Main Page «
Front Page «
Metro «
International «
Sports «
National «
Editorial «
Op-Ed «
Home «
Timeout «
Letters «

Archive «
Launch Supplement «
Special Supplements «

Inflation maintained a double-digit growth in the first month of the current fiscal year, creeping up to 10.82 per cent in July despite continuous declines in global food and oil prices — main culprits for the inflationary pressure.
   Economists criticised the government for failing to keep inflation in check even after a bumper boro harvest and falling global prices.
   Monthly inflation soared 0.78 per cent in July from 10.04 at the end of last fiscal year mainly on the back of high food prices, the latest data of Bangladesh Bureau of Statistics showed Thursday.
   The inflation figures proved the local market’s indifference to about 25 per cent decline in average food prices in the international market in the last three months and also to the steep fall of global crude prices to $97 a barrel level in the week ending Thursday.
   Of late, the government announced that it would consider downward revision of domestic fuel prices given the falling trend in global prices, but there was no hint when it would be done.
   Even an official of Asian Development Bank, which often puts pressure on the government to end fuel subsidy and keep oil prices high to limit budget deficit, last week said that the government could consider fuel price cut in case global crude prices dropped to $90.
   Though the country depends on import for less than 10 per cent of its rice consumption, price of the stable food showed no sign of falling in the last couple of months. Moreover, reflection of significant fall in global edible oil prices has been slower on the local market, consumers and market sources said.
   Earlier, Bangladesh Bank governor Salehuddin Ahmed cautioned surging demand for commodities during Ramadan might further fuel the inflationary pressure, which was unlikely to ease in next couple of months until the next aman harvest.
   The official statistical agency showed food price index rose to 13.92 per cent in July from 12.28 per cent of the month back, while non-food prices declined to 5.93 from 6.32 per cent.
   Rural inflation was 11.19 per cent and urban index 9.91 per cent in July, both showing increases from their June figures.
   Urban food index fell slightly to 14.17 per cent, apparently because of some piecemeal market intervention measures, but non-food prices were higher at 4.89 per cent compared with June data.
   Monthly inflation remained 7.66 in April and 7.66 in May after ranging between 10 and 11 per cent levels for previous six months in a row.
   Annualised inflation was 9.93 per cent in the last fiscal, up from 7.22 of the year before.
   Zahid Bahkt, a research director at the Bangladesh Institute of Development Studies, said even after a bumper production of boro, the government had failed to tame the local inflationary pressure, although global inflation showed signs of easing on the back of declines in fuel and food prices.
   ‘Inflationary fears still remain high among businessmen and common people due to uncertainty over politics and the general election,’ he said.
   ‘The government needs to have immediate interventions into the market which faces erratic food supply,’ the economist added.
   Economist Atiur Rahman said the higher inflation was continuously eroding the purchasing power of the masses.
   ‘More people joined the marginalised section as inflation keeps galloping,’ he said, stressing that the government should take steps to raise people’s incomes and shield the poor from price shocks.
   Economist Professor Abu Ahmed said the government failed to reduce the inflationary fears of the common people and businessmen.

Dhaka stocks closed mixed on Thursday as share prices of blue chips fell, said market operators.
   The general index of the Dhaka Stock Exchange gained 2.49 points, or 0.09 per cent, to close at 2838.54, while its blue chips index, DSE20, lost 16.38 points, or 0.68 per cent, to finish at 2383.68.
   A DSE stock broker said the market remained dull as retail investors continued to offload their holdings for cash one week ahead of the bourses to go to a 9-day Eid holiday.
   The DSE and the Chittagong Stock Exchange will remain closed from September 26 to October 4 on the occasion of Shab-e-Qadr, Eid-ul-Fitr and weekly holidays.
   Of the total 227 issues traded at the DSE floor, 112 advanced, 99 declined and 16 remained unchanged.
   Turnover at the DSE decreased to Tk 311.55 crore from the Wednesday’s Tk 348.60 crore.
   Titas Gas Transmission and Distribution Company topped the turnover leaders with a total transaction of Tk 33.34 crore.
   Aims 1st Mutual Fund, Grameen Two Mutual Fund, ICB 2nd NRB Mutual Fund, Beximco Pharmaceuticals, Grameen One Mutual Fund, Beximco, ACI, Delta Brac Housing and Meghna Life Insurance were the rest of the top 10 turnover leaders.
   The CSE selective categories index gained 13.43 points, or 0.24 per cent, to close at 5655.18, while its blue chips index, CSE30, lost 14.11 points, or 0.18 per cent, to finish at 7626.19.
   Of the total 131 issues traded at the bourse, 71 posted gain, 54 dropped, and six remained unchanged.
   Turnover at the CSE increased to Tk 59.45 crore from the Wednesday’s Tk 54.76 crore.

Asian Development Bank president Haruhiko Kuroda Thursday proposed establishing an ‘Asian Financial Stability Dialogue’ to coordinate regulatory development and monitor potential vulnerabilities in the region’s markets and financial systems.
   The most recent bout of global financial market turmoil illustrates the urgent need for central banks and regulators to build a cogent and pro-active plan to better preserve regional financial stability, Kuroda said at the ADB headquarters in Manila.
   A new wave of financial tsunami triggered by Lehman Brothers Holdings Inc, the fourth-largest US investment bank which filed for bankruptcy protection on Monday, has knocked Asian banking stocks and prompted central banks to pump billions into strained money markets.
   ‘It’s now time for Asia to move forward on its path toward greater financial integration and to develop the foundations for regional financial stability,’ Kuroda said.
   The proposed ‘Asian Financial Stability Dialogue’, which would include finance ministry and central bank officials, financial regulators and supervisors, and market participants, could use early warning systems and other mechanisms to improve surveillance of the region’s financial markets, Kuroda said.
   Asian financial markets and economies have so far weathered the current global financial storm relatively well, ‘but we cannot take this for granted,’ he added.
   Kuroda warned that vulnerabilities and risks to the region’s financial systems remain. Authorities are working hard to contain inflationary pressures against the risk of slowing economic activity, for example. And several asset markets, particularly real estate, also show potential vulnerability to shocks.
   ‘Our region requires deeper and more innovative financial markets. Bank finance and equity markets still dominate Asia. Debtmarkets are the next stage and we have seen progress,’ Kuroda said.
   Asia needs to promote consistent standards, harmonize prudential indicators, and establish standards for governance and transparency to facilitate domestic and international investment, he added.
   Financial integration in the region has lagged despite the rapid growth in regional trade integration. Asia is still dependent on more mature markets in Europe and North America to intermediate its large savings than doing it through its own markets, according to ADB.

Bangladesh will set up an exclusive economic zone for the Chinese businessmen to woo investment in the country, an adviser said on Thursday.
   The chief adviser, Fakhruddin Ahmed, while meeting the Chinese president, vice-president, prime minister and business leaders said Bangladesh was open to Chinese investment.
   He pledged all necessary physical infrastructure facilities for them, foreign adviser Iftekhar Ahmed Chowdhury told the news agency by telephone.
   The EEZ will offer all infrastructures like buildings, roads, electricity, gas and other utilities and Bangladesh’s trade laws will not be applicable to the EEZ investors.
   ‘We have told them that we will set up an exclusive economic zone for the Chinese businessmen,’ Iftekhar, who was accompanying Fahkruddin, said from Hong Kong as they were on way to Bangladesh.
   ‘The Chinese authorities have said they would encourage Chinese businesses to invest in Bangladesh and showed particular interest in the planned EEZ for the Chinese investors,’ said the foreign adviser.
   The interim government has taken initiatives to set up EEZs for Korean businessmen in Chittagong and for expatriate Bangladeshis in Sylhet. The chief adviser and his entourage left Beijing on Thursday on a Dragon Airlines flight and are scheduled to fly in at 12:25am on Friday, according to the immigration wing at the Zia International Airport.

Asia could be hit hard by the US financial crisis despite limited direct exposure to instruments linked to sub-prime mortgages, experts at a Philippines conference warned Thursday.
   The region’s potential vulnerability is linked to its key role in the global current account imbalances, said Charles Adams, a visiting professor of the National University of Singapore and a former International Monetary Fund official.
   The US current account deficits ‘are financed 50-50 by Asia and the Middle East’ and ‘there is a risk that Asia will get caught up,’ he told an international conference on the subprime crisis in Manila.
   Hirohiko Kuroda, president of Manila-based Asian Development Bank that hosted the conference, said ‘even if the region’s subprime-related losses have to date been lower than elsewhere, this is no guarantee recent events will not affect major Asian financial institutions.’
   There seems to be ample liquidity to power private sector expansion and economic growth, but ‘it cannot be taken for granted that these relatively favourable conditions will continue,’ he said.
   ‘We still need to assess the spillover from this week’s events on our region’s financial institutions,’ Kuroda said.
   He noted that many Asian banks, like those in the West, ‘have also shifted into relatively new lines of business, such as household credit.’
   David Fernandez, managing director and head of JP Morgan’s emerging Asia research, said’ ‘Asia is very much involved in this.’
   He noted that emerging Asian markets have borne the brunt of the fallout from the US financial crisis.
   Lee Chee Sung, the IMF’s assistant director for Asia, said ‘stability risks are now higher in emerging markets’, which include developing Asia.
   ‘Is this the beginning or the end? We don’t know yet,’ he added.

European Union trade commissioner Peter Mandelson said Thursday that the current worldwide financial turmoil emphasised the need to conclude a global WTO trade pact that failed earlier this year.
   ‘The message that governments, ministers and negotiators should take from this current crisis is that the global economy needs strengthening,’ Mandelson said during a visit
   to Oslo.
   Faced with a ‘very vulnerable and fragile’ world economy, ‘we need to restore confidence in markets and the successful conclusion of the Doha talks would certainly help achieve that,’ he added.
   The Doha Round, orchestrated by the World Trade Organisation, was launched in the Qatari capital seven years ago but has been deadlocked because of disputes between the rich developed world and poorer developing nations on trade in farm and industrial products.
   The latest round collapsed in July after India and the United States failed to agree on a safeguard mechanism that would allow nations to impose a special tariff on agricultural goods if imports surge or prices fall.
   ‘If anyone was in any doubt about the need for success of the Doha Round and the contribution of a successful outcome to the global economy, they should have no doubts after what we’ve seen in the last week,’ said Mandelson, who represents the EU in the talks.
   ‘The European Union and non-EU member Norway, as well as others, will be making every effort we can to revive these talks and bring them to a successful conclusion in the near future,’ he added.
   Following the crushing collapse of July’s meeting, lower-level trade talks were relaunched this month at the WTO’s headquarters in Geneva.
   Both Mandelson and WTO chief Pascal Lamy have said ministerial level talks would take place in a few weeks.

AF Nesaruddin has recently been appointed director of the Sonali Bank Limited for a three-year period.
   Nesaruddin is one of the partners of Hoda Vasi Chowdhury and Co, an affiliated firm of Deloitte, one of the big four global professional services firms, said a press release.
   After completing post graduation in finance from Dhaka University, Nesaruddin joined chartered accountancy profession in 1981 and qualified as chartered accountant in 1984.
   He has been a Rotarian for about 20 years. Currently, he is the president of rotary club of Dhaka North West.

The Inspector of Factories and Establishments has sued owners of seven Jamdani weaving factories for employing child workers.
   The cases were lodged with the third Labour Court in Dhaka against the owners of Marzina Jamdani Weaving Factory, Kawser Dhakai Jamdani Weaving Factory, Bangladesh Jamdani Weaving Factory, Julekha Jamdani Weaving Factory, Shahanaz Jamdani Weaving Factory, Kalam Jamdani Weaving Factory and Anwar Jamdani Weaving Factory, all located in Rupganj Upazila of Narayanganj.

India’s inflation rate has held stubbornly above the 12 per cent mark, official data showed Thursday.
   Annual inflation was at 12.14 per cent for the week ended September 6 from 12.10 per cent a week earlier, according to the Wholesale Price Index, India’s most watched cost-of-living monitor.
   The figure was roughly in line with analysts’ forecasts and still far above the central bank’s target of seven percent for the fiscal year to March 31, 2009.
   Analysts say they expect India’s central bank to tighten monetary policy at least one more time to get inflation under control before gradually starting to lower interest rates, most likely in 2009.
   ‘We are seeing rangebound inflation, but it may not be fully out. We expect inflation to remain in double digits till the year end,’ said Siddhartha Sanyal, economist with brokerage Edelweiss Securities.

The 2008 Summer Davos will be held in north China’s Tianjin Municipality from September 27-28, with more than 1000 guests having registered to attend so far.
   Chinese Foreign Ministry spokeswoman Jiang Yu announced at a regular press conference Thursday afternoon that Premier Wen Jiabao will address the opening ceremony.
   The theme of this year’s Summer Davos Forum is ‘The Next Wave of Growth’. The annual conference has attracted more than 1000 international guests from about 80 countries and regions, most of them CEOs from international enterprises, governmental officials, experts and scholars, celebrities and media managers. Jiang said the upcoming forum will be a good platform for people from business community to promote exchange and pursue joint development.
   She also considered the Davos Forum as ‘an important symbol of closer cooperation between the World Economic Forum and China’.

A regional video game expo opened Thursday here on a positive note despite global financial turmoil, with industry players predicting online titles will generate robust growth in coming years.
   The Asia-Pacific region accounts for 15 billion US dollars of the gaming industry’s global turnover of 50 billion dollars, said Seto Lok Yin, assistant chief executive officer of Singapore’s Media Development Authority, a government agency.
   ‘This figure is expected to increase to 25 billion dollars in the next few years,’ Seto said in a speech to open the Games Convention Asia 2008 conference and exhibition.
   The three-day gathering, now in its second year, features 118 exhibitors from 13 countries and is expected to attract about 100,000 visitors, organisers said.
   Major exhibitors include industry giant Electronic Arts (EA) and Ubisoft, both which are games publishers, along with hardware manufacturers Asus and Logitech.

South Korea Thursday unveiled steps to ease regulations in its services sector, including broadcasting ownership rules, in an attempt to boost economic growth and create more jobs.
   The Ministry of Strategy and Finance said the service industry, which accounts for more than half of gross domestic product, is acting as a hurdle to growth by lagging behind.
   The International Monetary Fund, in a report this month, cautioned that Korea faces long-term challenges to growth from population ageing, the erosion of its low-skilled manufacturing base and lagging service sector productivity.
   The ministry said various public-interest regulations covering broadcasting have discouraged investment in an area where more jobs could be created.
   Big local business groups will still be banned from owning stakes in the three major ground-based broadcasters, MBC, KBS and SBS.
   But in future they will be allowed to hold up to 49 per cent of smaller terrestrial broadcasters, compared to 33 per cent now, and to own satellite broadcasters outright.
   Daily newspapers, news wires and foreign investors will be able to own 49 per cent of satellite broadcasters compared to the current 33 per cent.
   Overseas investors, however, will be banned from owning stakes in ground-based broadcasters and programme providers.
   The government will also ease regulations on logistics, information, and telecommunications industries and foreign currency transactions.
   Law firms will be allowed to open local branches freely and lend more capital to relevant firms, it said.
   Hospitals and insurers selling health-related insurance will be allowed to provide healthcare services.
   In an effort to create more jobs, the government will set up a 10 billion dollar matching fund with conglomerates this year to provide financial help to smaller firms.
   It also earmarked 480 billion won ($416m) to support research and development by small firms next year, compared to 430 billion won this year.

For the second day hundreds of anxious policyholders lined up in the hot sun outside the Singapore offices of global insurance giant American International Group Thursday, despite a US government bailout of the firm.
   Hundreds more -- some vowing to terminate their policies -- were already inside the offices of AIG and its wholly-owned subsidiary, American International Assurance Company Limited. They had returned after lining up on Wednesday without getting served.
   Many in the crowd were unmoved by an announcement from the US Federal Reserve that the United States government would give an unprecedented loan of up to 85 billion dollars to AIG in a bid to avert a global financial calamity.
   'I don't have any more confidence in this company,' a woman who gave her name as Annie said after surrendering her two policies. She said the Fed's move made no difference to her decision.
   'I'm a bit apprehensive' about the company's future despite the bailout,' said another woman. The retiree, who declined to give her name, said she decided to liquidate her policy because the potential return was not large enough to justify the risk.
   'If my calculation is correct, I will break even' by cancelling the policy, she said.
   An agitated businessman, Chan Foo Choong, also lined up to liquidate his family's policies.
   'If anything happens, will you pay me?' he asked an AFP reporter.
   Others among the queue were simply seeking answers.
   One AIA staff member said employees worked until after midnight to deal with inquiries from the hundreds who thronged the office on Wednesday.
   After lining up to take numbers for service on Thursday, members of the crowd dispersed to pass the time until they were called inside.
   Staff said they gave out 500 numbers on Thursday before more people lined up to collect numbers for Friday.
   An AIA spokeswoman could not say how many customers in Singapore had cancelled their policies.
   In Hong Kong, AIG's subsidiary said on Thursday that more than 2,000 policies had been terminated by customers who feared a collapse. That number was small considering the company had written 2.2 million policies for 1.3 million customers, said Derek Yung, senior vice-president and general manager of AIA for Hong Kong and Macau.
   The company said it would waive re-admission charges and a health declaration requirement in a bid to woo customers back.
   In Taipei on Wednesday, more than 1,200 customers descended on a downtown office of AIG subsidiary Nan Shan Life Insurance.
   Authorities and AIA subsidiaries around the region sought to assure customers that the local firms were not in danger.
   AIA Singapore took out a full-page advertisement in the Straits Times newspaper Thursday telling policyholders it has 'more than sufficient capital and reserves to meet all obligations.'
   Despite short-term liquidity pressures at AIG, the Singapore unit is a 'strong, well-positioned business,' Mark O'Dell, the local company's executive vice-president and general manager, wrote in the advertisement.
   He said the funds in Singapore were segregated from AIG.
   AIA Hong Kong also keeps 'a separate and sound book of its own,' Yung said in the Chinese territory.

The Hong Kong and Shanghai Banking Corporation Limited has been ranked first among the world’s top 1,000 banks in a recent Banker Magazine survey.
   Citigroup, Royal Bank of Scotland, JP Morgan Chase and Bank of America are the rest of the top five banks, said a press release.
   HSBC led the rankings by virtue of its tier one capital of $105 billion and its robust profit.

Citibank NA recently signed an agreement with the Bangladesh Export Processing Zones Authority for opening a branch at the Adamjee Export Processing Zone.
   Prasanta Bhushan Barua, member of BEPZA, and Khawja Muhammad Masum Billah, senior vice-president and head of operations and technology of Citibank NA, signed the lease agreement at a ceremony held in Dhaka city, said a press release.
   Senior officials of BEPZA and Citibank NA were present on the occasion.
   The proposed branch of Citibank NA will be located in the Zone Service Complex of Adamjee EPZ. Foreign investors will get offshore banking facilities including other services at the outlet.

Morgan Stanley became the next great Wall Street name in peril on Thursday with reports it was in talks to be bought by US Wachovia Corporation or even the Chinese, as HBOS bank was bailed out in London
   With the flames of financial crisis outrunning renewed central bank intervention and the nationalisation of US insurance Titan AIG, US media reports meanwhile said Morgan Stanley was looking for help.
   The latest US drama was unfolding against a background of plummeting global stocks and yields, or interst rates, on US Treasury bonds as investors rushed for the safety of government debt instruments.
   The Bank of Japan made the latest of a series of interventions to support the Japanese banking system, pouring in the equivalent of 23.9 billion dollars, and the Russian stock market was closed even before trading opened, marking the third closure in three days.
   The reports here said Morgan Stanley, one of the last two independent US-based investment banks, was negotiating a merger with another firm.
   In London, the Halifax Bank of Scotland became the latest victim of the firestorm when British bank Lloyds TSB said it was acquiring this leading British mortgage in an all-share deal worth 12.2 billion pounds ($21b).
   The bailout came after HBOS stocks had plummeted in wild trading on Wednesday.
   The New York Times reported that Morgan Stanley was in talks to merge with Wachovia Corporation. Separately, CNBC business network said that the bank was in talks to be bought by the Chinese bank CITIC.
   Fears mounted that the US Federal Reserve’s 85 billion dollars loan to rescue American International Group might not be sufficient to reverse a rout on financial markets.
   The White House said on Wednesday that recent US economic news painted a ‘very mixed picture’ but added that the United States had ‘the strength’ to overcome the current financial crisis.
   The bailout for AIG, one of the world’s biggest insurers, and the earlier reports that HBOS was in advanced talks with Lloyds TSB had initially cheered Asian and European exchanges.
   Worries about British bank HBOS and US thrift Washington Mutual had dragged down stocks around the globe on Wednesday.
   HBOS shares were down 19.2 per cent at the close of trading Wednesday, against the backdrop of the dramatic collapse of US investment bank Lehman Brothers.
   But markets quickly reversed course as investors stampeded into gold, oil and safe short-term US Treasury bills.
   Around the world, nervous traders flocked to gold and oil and made an unprecedented rush to short-term US Treasury bills, pushing yields down to their lowest levels since 1954 for what is normally seen as the safest of securities.
   Aaron Smith at Economy.com called the action ‘an unprecedented flight to quality,’ adding: ‘Investor concern is also growing about the Fed’s ability to support markets in the future as the central bank’s own balance sheet is reduced.’
   The US Treasury announced it would sell 40 billion dollars in 35-day bonds to help the Federal Reserve as it battles to shore up the struggling economy.
   The Dow Jones Industrial Average slid 4.06 per cent in the second massive loss in three sessions. In London, the FTSE 100 index tumbled 2.25 per cent to 4,912.40.
   Markets were turbulent as they digested the AIG rescue amid anxiety about the state of the world financial system following the dramatic collapse on Monday of US investment bank Lehman Brothers and the sale of Merrill Lynch to Bank of America.
   The US government got a 79.9-per cent stake in AIG in return for the 85-billion-dollar loan, which followed hard on the heels of its takeover of US mortgage giants Fannie Mae and Freddie Mac.
   The Fed said it acted because ‘a disorderly failure of AIG could add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth, and materially weaker economic performance.’
   The size and scope of the Fed intervention also triggered political controversy in the United States.
   Some analysts said the action orchestrated by Fed chairman Ben Bernanke with the blessing of Treasury Secretary Henry Paulson pushes the government further toward nationalization.
   ‘The move represents the largest lurch toward socialism that this country has ever seen, and signals the end of the vibrancy of America’s once vaunted free market economy,’ said Peter Schiff, president of Euro Pacific Capital.
   ‘Since there is no limit to the amount of money the Fed can create, there is no limit to the number of assets they can acquire.’
   In Paris, French Finance Minister Christine Lagarde said this week’s dramatic developments heralded a major reconfiguration.
   ‘We are seeing a transformation of financial markets, of the role of people in finance and of bodies overseeing finance,’ she told France 24 television.

The US current account deficit widened to 183.1 billion dollars in the second quarter of 2008, from a downwardly revised 175.6 billion dollars in the first quarter, the Commerce Department said Wednesday.
   The deficit rose due to an increase in the trade deficit on goods and a decrease in the surplus on income, according to the statement.
   The deficit on goods increased to 216.3 billion dollars in the second quarter from 211 billion dollars in the first.
   The account deficit is the broadest measure of the flow of goods, services and capital in and out of the US. In the second quarter, the deficit totalled 5.1 per cent of the US gross domestic product, up slightly from 5.0 per cent in the first quarter.
   Analyst Sal Guatieri of BMO Capital Markets faulted the spike in oil prices for inflating the current trade gap in
   goods. But Guatieri said
   he expected the trade balance to improve, since oil prices
   fell 25 per cent in the second quarter.
   According to another expert, University of Maryland business professor Peter Morici, ‘The trade deficit with China and on petroleum and automotive products account for about 90 per cent of the deficit on trade in goods.’
   The faulty US energy policy has increased dependence on foreign oil; meanwhile the three domestic car manufacturers — General Motors, Ford and Chrysler — struggle to stay competitive, Morici added.
   Income from US-owned assets abroad decreased to 194.1 billion dollars in the second quarter from 199.1 billion dollars in the first quarter.
   Foreign residents’ acquisitions of US assets slowed significantly in the period from June-August.
   They increased 26.3 billion dollars, compared to an increase of 459 billion dollars in the first quarter.
   US-owned assets abroad also fell to 110.4 billion dollars in the same period, from
   260.6 billion dollars in the first quarter.
   The United States also slowed its purchases of foreign securities and stocks. It reduced direct investments abroad to 65.5 billion dollars in the second quarter, down from 89.1 billion dollars in the first quarter.
   Also on Wednesday, the first quarter account deficit was revised to 175.6 billion dollars, from 176.4 billion dollars.
   Third quarter account deficit figures will be released December 17.

Gulf states are bracing for the shakeout in the value of their massive foreign investments and the impact of lower oil revenues as the US financial crisis jolts the global economy, analysts say.
   But the banking sector in the oil and gas-rich six-nation Gulf Cooperation Council appears safe, they have told AFP.
   GCC states have earned well over one trillion dollars from high oil prices in the past six years and are estimated to be holding global investments worth 1.5 trillion dollars run by their sovereign wealth funds.
   ‘The US banking crisis will further slow global economic growth, dampening demand for oil. This will cause oil prices and revenues to drop sharply,’ said Saeed al-Shaikh, chief economist of Saudi Arabia’s National Commercial Bank.
   GCC member states Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates together pump 16 million barrels a day, or about 20 per cent of world supplies, and hold 45 per cent of proven global oil reserves.
   ‘After this crisis, Gulf states should be prepared for cheaper oil prices and a drop in their oil revenues,’ which account for more than 90 per cent of public income, Kuwaiti economist Hajjaj Bukhdur said.
   ‘I think demand for oil will decline even from China because its exports to the United States are expected to take a dive as a result of the banking crisis,’ Bukhdur told AFP.
   Global markets were shocked on Monday when Lehman Brothers, the fourth largest US investment bank, filed for bankruptcy and Bank of America bought troubled Merrill Lynch for 50 billion dollars.
   Markets were further rattled by the near bankruptcy of insurance and financial services group AIG, one of the largest companies in the world, which was staved off by a US government rescue.
   The price of crude oil dropped below 90 dollars on Wednesday losing around 10 dollars a barrel within two days of the US banking crisis. It has now plunged by almost 40 per cent since striking record highs above 147 dollars per barrel in July.
   On Tuesday, OPEC cut its world oil demand growth forecast for 2008 to 1.02 per cent from 1.17 per cent in the face of falling demand already occurring in the United States, the world’s biggest consumer of energy.
   The Gulf banking system is not expected to be affected but Gulf nations are fretting about their huge foreign investments, estimated by some reports at more than 1.5 trillion dollars.
   ‘I don’t think any Gulf financial institution will be directly affected by the collapse of Lehman Brothers because they hold no key stake in the giant investment bank,’ Shaikh told AFP.
   GCC central bank governors, meeting in Saudi Arabia, said on Tuesday that their banking system will not be affected by the US financial crunch.
   ‘But certainly there is serious concern over the fate of other major US financial institutions in which Gulf SWFs and private investors hold important stakes,’ Shaikh said.
   International Monetary Fund chief Dominique Strauss-Kahn, who met with the bankers, said the region’s banking and financial sectors had proven ‘quite resilient’ to the crisis.
   Bukhdur estimated that the value of Gulf SWFs investments in the United States and Europe was around a trillion dollars a year ago when the US sub-prime crisis began to unfold.
   ‘Gulf SWFs assets in the US and Europe have dropped by 30 per cent during the past year, or an estimated book loss of 300 billion dollars,’ Bukhdur said, referring to losses incurred as a result of the US subprime and financial crises.
   Shaikh said Gulf SWF investments in the United States are not concentrated in the financial or banking system but are well diversified over several sectors and are run in a highly professional way.
   In the past year, UAE and Kuwaiti SWFs pumped more than 12 billion dollars into a number of major US banks, and the value of those investments have been cut by a half as price of shares dropped.

Some 85 per cent of major Japanese companies believe the nation is already in recession and most say the economy would only recover late next year, according to a survey published Thursday.
   About 71 per cent of 209 leading companies polled said the world’s second largest economy was in a gradual recession and 14 per cent said it was in a definite recession, the Tokyo Shimbun said.
   The latest poll, conducted from late August to mid-September, was a sharp contrast to the previous survey in April, when 61 per cent saw the economy as flat and 19 per cent said it was going down.
   As for concerns, the companies cited price rises in oil and other commodities, the course of the US economy, weakening consumer spending and the spread of the subprime mortgage problems stemming from the United States.
   The survey found virtually no one who believed the economy would recover this year. Fifty-one per cent said it would pick up in the second half of 2009 and 19 per cent in the April-June quarter.
   Japan’s economy contracted in the second quarter by a revised 3.0 per cent on an annual basis. Economist generally define a recession as two quarters of negative growth.
   The Bank of Japan said Wednesday that it expected the economy to remain sluggish for now amid global market turmoil but also voiced relief that commodity prices seemed to be stabilising.

Central banks around the world on Thursday threw more than 300 billion dollars into the fight against the credit crisis as speculation grew over Wall Street legend Morgan Stanley and a top British bank was forced into a merger.
   The US Federal Reserve led a desperate operation to douse the financial firestorm, putting up an extra 180 billion dollars to relieve ‘elevated pressures’ in global markets amid mounting political calls for decisive action to end the chaos.
   But the panic drove heavy stocks falls in Asia, a slump in US Treasury bond yields and a leap in the gold price as investors sought a safe haven. The euro rose to a two week high of 1.45 against the dollar.
   Central banks have now spent more than 600 billion dollars this week to ward off failure in the global financial system. In addition, the Fed rescued US insurance titan AIG with 85 billion dollars, having allowed Lehman Brothers bank to fail.
   ‘The most important thing about this coordinated action is that there is access to US dollars even when the US markets are closed’, said Credit Suisse analyst Marcel Thieliant. This meant US financial groups could access dollars at any time through their foreign subsidiaries, he said.
   The Fed was joined by the European Central Bank with the British, Japanese, Swiss and Canadian banks. They offered extra dollars to the banking system through arrangements to swap other currencies for dollars.
   The Fed gave overall figures pointing to a total of 290 billion dollars. The ECB also made a direct emergency cash injection of 25 billion euros ($36m).
   European stocks staged a feeble rally on the central bank support and the takeover of Britain’s biggest mortgage lender HBOS by British bank Lloyds TSB.
   British authorities oversaw the takeover of Halifax Bank of Scotland by Lloyds TSB in an all-share deal worth 12.2 billion pounds ($21b).
   Britain’s Financial Services Authority said the takeover would ‘enhance stability within financial markets and improve confidence among customers and investors’.
   There was a 1.62 per cent rise in London after a 10-per cent fall over three days.
   Stocks in Asia ended with heavy falls on reports that Morgan Stanley, one of the last two independent US merchant banks, was in merger talks. Morgan Stanley’s shares slumped 24 per cent on Wednesday.
   The state-controlled Chinese group CITIC declined to comment on a report by CNBC television, quoting US and Chinese sources that it was in talks with Morgan Stanley. The sovereign wealth fund, China Investment Corporation, already owns 9.9 per cent of Morgan Stanley.
   The New York Times said Morgan Stanley was in ‘preliminary’ talks with Wachovia Corporation of the United States.
   US thrift Washington Mutual is also at the centre of market worries which have dragged down stocks. British finance minister Alistair Darling said after central banks acted that governments must now act ‘decisively and quickly’ to end the crisis.
   ‘The key thing...is to maintain stability of the banking system,’ he told BBC radio.
   ‘We are going through a truly exceptional difficult time in relation to banks and other financial institutions,’ he added.
   Russian president Dmitry Medvedev ordered his government to support the Russian financial system, saying it was the ‘most important priority’, after the stock market in Moscow was closed for a third day in a row.
   ‘We have enough reserves, we have a strong economy,’ Medvedev said. ‘The market will get all necessary support.’
   But at Heartland Advisors, portfolio manager Michael Petroff, said: ‘The market is trading under the assumption that every financial institution is going under...it’s now emotional.’

The dollar fell further in Asian trade Thursday on fresh fears that the worsening global credit crisis would claim more victims on Wall Street, dealers said.
   The dollar traded narrowly, changing hands at 104.46 yen in Tokyo afternoon trade from 104.91 in New York late Wednesday after tumbling five per cent from a month ago.
   The euro strengthened to 1.4368 dollars from 1.4344 but slipped to 150.09 yen from 150.50.
   Asian equities suffered another bloodletting following a plunge on Wall Street and European stock markets amid persistent fears over the health of the US and European financial sectors, dealers said.
   British bank Lloyds TSB Group announced Thursday it will acquire troubled mortgage lender HBOS for 12.2 billion pounds ($22b) while markets continued to reel from the collapse of Wall Street titan Lehman Brothers.
   ‘What is happening is mind-blowing and scary for the real economy in the next 10 years,’ said a London-based Citigroup equity analyst who had watched shares of HBOS nosedive before the merger.
   ‘What is more amazing is the speed that institutions more than 100 years old are capable of crumbling. More than half of the market capitalisation of HBOS was wiped out... in two hours of trading,’ he said.
   The Federal Reserve’s 80 per cent purchase of giant insurer American International Group on Wednesday failed to shore up market confidence, as banking shares continued to plunge.
   ‘The bankruptcy of Lehman Brothers and need for AIG to be saved by the US government has returned the US to the epicentre of concerns over financial stability,’ NAB Capital strategist John Kyriakopoulos wrote in a note.
   While the dollar was supported in the past month on views that the US economy was holding up better than in Europe, ‘attention has been refocused on the larger problems in the US financial system,’ he said.
   ‘This suggests the dollar will now struggle, especially if the Fed holds its line on not cutting interest rates further.’
   In a fresh effort to calm markets, the Bank of Japan on Thursday pumped cash into the money market for a third straight day, injecting 2.5 trillion yen (23.9 billion dollars).
   The latest injection brought the amount of funds the bank pumped into money markets to eight trillion yen since Tuesday.
   Japanese economy minister Kaoru Yosano, a candidate to be the next prime minister, said Thursday that Japan would provide Washington all the support it could to help stabilise the US financial system.
   The dollar was mixed in regional Asian trade. It edged up to 32.28 Taiwan dollars from 32.08, to 1,150.75 South Korean won from 1,136.18, to 47.26 Philippine pesos from 47.03 and to 9,417.50 Indonesian rupiah from 9,400.
   But the greenback slipped to 34.16 Thai baht from 34.35 and was stable at 1.4344 Singapore dollars.

Oil prices rose sharply for a second day running Thursday, bouncing above 102 dollars, as the US currency fell after major central banks further boosted liquidity on financial markets.
   ‘The coordinated move by central banks has seen the dollar sold off and has sparked some interest in the dollar denominated commodities like oil,’ said Sucden analyst Nimit Khamar in London. A weak dollar makes oil cheaper for buyers holding stronger foreign currencies.
   New York’s main contract, light sweet crude for delivery in October, hit an intra-day high of 102.24 dollars a barrel. It later stood at 101.17 dollars, up 4.01 dollars.
   London’s Brent North Sea crude for November soared 3.91 dollars to 98.75 dollars a barrel.
   The US Federal Reserve on Thursday announced a 180 billion dollars cash line to fight the global credit crisis as part of a joint campaign with other leading central banks.

Transaction
   National Bank
   AB Tajul Islam, one of the directors of the bank, has reported his intention to buy 500 shares of the bank at prevailing market price through the stock exchange within next 30 working days.
   
   Jamuna Bank
   MA Khayer, one of the sponsors/directors of the bank, has reported his intention to sell 4,142 shares out of his total holdings of 1,07,142 shares of the bank at prevailing market price through the stock exchange within next 30 working days.
   
   BGIC
   Noor Alam, one of the sponsors/directors of the company, has reported his intention to sell 1,760 shares out of his
   total holdings of 9,760 shares of the company at prevailing market price through the stock exchange within next 30 working days.
   
   Sale status
   Titas Gas
   As reported by the selling agent ICB, total 86,35,700 shares were sold up to September 18 out of 2,14,11,728 shares.
   
   Scrip downgraded
   Paramount Insurance
   The company will be placed in ‘Z’ category from ‘N’ category with effect from September 21 as the company did not
   recommend any dividend for the year 2007.
   
   Response to DSE query
   Bengal Fine
   In response to a DSE query, the company has informed that the board of directors of the company did not recommend any dividend for the year ended on June 30 in 2007.
   
   Aramit
   In response to a DSE query, the company has informed that there is no undisclosed price sensitive information of the company for recent unusual price hike.
   Source: DSE

Three Chinese banks hold Lehman-related bonds
At least three large Chinese commercial banks have disclosed their exposure to the worsening US financial crisis through bonds issued by investment bank Lehman Brothers, which has filed for Chapter 11 protection. China Merchants Bank Wednesday said in a statement to the Shanghai Stock Exchange that it holds 70 million US dollars of Lehman Brothers bonds, of which 60 million dollars is senior debt and the rest subordinated debt. The bank also said it has not made special provisions for the book losses on those bonds and will evaluate their potential risks and disclose further details at a later date. Industrial and Commercial Bank of China, the country’s largest State-controlled commercial bank by assets, holds 152 million dollars in bonds issued by, or linked to, Lehman Brothers. At press time, ICBC had not issued a statement to the Shanghai bourse to specify its exposure to Lehman Brothers. Bank of China was also affected by the failure of Lehman Brothers.
— Xinhua

Over 2,000 policies terminated in Hong Kong
The Hong Kong subsidiary of troubled insurance titan AIG said on Thursday that more than 2,000 policies had been terminated by customers who feared a collapse. In a bid to lure back their customers, American International Assurance said it would waive re-admission charges and a health declaration requirement for those who decided to revive their life insurance policies with them. ‘We hope that our customers are convinced that our business remains sound and profitable,’ Derek Yung, senior vice-president and general manager of AIA for Hong Kong and Macau, told a press conference Thursday.
— AFP