Swine flu fear, not fact,
threatens businesses
Say analysts
Agence France-Presse . Paris
Airlines and the bacon business on one side and viral treatments and rubber gloves on the other are among sectors in the front line of economic shocks from the swine fever alert.
Any activity connected to international travel and tourism is seen as potentially most-exposed to a fall in traffic.
A strong warning came from Australia where tourism expert Olivia Worth said the crisis had created a ‘perfect storm’ for Australian tourism.
But fear rather than fact is hitting some sectors while boosting others, such as drug companies, analysts say.
The main reference point for judging economic damage from global swine fever is the bird flu crisis about four years ago, which sharply reduced retail consumption in Asia where the outbreak was concentrated.
By Wednesday, flu fever on financial markets was cooling as analysts stressed that greatest factor is fear itself.
Barclays Capital in London said a key lesson of the avian flu crisis in Asia, known as SARS which began in 2003, was that ‘fear and panic subsided quickly once the disease was under control, and the affected economies rebounded rapidly.’
The short-lived economic impact hit mainly demand, ‘particularly local consumption and tourism in the afflicted economies.’
They stressed: ‘SARS was a crisis of fear.’
People avoided crowded places. ‘Restaurants, shops, cinemas and other entertainment venues were deserted. Schools were closed for weeks ... There was direct and immediate curtailment in spending and economic activity.’
But initial concern that international trade in goods, and foreign investment, would be hit faded as quickly as the outbreaks were contained.
However, Barclays analyst Julian Callow noted that the World Bank estimates that a ‘mild’ flu epidemic defined as 1.4 million deaths would cut world output in the first year by 0.7 per cent, a ‘moderate’ pandemic of 14.2 million deaths by 2.0 per cent and a ‘severe’ pandemic of 71.1 million deaths by 4.8 per cent.
In Singapore, Societe Generale bank commented that ‘investors have moved to trim risk averse positions,’ estimating that ‘economic threats as a result of swine flu are, for now, adequately priced.’
In New York, Patrick O’Hare at Briefing.com said that recent reactions suggested ‘the market respects the swine flu scare, but that it isn’t fully intimidated by it, given past experiences.’
Business and leisure travellers are expected to reconsider trips, in some cases on official advice or because travel to Mexico for example is being suspended by some operators.
But trade in pigmeat is also in the firing line.
The United States says that nine countries have banned to some degree the importation of US pigmeat, or even other meat.
Clearly concerned about the economic damage, Washington has protested that such measures are mistaken, arguing that the human version of the virus is spread only by people not by meat.
‘It is perfectly safe to consume pork products from America,’ US Agriculture Secretary Tom Vilsack insisted.
Russia has also banned imported pork from several countries in central and Latin America.
Among gainers from the crisis are some bonds, the dollar and yen, considered as defences in times of uncertainty, particularly the yen since Japan is seen as distant and relatively unconnected to the source in Mexico.
Some leading drug companies could benefit from sales of existing anti-flu viral treatments, and from any new vaccine which is developed.
The World Health Organisation says that four ‘reference’ laboratories are working on a vaccine, and Novartis says it is involved.
A leading gainer already is Swiss pharmaceutical group Roche, maker of Tamiflu, which was in great demand during the bird flu crisis. GlaxoSmithKline is trying to boost production of its drug, Relenza.
In Japan, shares in Chugai Pharmaceutical, which sells Tamiflu locally have risen as have shares in Green Cross in Seoul, which is developing a vaccine for avian flu.
Makers of rubber gloves and face masks can also expect a huge surge in demand, as witnessed in Hong Kong where long queues have formed outside chemists. In Malaysia, shares in a firm called Top Glove have jumped as has stock in the Latex rubber group.
DSE favours cell phone operators
to get tax rebate
Staff Correspondent
The Dhaka Stock Exchange has suggested the government to withdraw the condition for mobile phone companies that they have to offload 10 per cent of their paid up capitals to avail the tax rebate.
‘We have suggested for the withdrawal of the condition as other companies except banks, insurance companies and non-bank financial institutions enjoy tax rebate facility by offloading any amount of shares of their paid up capitals,’ DSE president Md Rakibur Rahman told at a press briefing at the bourse’s board room in Dhaka on Wednesday.
The existing corporate tax for mobile phone operators is 45 per cent. If they become publicly traded companies by offloading 10 per cent of their paid up capitals, corporate tax for them comes down to 35 per cent, he said.
The DSE organised the briefing after a team of the bourse made a visit to the chairman of the National Board of Revenue, Nasiruddin Ahmed, at his office in Dhaka.
Rakibur said the DSE submitted a set of proposals to the NBR chairman for the next national budget for the betterment of the country’s capital market.
‘We have proposed reducing of the tax for the listed companies other than banks, insurance companies and non-bank financial institutions from the existing 27.5 per cent to 25 per cent,’ he said. The bourse also suggested that the government should reduce tax for listed banks, insurance companies and NBFIs from the existing 45 per cent to 35 per cent.
‘If the tax rate is lowered for listed companies, they will have more capacity to declare cash dividends for their shareholders,’ he said.
Rakibur said, ‘We have also proposed that 10 per cent tax at source on dividend income should be final.’ ‘We have also suggested that the government should allow investment of undisclosed money in the pre-IPO placements and secondary market,’ he added.
Digital Lifestyle Fair in June
Business Desk
Digital Lifestyle Fair, a three-day exposition aiming at promoting digital products and services to help build a digital Bangladesh, is going to be held on June 26-28.
Gmaks, an event management firm, will organise the digital lifestyle show at Bangladesh-China Friendship Conference Centre in the city.
A total of 60 companies including telecom, IT, ISP, website design & hosting, software and hardware firms will be showcasing their digital products and services as part of changing trend of lifestyle.
The fair will remain open for visitors from 10 to 8 everyday during the exposition. Side by side sales and display, this lifestyle fair will also have seminar and workshop on different digital topics.
Quiz contest and game-show will also be arranged to woo and entertain college and university student. There will be no entrance fee for students wearing school uniform.
Rajshahi int’l trade
fair begins
Staff Correspondent . Rajshahi
A month-long international trade and commerce fair, organised by the Rajshahi Chamber of Commerce and Industries, began in the Rajshahi city on Wednesday.
Shirin Akhter Rini, wife of Rajshahi mayor AHM Khairuzzaman Liton, inaugurated the fair as chief guest at the Collectorate ground while Hafizur Rahman, additional police commissioner of Rajshahi Metropolitan Police and Hasen Ali, director of FBCCI were present as special guests.
Abu Bakkar Ali, president of the Rajshahi Chamber of Commerce and Industries, presided over the inaugural session.
Khandaker Mainul Islam, chairman of the fair committee also present among others.
A total of 118 stalls have so far been set up at the fair.
New body takes over Rangpur chamber
Our Correspondent . Rangpur
The Rangpur Chamber of Commerce and Industries recently welcomed its newly elected body at the chamber auditorium.
Rangpur chamber outgoing president Mostafa Azad Chowdhury presided over the session. Senior vice-president Mostafa Ahamed, president-elect ATM Shanewaj Bablu, senior vice-president Abul Kashem, and member Mostafa Sohrab Chowdhury, addressed among others.
The biennial election for 2009-2011 of the Rangpur chamber was held on April 5.
The newly elected members are ATM Shahanewaj Bablu, Emdadul Hossain, Mostafa Sohrab Chowdhury, Habibur Rahman Raja, Azizul Islam Mintu, Partho Bose, Nazmul Ahasan Sarker, Rabi Somani, Manzur Ahamed, Mohammad Riaz Shahid Suman, Debobroto Sarker and Kazi Mohammad Adam from general group and Abul Kashem, Fazlul Haq, Azoy Prasad Babon, Mohammad Enamul Haq Sohel, Anowar Ahamed and Alhaj Nawshad Hossain from associate group.
Rangpur chamber election board chairman Abdus Samad conducted the swearing in of the elected members.
European stocks shrug off
swine flu worries
Agence France Presse . London
Europe's main stock markets won back ground Wednesday, as investors shrugged off swine flu concerns following news of resurgent economic confidence in the recession-hit eurozone.
In late morning deals, London's FTSE 100 of leading shares rose 0.79 per cent to 4,128.93 points. Frankfurt's DAX 30 added 0.88 per cent to 4,647.95 points and the Paris CAC 40 won 1.24 per cent to 3,089.01 points.
The DJ Euro Stoxx 50 index of leading eurozone shares increased 1.19 per cent to 2,307.68 points.
The European single currency stood at 1.3241 dollars.
Frankfurt, London and Paris stock markets had dipped Tuesday on profit-taking amid jitters over US banks and anxiety about the deadly swine flu outbreak hampering a global economic recovery.
Business and consumer confidence in the European economy rose in April for the first time in nearly two years, an EU survey showed on Wednesday, adding to signs the slump is stabilising.
The European Comm-ission's economic sentiment indicator for the 16-nation eurozone rose to 67.2 points in April, from 64.7 points in March, beating economists' expectations for an increase to only 65.3 points. The improvement marked the first increase since May 2007 in the eurozone.
CORPORATE DISCLOSURES
GQ Ball Pen recommends
22pc dividends
Business Desk
The board of directors has recommended cash dividend at 22 per cent for 2008. Date of AGM: June 18, 2009, time: 11:00am, venue: National Shooting Complex, Dhaka. Record date: May 28, 2009.
1st Lease International
The board of directors has recommended cash dividend at 10 per cent and stock dividend at 10 per cent (1 Bonus share for every 10 shares held) for the year 2008. Date of AGM: 26.05.09, Time: 10:00 A.M., Venue: BIAM Auditorium, 63, New Eskaton, Dhaka.1000.
Standard Insurance
As per regulation 30 of DSE Listing Regulations, the company has informed that 65th meeting of the board of directors of the company will be held today at 3:00pm to take the following decisions - to adopt financial statements for the year ended December 31, 2008, to recommend dividend for the year ended December 31, 2008, to fix date, time, venue and record date of AGM and to discuss other related issues.
National Housing Fin and Inv
The company has reported net profit after tax of Tk 88.11m with EPS of Tk 18.50 as on December 31, 2008 as against Tk 74.35m and Tk 15.82 respectively as on December 31, 2007. The company has also informed that the time of 10th AGM of the company shall be 3:00pm instead of 11:00am.
Peoples Insurance
M Abul Hasnat, one of the sponsors of the company, has reported his intention to sell 2,000 shares out of his total holdings of 29,070 shares of the company at prevailing market price through Stock Exchange by May 28.
Northern General Insurance
As per audited accounts as on December 31, 2008, the company has reported net profit after tax of Tk 16.12m with weighted average EPS of Tk 20.67 as against Tk 12.32m and Tk 20.53 respectively as on December 31, 2007.
Al-Haj Textile
Today (Thursday) Trading of the shares of the company will resume in Demat form announced earlier. Source:DSE
Global lending plummets
to record low
Agence France-Presse . Geneva
Banks cut cross-border lending by a record $1.8 trillion in the fourth quarter last year, the world’s biggest central banking body said Wednesday.
Lending between banks accounted for about half of the drop, while another half of 903 billion dollars constituted lending to non-banks, according to the Bank for International Settlements.
‘After a relatively small change in total outstanding stocks in the third quarter, banks’ external claims shrank by 5.4 per cent in the fourth quarter of 2008 to $31 trillion,’ the BIS said in its quarterly report on international banking statistics.
The biggest fall was recorded in loans, which plunged $1.678 trillion, followed by securities, which fell by $211 billion.
Claims denominated in US dollars declined by 6.0 per cent while those in yen were down 15 per cent.
Banks have become extremely reluctant to lend to each other since the beginning of the financial crisis in 2007.
The latest statistics revealed the severity of a global credit crunch that emerged following the dramatic collapse of US banking titan Lehman Brothers in September 2008.
As banks sought to protect their capital base, they stopped lending not only to fellow banks but also to industries.
As a result, major central bankers had to take coordinated action on several occasions to offer cash to the markets in a move to prevent the credit squeeze from choking off commercial bank lending.
The BIS statistics also indicate that during the fourth quarter of last year, banks were hit by $1.7 trillion worth of withdrawals to leave them with total liabilities of 28.731 trillion.
Deposits plunged by $1.873 trillion and securities by $232 billion. However, this was partly offset by ‘other stocks,,’ which gained $369 billion.
China to allow foreign
bonds, shares
Agence France-Presse . Shanghai
China Wednesday said it would eventually let foreign firms issue bonds and shares in the country as it detailed plans to turn Shanghai into an international financial and shipping hub.
It will also gradually allow international development institutions, such as the Asian Development Bank, to issue an increasing amount of yuan-denominated bonds, the State Council, or cabinet, said.
China announced in March its goal of building Shanghai into an international financial and shipping hub by 2020 that would reflect the nation’s economic strength and its aspirations for its currency.
‘Shanghai has a relatively (for mainland China) complete financial market... a strong manufacturing base and technology innovation capability,’ the cabinet said in a paper published Wednesday.
‘It is a natural choice to continue to give play to Shanghai’s model role in leading China’s development.’
The city is home to China’s main stock market and its port was the busiest in the world with a cargo throughput of 580 million tonnes last year.
To bolster its status as a global shipping centre, Shanghai-registered insurers will eventually be exempted from business tax on income from their international shipping insurance operations.
Shipping companies are allowed to set up financial leasing firms, which would be able to borrow and lend on China’s Shanghai-based inter-bank market and issue bonds, according to the cabinet paper.
The city is also ‘not far’ from using the yuan to settle trade with Hong Kong under a planned pilot programme, vice mayor Tu Guangshao told at a news conference Wednesday, where the plan was discussed.
He did not give a more detailed timetable.
Earlier this month, the cabinet said Shanghai and the cities of Guangzhou, Shenzhen, Zhuhai and Dongguan in southern China neighbouring Hong Kong would participate in a trial scheme to use yuan to settle trade.
The move is expected to be a small step toward the yuan becoming an international currency.
Zimbabwe secures $400m
credit lines
Agence France-Presse . Harare
Zimbabwe’s new power-sharing government has secured $400 million in credit lines from neighbours to revive the country’s moribund economy, a state daily reported Wednesday.
Citing industry minister Welshman Ncube, The Herald newspaper said Zimbabwe had secured about $200 million in credit from nations in the Southern African Development Community.
Countries in the Common Market for Eastern and Southern Africa will extend another $200 million in credit, the paper added.
The report did not say which countries would extend the credits or what form they would take, except that the loans could only be used by private companies to meet their capital requirements to revive their businesses.
Ncube was not immediately reachable for comment.
Once a model economy and food exporter, Zimbabwe’s economy has been on a downturn for nearly 10 years, battered by hyperinflation that only stopped when the government this year abandoned the local currency in favour of the US dollar and the South African rand.
The economic crisis blamed on the policies of long-time President Robert Mugabe, including controversial land reforms, saw many companies pulling down the shutters while the few which remained operated at a fraction of their capacity.
Ncube said the money secured by the government would help companies buy raw materials.
‘We hope to start accessing the funds in next few weeks but I must point out that this money is working capital for companies seeking to procure raw materials to improve their capacity,’ the newspaper quoted minister Ncube as saying.
‘The money is not for expansion purposes.’
Zimbabwe’s three main political rivals formed a new power-sharing government in February aimed at tackling a chronic economic crisis and easing political tensions in the aftermath of contentious presidential elections last year.
Steel giant Mittal logs
$1 billion loss
Agence France-Presse . Paris
The world’s biggest steel maker ArcelorMittal on Wednesday reported a net loss of $1.063 billion in the first quarter, with major write-downs due to the economic crisis.
The figure included $1.2 billion worth of exceptional charges due mainly to write-downs of the value of items in its inventory, the company said in a statement.
Earnings were down sharply from the same quarter in 2008 when it reported a profit of $3.614 billion, but the loss reported Wednesday was less heavy than the $2.632 billion fall booked in the fourth quarter of 2008.
ArcelorMittal said it planned to continue cutting production in line with reduced demand and forecast that profits would rebound in the second quarter.
‘Strong measures have been taken to reduce our cost considerably and liquidity remains healthy,’ the company’s chairman, Lakshmi Mittal, said in the statement.
‘Although market conditions remain challenging, a technical recovery is inevitable.’
Google books deal under scan
Reuters/Bdnews24.com . Washington
The US Justice Department is making inquiries about a class action deal that Google Inc struck giving it the right to digitise and sell entire libraries, two experts on digitisation told Reuters on Tuesday.
Under a proposed settlement last October between Google and the Authors Guild and the Association of American Publishers, Google agreed to pay $125 million
to create a Book Rights Registry, where authors and publishers can register works and receive compensation from institutional subscriptions or book sales.
Google’s plan is to let readers to search through millions of copyrighted books online, browse passages and purchase copies.
But the deal also would allow Google to digitise so-called orphan works, which has raised some eyebrows in antitrust circles. Orphan works are books or other materials that are still covered by US copyright law, but it is not clear who owns the rights to them.
‘Essentially, it gives Google a free pass for infringement for selling all these books,’ said James Grimmelmann, who teaches at the New York Law School. ‘Publishers (who are part of the settlement) would be happy to share the monopoly with Google.’
Grimmelmann said he was part of a recent conference call with Justice Department lawyers, who asked questions about Google’s proposed settlement.
Grimmelmann said the Justice Department lawyers did not indicate what their concerns
were.
‘I have no idea what they’re thinking,’ he said.
Peter Brantley of the Internet Archive, which also digitizes books, said his organization had ‘multiple conversations’ with the Justice Department about the Google plan.
‘There are legitimate antitrust issues related to Google’s ability to solely commercialise this content,’ Brantley said, adding he hoped the settlement agreement would be rejected by US District Judge Denny Chin.
‘We would like the court to say: ‘This is fine theoretically, but these orphan books, they don’t have anyone to speak for them, so let’s take them out of the agreement,’ he said.
Neither Google nor the Justice Department had any immediate comment.
Judge Chin granted a four-month extension on Tuesday to a group of authors deciding whether they want to opt out or object to the settlement.
The judge set a final settlement hearing on October 7 for court approval. If approved, it would bring to a close an almost four-year long legal challenge of Google’s plan to make many of the world’s great books searchable online.
Fonterra to sell ice
cream business
Agence France-Presse . Melbourne
Dairy producer Fonterra said Wednesday it was selling its Australian ice cream business, resulting in 140 job losses, with Swiss giant taking some of its assets.
The New Zealand-based company said it had also agreed to sell other assets to Australia’s Bulla, subject to regulatory approval.
It did not disclose the prices paid.
Under the deal, Nestle will acquire the Peters brand in Western Australia and Connoisseur brand nationwide, while Bulla will take over the national rights to the Cadbury ice cream range.
Fonterra said the jobs would be lost at its Balcatta site in Western Australia.
‘We regret the impact these decisions will have on our people and we are doing everything possible to minimise the number of people affected by this announcement, including pursuing redeployment opportunities within Fonterra and employment opportunities with other companies,’ it said.
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