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25
 
January
 
2009
 

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AT CAPITAL RESEARCH
 
EDITORS
 
Ifty
 
Islam
 
Managing
 
Partner
 
ifty.islam@at
‐
capital.com
 
Syeed
 
Khan
 
Partner
 
syeed.khan@at
‐
capital.com
 
Jisha
 
Sarwar
 
Senior
 
Research
 
Associate
 
 jisha.sarwar@at
‐
capital.com
 
Asian
 
Tiger
 
Capital
 
Partners
 
UTC
 
Building,
 
Level
 
16
 
8
 
Panthapath,
 
Dhaka
‐
1215
 
Bangladesh
 
Tel:
 
8155144,
 
8110345
 
Fax:
 
9118582
 
www.at
‐
capital.com
 
AT
 
Capital
 
Weekly
 
Update
 
    A   s    i   a   n    T    i   g   e   r    C   a   p    i    t   a    l    P   a   r    t   n   e   r   s    W   e   e    k    l   y    N   e   w   s    U   p    d   a    t   e
Key
 
themes
 
in
 
this
 
issue
 
are:
 
Bangladesh
 
Overview:
 
•
 
We
 
review
 
the
 
Asian
 
Development
 
Bank
 
(ADB)
 
economic
 
and
 
political
 
update
 
for
 
Bangladesh.
 
They
 
are
 
modestly
 
more
 
bearish
 
than
 
Bangladesh
 
Bank
 
in
 
forecasting
 
FY
 
09
 
GDP
 
growth
 
slowing
 
to
 
5.7%.
 
However,
 
they
 
are
 
far
 
less
 
pessimistic
 
than
 
the
 
World
 
Bank’s
 
equivalent
 
forecast
 
of 
 
4.8%.
 
•
 
Perhaps
 
the
 
biggest
 
risk
 
for
 
Bangladesh
 
is
 
the
 
speed
 
at
 
which
 
the
 
global
 
economy
 
in
 
general,
 
and
 
China
 
in
 
particular,
 
is
 
slowing.
 
•
 
We
 
discuss
 
some
 
current
 
analysis
 
that
 
suggests
 
that
 
Chinese
 
Q4
 
GDP
 
growth
 
estimates
 
of 
 
6.8%
 
are
 
grossly
 
over
‐
optimistic.
 
A
 
number
 
of 
 
private
 
forecasters
 
suggest
 
that
 
the
 
manufacturing
 
sector
 
is
 
already
 
in
 
recession
 
and
 
the
 
overall
 
economy
 
barely
 
expanded.
 
•
 
Japanese
 
exports
 
to
 
China
 
have
 
collapsed
 
while
 
Chinese
 
electricity
 
demand
 
is
 
also
 
contracting.
 
•
 
The
 
recent
 
comments
 
from
 
Treasury
 
Secretary
 
Geithner
 
in
 
his
 
Congressional
 
ratification
 
hearings
 
warning
 
China
 
against
 
manipulating
 
the
 
Yuan,
 
underlines
 
US
 
fears
 
that
 
China
 
will
 
try
 
and
 
depreciate
 
their
 
way
 
out
 
of 
 
crisis.
 
•
 
The
 
global
 
banking
 
crisis
 
has
 
also
 
re
‐
surfaced
 
with
 
Barclays
 
bank
 
stock
 
price
 
falling
 
almost
 
75%
 
in
 
2
 
weeks,
 
RBS
 
announcing
 
a
 
USD
 
41bn
 
loss
 
for
 
2008,
 
the
 
largest
 
in
 
UK
 
history,
 
and
 
Bank
 
of 
 
America
 
leading
 
the
 
way
 
lower
 
among
 
US
 
financials,
 
triggering
 
the
 
resignation
 
of 
 
ML
 
CEO
 
John
 
Thain.
 
•
 
Bangladeshi
 
exports
 
have
 
been
 
resilient
 
but
 
the
 
authorities
 
need
 
to
 
keep
 
a
 
close
 
watch
 
on
 
demand
 
and
 
margin
 
pressure
 
given
 
the
 
rapid
 
speed
 
of 
 
the
 
slump
 
in
 
global
 
demand.
 
Special
 
Focus:
 
•
 
This
 
week
 
we
 
discuss
 
the
 
progress
 
made
 
by
 
Bangladesh
 
in
 
terms
 
of 
 
regulatory
 
reforms.
 
•
 
In
 
addition
 
we
 
review
 
the
 
country’s
 
performance
 
with
 
respect
 
to
 
The
 
World
 
Bank
 
“Doing
 
Business”
 
Survey
 
which
 
suggests
 
Bangladesh
 
still
 
needs
 
to
 
push
 
ahead
 
with
 
making
 
the
 
regulatory
 
environment
 
more
 
business
 
friendly.
 
•
 
We
 
also
 
summarize
 
some
 
of 
 
the
 
key
 
findings
 
from
 
a
 
recent
 
IFC
‐
BICF
 
survey
 
of 
 
private
 
sector
 
attitudes
 
towards
 
the
 
reform
 
process
 
started
 
by
 
the
 
recent
 
Caretaker
 
Government,
 
and
 
expectations
 
from
 
the
 
New
 
Government.
 
•
 
Finally
 
we
 
review
 
some
 
of 
 
the
 
recent
 
literature
 
on
 
Regulatory
 
Impact
 
Assessment
 
(RIA)
 
and
 
conclude
 
that
 
it
 
should
 
be
 
incorporated
 
into
 
Bangladesh’s
 
regulatory
 
reforms
 
initiative.
 
Collapsing
 
Chinese
 
Electricity
 
Demand
 
Suggests Manufacturing
 
Sector
 
25
 
January
 
2009
 

AT CAPITAL RESEARCH
_______________________________________________________________________________________
AT
 
Capital
 
Weekly
 
Update
 
2
 
Contents
 
Page
 
Bangladesh
 
Overview
 
3
 
ADB
 
sees
 
modest
 
risks
 
for
 
a
 
growth
 
slowdown
 
3
 
ADB
 
highlights
 
the
 
need
 
to
 
encourage
 
private
 
investment
 
in
 
infrastructure
 
3
 
Biggest
 
vulnerability
 
to
 
ADB
 
forecast
 
for
 
Bangladesh
 
GDP
 
growth
 
is
 
a
 
rapid
 
move
 
towards
 
recession
 
in
 
rest
 
of 
 
Asia
 
3
 
The
 
Global
 
Banking
 
Crisis
 
Part
 
67
 
4
 
Special
 
Focus:
 
The
 
Need
 
for
 
Reforms
5
 
Stock
 
Market
 
Weekly
 
13
 
Weekly
 
Stock
 
Market
 
Commentary
 
14
 
Stock
 
Market
 
News
 
15
 
Economics
 
17
 
Economics
 
News
 
18
 
Sector
 
News
 
20
 
Agriculture/
 
Aviation
 
20
 
Banking/
 
Infrastructure
 
&
 
Energy
 
21
 
Leather
 
Goods
 
22
 
Pharmaceuticals
 
/
 
Shipbuilding/
 
Telecoms
 
23
 
Textiles
 
24
 
 
25
 
January
 
2009
 

AT CAPITAL RESEARCH
_______________________________________________________________________________________
AT
 
Capital
 
Weekly
 
Update
 
3
 
Bangladesh
 
Overview
 
The
 
ADB
 
published
 
a
 
Political
 
and
 
Economic
 
Update
 
last
 
week
 
that
 
briefly
 
outlined
 
their
 
thoughts
 
on
 
the
 
risks
 
for
 
the
 
economy
 
as
 
well
 
as
 
policy
 
challenges.
 
ADB
 
sees
 
modest
 
risks
 
for
 
a
 
growth
 
slowdown
 
The
 
ADB
 
noted
 
the
 
following
 
on
 
the
 
resilience
 
of 
 
the
 
Bangladesh
 
economy
 
in
 
the
 
first
 
half 
 
of 
 
FY09,
 
which
 
is
 
over
 
the
 
past
 
6
 
months:
 
“Economic
 
performance
 
in
 
the
 
first
 
half 
 
of 
 
FY2009
 
held
 
up
 
well
 
with
 
a
 
pick
 
up
 
in
 
domestic
 
economic
 
activity
 
and
 
robust
 
growth
 
in
 
exports
 
and
 
remittances.
 
Continued
 
growth
 
in
 
readymade
 
garment
 
production,
 
together
 
with
 
improvements
 
in
 
business
 
confidence
 
and
 
recovery
 
in
 
housing
 
and
 
construction,
 
stimulated
 
industrial
 
activity
 
in
 
the
 
first
 
quarter
 
of 
 
FY2009.
 
Falling
 
prices
 
of 
 
construction
 
materials
 
and
 
a
 
rise
 
in
 
demand
 
for
 
real
 
estate
 
because
 
of 
 
the
 
growth
 
in
 
bank
 
credit
 
and
 
higher
 
remittances
 
helped
 
to
 
revive
 
the
 
construction
 
subsector.
 
Services,
 
especially
 
wholesale
 
and
 
retail
 
trade
 
and
 
transport
 
and
 
telecommunications,
 
also
 
performed
 
well
 
in
 
the
 
first
 
quarter
 
of 
 
FY2009.
 
Rapid
 
growth
 
in
 
the
 
mobile
 
phone
 
market
 
and
 
a
 
growing
 
number
 
of 
 
healthcare
 
service
 
providers
 
are
 
contributing
 
to
 
robust
 
service
 
sector
 
growth.
 
The
 
continued
 
expansion
 
in
 
agriculture
 
and
 
industry
 
is
 
also
 
likely
 
to
 
have
 
a
 
positive
 
impact
 
on
 
services
 
sector
 
growth.
 
Exports
 
grew
 
by
 
27%
 
through
 
November
 
2008
 
and
 
remittances
 
by
 
31%
 
through
 
December
 
2008,
 
over
 
the
 
corresponding
 
periods
 
of 
 
the
 
previous
 
fiscal
 
year.
 
“
 
Looking
 
ahead
 
the
 
ADB
 
only
 
saw
 
growth
 
slowing
 
modestly,
 
with
 
a
 
far
 
less
 
bearish
 
forecast
 
than
 
the
 
World
 
Bank,
 
given
 
that
 
the
 
latter
 
forecast
 
growth
 
for
 
the
 
whole
 
of 
 
FY
 
09
 
at
 
4.8%.
 
The
 
ADB
 
suggested
 
that:
 
“Before
 
the
 
onset
 
of 
 
the
 
global
 
financial
 
crisis,
 
a
 
6.5%
 
growth
 
target
 
for
 
FY2009
 
appeared
 
attainable.
 
With
 
the
 
financial
 
crisis
 
in
 
the
 
advanced
 
economies
 
unfolding
 
and
 
recession
 
setting
 
in,
 
a
 
growth
 
rate
 
of 
 
5.8%
 
seems
 
more
 
likely
 
in
 
FY2009.
 
Industrial
 
growth
 
is
 
expected
 
to
 
moderate
 
to
 
6.7%
 
from
 
6.9%
 
in
 
FY2009
 
as
 
production
 
for
 
exports
 
begins
 
to
 
slow
 
in
 
the
 
second
 
half 
 
of 
 
the
 
fiscal
 
year
 
with
 
cooling
 
global
 
demand.
 
Deceleration
 
in
 
remittance
 
growth
 
will
 
also
 
dampen
 
domestic
 
demand.
 
Services
 
growth
 
will
 
slow
 
to
 
6.2%,
 
down
 
from
 
6.7%
 
in
 
FY2008,
 
due
 
to
 
lower
 
activities
 
in
 
the
 
export
 
sector
 
and
 
declines
 
in
 
consumption
 
spending
 
induced
 
by
 
lower
 
income
 
and
 
moderation
 
in
 
remittance
 
growth.
 
Agriculture
 
is
 
expected
 
to
 
perform
 
well,
 
aided
 
by
 
favorable
 
weather
 
conditions,
 
expansion
 
of 
 
cultivable
 
land,
 
and
 
various
 
government
 
support
 
programs.
 
Overall,
 
agriculture
 
is
 
expected
 
to
 
grow
 
at
 
4.0%,
 
up
 
from
 
3.6%
 
in
 
FY2008.”
 
On
 
the
 
trade
 
and
 
remittance
 
outlook,
 
the
 
ADB
 
remained
 
quite
 
positive:
 
“The
 
external
 
position
 
should
 
also
 
remain
 
stable
 
with
 
annual
 
export
 
growth
 
projected
 
to
 
be
 
16.5%
 
in
 
FY2009,
 
still
 
higher
 
than
 
the
 
15.7%
 
growth
 
in
 
FY2008.
 
Further,
 
the
 
fall
 
in
 
international
 
commodity
 
prices
 
is
 
expected
 
to
 
contain
 
growth
 
in
 
the
 
import
 
bill,
 
which
 
is
 
projected
 
to
 
moderate
 
to
 
18.0%
 
in
 
FY2009.
 
Although
 
growth
 
in
 
remittance
 
inflows
 
will
 
also
 
slow,
 
the
 
current
 
account
 
in
 
FY2009
 
is
 
expected
 
to
 
show
 
a
 
modest
 
surplus
 
of 
 
0.8%
 
of 
 
GDP.
 
Foreign
 
exchange
 
reserves
 
during
 
the
 
year
 
are
 
expected
 
to
 
remain
 
at
 
a
 
relatively
 
comfortable
 
level
 
equivalent
 
to
 
about
 
3
 
months
 
of 
 
goods
 
and
 
services
 
imports
.”
 
ADB
 
highlights
 
the
 
need
 
to
 
encourage
 
private
 
investment
 
in
 
infrastructure
 
The
 
ADB
 
noted
 
that
 
“(one
 
of)
 
The
 
key
 
challenges
 
for
 
the
 
new
 
Government
 
over
 
the
 
longer
 
term
 
will
 
be
 
to
 
raise
 
infrastructure
 
investment
 
and
 
government
 
revenue
 
mobilization,
 
accelerate
 
Annual
 
Development
 
Program
 
implementation,
 
address
 
deficiencies
 
in
 
institutional
 
capacities
 
in
 
key
 
line
 
agencies,
 
and
 
create
 
more
 
 jobs.
 
Addressing
 
power
 
and
 
gas
 
shortages
 
will
 
be
 
critical
 
to
 
encourage
 
private
 
investment
 
to
 
enhance
 
longer
‐
term
 
growth
 
prospects.
 
Confrontational
 
politics,
 
if 
 
it
 
reappears
 
with
 
the
 
restoration
 
of 
 
democracy,
 
will
 
also
 
slow
 
down
 
economic
 
activity.
 
“
 
Biggest
 
vulnerability
 
to
 
ADB
 
forecast
 
for
 
Bangladesh
 
GDP
 
growth
 
is
 
a
 
rapid
 
move
 
towards
 
recession
 
in
 
rest
 
of 
 
Asia
 
We
 
believe
 
that
 
the
 
official
 
forecasts
 
of 
 
the
 
ADB
 
and
 
other
 
multilateral
 
agencies
 
are
 
lagging
 
the
 
dramatic
 
speed
 
of 
 
the
 
slump
 
in
 
demand
 
conditions
 
in
 
the
 
rest
 
of 
 
Asia.
 
The
 
Chinese
 
came
 
out
 
recently
 
with
 
their
 
6.8%
 
estimate
 
of 
 
Q4
 
2008
 
growth.
 
China
 
publishes
 
its
 
quarterly
 
GDP
 
figure
 
on
 
a
 
year
 
over
 
year
 
basis,
 
differently
 
from
 
the
 
U.S.
 
and
 
most
 
other
 
countries
 
that
 
publish
 
their
 
GDP
 
growth
 
figure
 
on
 
a
 
quarter
 
over
 
quarter
 
annualized
 
seasonally
 
adjusted
 
(SAAR)
 
basis.
 
When
 
growth
 
is
 
slowing
 
down
 
sharply
 
the
 
Chinese
 
way
 
to
 
measure
 
GDP
 
is
 
highly
 
misleading
 
as
 
quarter
 
on
 
quarter
 
growth
 
may
 
be
 
negative
 
while
 
the
 
year
 
over
 
year
 
figure
 
is
 
positive
 
and
 
high
 
because
 
of 
 
the
 
momentum
 
of 
 
the
 
previous
 
quarters’
 
positive
 
growth.
 
Indeed
 
if 
 
one
 
were
 
to
 
convert
 
the
 
6.8%
 
y
‐
o
‐
y
 
figure
 
in
 
the
 
more
 
standard
 
quarter
 
over
 
quarter
 
annualized
 
figure
 
Chinese
 
growth
 
in
 
Q4
 
would
 
be
 
close
 
to
 
zero
 
if 
 
not
 
negative.
 
Other
 
data
 
confirm
 
that
 
China
 
was
 
in
 
a
 
borderline
 
recession
 
in
 
Q4
 
and
 
that
 
it
 
may
 
be
 
in
 
an
 
outright
 
recession
 
in
 
Q1:
 
production
 
of 
 
electricity
 
plunged
 
7.9%
 
on
 
a
 
y
‐
o
‐
y
 
basis;
 
the
 
Chinese
 
PMI
 
has
 
been
 
below
 
50
 
and
 
close
 
to
 
40
 
for
 
five
 
months
 
now.
 
Ifty
 
Islam,
 
Managing
 
Partnerifty.islam@at
‐
capital.com
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