Download LR Global Bangladesh: Weekly News Update Reporting Week: 12th

LR Global Bangladesh: Weekly News Update
BANGLADESH MACRO ECONOMY
Investment ratio to GDP grows in FY16
Public investment increased to 7.60% while that of private
investment to 21.78% in FY16. Investment ratio to the GDP
was 28.89% in the 2014-15 fiscal year due to the development
in investment situation. The private sector investment ratio to
the GDP was then 22.07% while the government investment
ratio 6.82%. The investment ratio to the GDP in the 2013-14
fiscal was 28.58%, including 22.03% private investment and
6.55% government investment. The domestic savings ratio to
the GDP in the FY16 increased to 23.89% compared to 22.16
per cent in the previous fiscal year FY15. The gross national
savings ratio to the GDP also increased to 30.08% in FY16
compared to 29.02% recorded in the previous fiscal FY15 due
to low growth in remittance inflow. The investment ratio to
the GDP is hovering over 26% in the last couple of years.
FDI jumps 21% in July-April 2015-16
Foreign Direct Investments in the ten months of the outgoing
FY 15-16 has clocked USD 1.82 billion, up 21% over the
corresponding period in previous fiscal year. A net FDI
between July and April in the current FY was USD 1.82 billion
against USD 1.50 billion in FY 14-15. Most of the FDIs coming
in last year were from the US, UK, South Korea, Australia, the
Netherlands, Malaysia, Hong Kong, Singapore, Japan and
India. The sectors that attracted foreign investors the most
were gas and petroleum, textiles, banking, telecom, power,
food, cement, leather and leather goods. FDIs in Bangladesh
come as equity capital, reinvested earning and intra-company
loan, making up the gross flow. Bangladesh’s gross flow
crossed USD 2 billion for the first time in 2014 and the net
flow that year was a little over USD 1.5 billion. In 2015, the net
flow stood at USD 2.2 billion.
Inflation hits 4-year low in May
The point-to-point inflation hit four-year low at 5.45% in May.
The overall point-to-point inflation came down in May from
around 5.61% in April because of a continued fall in both food
and non-food inflation. The May inflation rate was four-year
low as the point-to-point inflation rate had hit as low as 4.96%
in September 2012. The BBS started to calculate inflation rate
considering 2005-2006 as the base year in July 2012 when the
inflation rate was calculated at 5.21% for the month
compared with that of 8.03% inflation as per the previous
1995-96 base-year. The rate was coming down for the last few
months because of rise in agricultural production, decline in
prices of imported commodities and reduction in oil prices in
the country.
SECTOR SPECIFIC NEWS
BANK
Banks lower rates further in April
The country’s scheduled banks in April cut their interest rates
on lending further against the backdrop of the businesses’
persistent reluctance to borrow from banks due to a sluggish
business situation worsened by political uncertainties and
vulnerable law and order situation. The weighted average
interest rate on lending in the banking sector declined to
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Reporting Week: 12th June- 16th June, 2016
10.64% in April from 10.78% in March 2016. The weighted
average rate on lending was 10.91% in February and 11.05%
in January of this year. The weighted average interest rate on
lending had declined throughout last year. The banking sector
was forced to maintain the downward trend in the lending
rate due to a sluggish credit demand from the business people
amid political uncertainties and fragile law and order
situation. The weighted average interest rate on deposit of
the banks also decreased to 5.77% in April from 5.92% in
March of 2016.
BB cuts interest rate ceiling on farm credit
The central bank has slashed the ceiling on agricultural credit
by 1.0 percentage points considering the declining trend of
interest rates on both lending and deposits. Under the revised
provisions, the banks are allowed to charge maximum 10%
interest rate on agriculture credit instead of 11%. The revised
interest rate on agriculture credit will come into effect from
July 1, 2016. The central bank has reduced the interest on
farm credit aiming to facilitate agriculture activities across the
country. The central bank slashed maximum ceiling on
agricultural credit by 2.0 percentage points to 11% from 13%
on December 21, 2014 on the same ground.
INDUSTRIALS
BSRM Steels raises BDT 245cr through zero-coupon bonds
BSRM Steels, a unit of Chittagong-based BSRM Group, raised
BDT 245 crore through what has been the largest issue of
zero-coupon bonds by a company in Bangladesh yet. A zerocoupon bond, also known as discount bond or deep discount
bond, is bought at a price lower than its face value, with the
face value repaid at the time of maturity. The proceeds of the
bonds will be utilized for BSRM Steels' capital expenditures,
refinance and equity investment in its subsidiary company.
The company started its journey in 1952 and since then it has
been pioneering the steel industry in the country. BSRM Steel
was listed on the stock market in 2009. Its net profit was BDT
209.68 crore in 2015, up from BDT 123.92 crore a year ago.
CAPITAL MARKET NEWS
No bar to transfer 'dividends', 'split bonus' to margin loan
providers
The issuer companies and mutual funds have no bar to
transfer the 'dividends' and 'split bonus' to margin loan
providers as the Supreme Court (SC) has upheld the securities
regulator's directive. The lenders have to no bar to receive
their clients' dividends or split bonus in accordance with
regulatory directive. In May, 2015, the securities regulator
asked the issuer companies and mutual funds to provide the
dividends and split bonus of the investors having margin
accounts to the stock brokers instead of depositing into
clients' beneficiary owner's (BO) accounts. The securities
regulator had brought changes in the provision of distributing
dividends following a proposal made by the stock brokers of
the premier bourse.