED? Absolutely,’ he said in a speech delivered to the Center for Strategic and International Studies.
   His remarks came ahead of next month’s third in a series of SED discussions, launched in September 2006.
   ‘Time after time, US government agencies have been able to ‘draft behind’ the momentum created by the SED,’ the ambassador told the US think tank.
   Holmer cited progress to date, including ‘a new air services agreement, collaboration on energy security and the environment, moving toward more efficient capital markets, and addressing concerns about tainted food and product imports,’ such as a recent series of toy recalls.
   treasury secretary Henry Paulson will lead a delegation for the talks in China on December 12 and 13.

The Eastern Bank Limited and the Apollo Hospitals Dhaka have recently signed a corporate agreement under which the hospital will provide medical services for the EEL employees.
   Ali Reza Iftekahar, managing director and chief executive officer of EBL, and Dr Edwin Lee Hansen, chief executive officer of the Apollo Hospitals Dhaka, signed the agreement on behalf of their organisations, said a press release.
   Malick Musfique Reza, head of finance and admin, Md Sirajul Islam, head of human relations, Nazeem A Choudhury, head of marketing, of EBL, and Malka Shamrose, director, business development, Tasnim Hussain, manager, corporate business development, of Apollo Hospitals were present at the signing ceremony.

The IFIC Bank Limited opened its 66th branch at Ashulia under Savar in Dhaka on Monday.
   Mohammad Lutfar Rahman, chairman of the bank, inaugurated the new branch, said a press release.
   Mashiur Rahman, managing director, and directors Abu Tahir Mohammad Golam Maruf and Mohammad Didarul Alam were present at the opening ceremony.

The dollar rose against the euro and yen Wednesday as markets awaited an important US economic report for clues on whether the Federal Reserve will cut interest rates next month, dealers said.
   In European trading, the euro fell to 1.4749 dollars from 1.4825 late on Tuesday in New York.
   Last Friday, the European single currency hit a record 1.4967 dollars.
   On Wednesday, the dollar climbed to 109.08 yen, from 109.01 late Tuesday.
   Investors were awaiting Wednesday’s release of the Federal Reserve’s Beige Book economic report.
   ‘The Beige Book will be useful to gauge just how badly consumers are faring ... especially as the US enters the all important holiday season when most retailers usually see a big chunk of their sales for the year,’ said Calyon analyst Mitul Kotecha.
   Traders are looking for clues on prospects for further US interest rate cuts following two reductions by the Fed since September, with markets betting on a further monetary loosening in light of the ongoing credit squeeze.
   Dealers said markets were also looking ahead to a speech by Fed chairman Ben Bernanke on Thursday following recent comments from officials at the central bank suggesting a further US rate cut is not a done deal.
   Chicago Federal Reserve President Charles Evans, a member of the policy-making Federal Open Market Committee, suggested Tuesday that the Fed’s combined 75 basis point cuts since September may be sufficient insurance against weak growth.
   ‘This may have pre-empted the message on the economy from the latest Fed Beige Book,’ noted NAB Capital strategist John Kyriakopoulos.
   ‘Still, traders continue to factor (in) a more than 90 per cent chance that the Fed cuts rates by 25 basis points on December 11,’ he added.
   Elsewhere, the market was following the China-Europe annual summit underway in Beijing.
   The pair confronted each other Wednesday over trade issues, with the EU calling for a level playing field and Chinese Premier Wen Jiabao insisting on gradual reform.
   The EU, China’s largest export market, ran a trade deficit of 128 billion euros (175 billion dollars) with China last year — which is likely to balloon to 170 billion euros in 2007, according to EU statistics.
   The main argument from the EU, and other trading partners such as the United States, is that the artificially weak yuan makes Chinese products cheaper on international market.
   In European trade Wednesday, the euro changed hands at 1.4749 dollars, against 1.4825 late on Tuesday, at 160.73 yen (161.64), 0.7154 pounds (0.7166) and 1.6440 Swiss francs (1.6390).

Koji for
expansion
of ties
Chairman of Japan-Bangladesh Joint Committee for Commercial and Economic Cooperation Koji Nojima Wednesday discussed the issue of expansion of economic cooperation between Dhaka and Tokyo with foreign adviser Iftekhar Ahmed Chowdhury. He also showed keen interest regarding the possibility of import of skilled workers from Bangladesh, as the population of his country was ageing resulting in growing need for outside labour support, said a foreign ministry release. Koji was accompanied by Japanese ambassador Masayuki Inoue. So far India and Vietnam were sending their skilled workers to Japan, Koji said adding Bangladesh could be a good source for importing skilled workers for his country, the press release said. Chowdhury told Koji Nojima that Bangladesh was adopting a plan to enhance skills to provide labour to developed countries.
—UNB

Hong Kong gold closes lower
Hong Kong gold prices closed markedly lower Wednesday at 802.10-802.60 US dollars an ounce, down from Tuesday’s close of 823.70-824.20 dollars. It opened at 810.10-810.60 dollars.
— AFP