Daily News Flash: 14th May 2020

Contents
GLOBAL NEWS ................................................................................................................................... 1
OIL PRICES EDGE HIGHER ON SURPRISE US STOCK DRAWDOWN, BUT DEMAND CONCERNS LINGER .... 1
ASIAN STOCKS DROP AS VIRUS RECOVERY BEGINS TO LOOK DISTANT .................................................. 1
INDIA UNVEILS $40 BILLION CREDIT LINE FOR SMALL BUSINESSES ....................................................... 1
UK ECONOMY SHRANK BY RECORD 5.8% IN MARCH, HARDER COVID HIT AHEAD ................................ 1
MACRO ECONOMY ........................................................................................................................... 1
TEXTILE, FINANCIAL SECTORS TO FEEL THE BRUNT OF PANDEMIC FALLOUT......................................... 1
E-COM SECTOR INCURS TK 666CR IN LOSSES AMID PANDEMIC: ASSOC................................................ 2
FACTORIES LEAVING CHINA: CAN BANGLADESH SEIZE THE OPPORTUNITY? ......................................... 2
$700M MAY COME FROM IMF AND WITH NO STRINGS ATTACHED ...................................................... 2
BANK..................................................................................................................................................... 3
BANGLADESH BANK LAUNCHES REPO WITH 1-YR DURATION ............................................................... 3
ENGINEERING .................................................................................................................................... 3
SINGER APPROVES 77PC CASH DIVIDEND ............................................................................................ 3
INTEREST EXPENSES EAT AWAY PROFITS OF NAVANA CNG .................................................................. 3
INSURANCE ......................................................................................................................................... 3
REINSURERS LOATH TO TAKE RISK ....................................................................................................... 3
TELECOMMUNICATION .................................................................................................................. 4
BTRC LIKELY TO REFRAIN FROM RAISING GRAMEENPHONE TARIFF FOR SMP IMPLEMENTATION ........ 4
TEXTILE............................................................................................................................................... 4
BANGLADESH SEEKS 2-YEAR DUTY-FREE ACCESS TO US FOR RMG........................................................ 4
CAPITAL MARKET ............................................................................................................................ 4
DSE PROPOSES CORPORATE TAX CUT FOR LISTED COMPANIES ............................................................ 4
GLOBAL NEWS

OIL PRICES EDGE HIGHER ON SURPRISE US STOCK DRAWDOWN, BUT DEMAND CONCERNS LINGER
 Oil prices crept up on Thursday, supported by a surprise decline of US crude inventories, but
gains were capped by worries that a potential second wave of the coronavirus pandemic might
trigger fresh lockdowns and slam fuel demand once again.
 Brent crude futures rose 6 cents, or 0.2%, to $29.25 per barrel at 0045 GMT. US West Texas
Intermediate (WTI) crude futures were up 8 cents, or 0.3%, to $25.37 a barrel.
Source: https://tbsnews.net/world/global-economy/oil-prices-edge-higher-surprise-us-stock-drawdown-demand-concerns-
linger-81172

ASIAN STOCKS DROP AS VIRUS RECOVERY BEGINS TO LOOK DISTANT

 Asia's stock markets fell and gold hit a one-week high on Thursday as worries about a second
wave of coronavirus infections and a dour assessment of the way back from the head of the US
Federal Reserve dashed hopes for a quick recovery.
 Fed Chair Jerome Powell warned of an "extended period" of weak economic growth, while
vowing to use the US central bank's power as needed and calling for additional fiscal spending to
stem the fallout from the pandemic.
Source: https://tbsnews.net/world/global-economy/asian-stocks-drop-virus-recovery-begins-look-distant-81166

INDIA UNVEILS $40 BILLION CREDIT LINE FOR SMALL BUSINESSES

 India will offer bank loans amounting to 3 trillion rupees ($39.85 billion) to small businesses,
Finance Minister Nirmala Sitharaman said on Wednesday, as part of measures to combat the
damage caused by the coronavirus outbreak.
 Under the plan, the government will provide a credit guarantee to businesses to avail collateral-
free loans from banks, aiming to help 4.5 million businesses by October 2020, she said.
 The allocation is part of a 20 trillion rupee ($266 billion) fiscal and monetary package to support
the economy that has been battered by a weeks-long lockdown.
Source: https://tbsnews.net/world/south-asia-china/india-unveils-40-billion-credit-line-small-businesses-81025

UK ECONOMY SHRANK BY RECORD 5.8% IN MARCH, HARDER COVID HIT AHEAD

 Britain's economy shrank by a record 5.8% in March from February as the coronavirus crisis
escalated and the government ordered a shutdown of much of the country to stop the spread of
the virus, official data showed on Wednesday.
 That was the largest quarter-on-quarter fall since the end of 2008, during the depths of the
financial crisis, though slightly smaller than the average 2.5% forecast in a Reuters poll of
economists.
 It was also a smaller fall than a 3.8% slump in GDP in the euro zone in the January-March period
although several countries in the single currency area began their lockdowns before Britain.
Source: https://tbsnews.net/world/global-economy/uk-economy-shrank-record-58-march-covid-hit-80881
Source: https://thefinancialexpress.com.bd/economy/uk-gdp-shrinks-by-record-58-pc-in-march-harder-covid-hit-ahead-
1589362863

MACRO ECONOMY

TEXTILE, FINANCIAL SECTORS TO FEEL THE BRUNT OF PANDEMIC FALLOUT

 The textile, construction and financial sectors are at high risk and the pharmaceutical and power
sectors at low risk of the coronavirus pandemic fallout, according to a research conducted by
EBL Securities, a brokerage firm.

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  Like banks, financial market existence of non-bank financial institutions would also be affected
by issues including deposit withdrawal, squeezed interest margin, hike in NPL, and lower
operating income.
 The textile sector had already shown negative growth of 5.71 per cent in the first half of this
fiscal year.
Source: https://www.newagebd.net/article/106362/textile-financial-sectors-to-feel-the-brunt-of-pandemic-fallout

E-COM SECTOR INCURS TK 666CR IN LOSSES AMID PANDEMIC: ASSOC

 E-Commerce Association of Bangladesh on Wednesday claimed that the sector incurred losses
of Tk 666 crore in the last one and a half months as the coronavirus pandemic halted activities
of almost 90 per cent of enterprises.
 At an online press conference jointly organised by the commerce ministry and the e-CAB, the
sector leaders demanded waiver of corporate tax and bank loans with 2 per cent interest rate
for the e-commerce businesses to face the coronavirus fallout.
 Commerce minister Tipu Munshi assured that the government would provide all necessary
support to the e-commerce sector as the sector had been playing an important role in meeting
the consumers’ demand amid the pandemic.
Source: https://www.newagebd.net/article/106365/e-com-sector-incurs-tk-666cr-in-losses-amid-pandemic-assoc
Source: https://tbsnews.net/economy/covid-19-e-commerce-facing-tk666-crore-losses-month-81061

FACTORIES LEAVING CHINA: CAN BANGLADESH SEIZE THE OPPORTUNITY?

 Japan, the US and Europe have announced they will relocate their factories from China to
reduce their dependence on a single country. Japan has already allocated $2.2 billion to help its
manufacturers shift production units out of China. Korean companies are also planning to move
out of China.
 However, Vietnam and India have started talking to many Japanese and US firms that want to
move out of China. The Indian government, in April, reached out to more than 1,000 US
companies and reportedly offered them incentives to move to India from China.
 Mamun Rashid, managing partner of PwC Bangladesh, said, "We have failed to take advantage
of the US-China trade war."
Source: https://tbsnews.net/economy/factories-leaving-china-can-bangladesh-seize-opportunity-81154

$700M MAY COME FROM IMF AND WITH NO STRINGS ATTACHED

 Bangladesh is set to request the International Monetary Fund (IMF) within a week to extend
$700 million in emergency financing to help the country avoid being overwhelmed by the
coronavirus pandemic.
 The amount is about half the sum Bangladesh can seek from the IMF under the country's quota
as special drawing right (SDR), a form of reserve assets that can be used by countries as
additional liquidity.
 The tool credits member countries' accounts with new, unconditional liquidity that could be
exchanged for the five currencies that underpin the SDR: the dollar, the yen, the euro, sterling
and the renminbi.
Source: https://www.thedailystar.net/business/news/700m-may-come-imf-and-no-strings-attached-1902439

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BANK

BANGLADESH BANK LAUNCHES REPO WITH 1-YR DURATION

 The Bangladesh Bank on Wednesday opened up another window to inject money into the
money market through issuing long-term repurchase agreement (REPO) facility to banks and
non-bank financial institutions.
 Under the newly introduced special REPO facility, the banks would be able to avail credit directly
from the central bank at around 6 per cent interest for 360 days.
 The central bank fixed the rate of the existing short-term REPO at 5.25 per cent amid the
pandemic.
Source: https://www.newagebd.net/article/106360/bangladesh-bank-launches-repo-with-1-yr-duration
Source: https://tbsnews.net/economy/banking/bb-introduces-1-year-repo-facilities-80995
Source: https://www.thedailystar.net/business/news/bb-steps-shore-banks-financial-muscle-1902469

ENGINEERING

SINGER APPROVES 77PC CASH DIVIDEND

 The 40th annual general meeting (AGM) of Singer Bangladesh Ltd was held online on
Wednesday.
 The members participated in the meeting and approved 77 per cent cash dividend for the year
2019 and also increased authorised capital from Tk 1.00 billion to Tk 2.50 billion.
 Chairman in his address mentioned that 2019 was a successful year for the company in terms of
revenue and profitability and results had been very pleasing for the investors".
 In 2019 turnover increased by 14.2 per cent to Tk 15.5 billion. Profit after tax increased by 12
per cent to Tk 1.0 billion, with earnings per share increasing at the same rate to Tk 10.4 per
share."
Source: https://today.thefinancialexpress.com.bd/stock-corporate/singer-approves-77pc-cash-dividend-1589383621

INTEREST EXPENSES EAT AWAY PROFITS OF NAVANA CNG

 Net profits of the company dropped to Tk3.9 crore in the July-December 2019 period as
compared to Tk5.6 crore in the same period of the previous year in spite of revenue jumping to
Tk326.5 crore from Tk252.9 crore in the respective periods.
 The interest expenses increased Tk6.8 crore during the half year, eating away profits of the
company.
 During the fiscal year 2019, the company's finance cost grew 131.5 percent to Tk62.4 crore
riding on the back of short term loan worth Tk290.59 crore and long-term loan worth Tk446.43
crore.
Source: https://tbsnews.net/companies/interest-expenses-eat-away-profits-navana-cng-80737

INSURANCE

REINSURERS LOATH TO TAKE RISK

 With the number of both infections and fatalities on the rise, none of global reinsurers has
agreed to partner with Sadharan Bima Corporation (SBC) to launch an insurance scheme for
physicians and other health workers fighting Covid-19.
 The lone state-run company moved to launch the health insurance scheme and contacted
dozens of global reinsurance companies to underwrite the risks, but almost none of them came
forward taking into account the severity of the deadly virus.

3
  "We had approached some 42 (reinsurance) companies worldwide. Only one has communicated
with us but ultimately (it) may not partner for the scheme," SBC managing director Syed
Shahriyar Ahsan told the FE.
Source: https://today.thefinancialexpress.com.bd/first-page/reinsurers-loath-to-take-risk-1589391853

TELECOMMUNICATION

BTRC LIKELY TO REFRAIN FROM RAISING GRAMEENPHONE TARIFF FOR SMP IMPLEMENTATION
 The Bangladesh Telecommunication Regulatory Commission is likely to refrain from slapping
increased tariff on the country’s leading telecom operator, Grameenphone, under its latest
initiative to enforce the Significant Market Power Regulations-2018.
 A senior BTRC official told New Age recently that any of the conditions to be imposed would not
go against the customers’ interest, which means that the call rate of the telecom operator might
remain unchanged.
 As part of the move to implement SMP regulations, commission officials held a meeting with GP
officials in April.
Source: https://www.newagebd.net/article/106363/btrc-likely-to-refrain-from-raising-grameenphone-tariff-for-smp-
implementation
Source: https://www.thedailystar.net/business/news/gps-scrap-btrc-ate-market-share-1902472

TEXTILE

BANGLADESH SEEKS 2-YEAR DUTY-FREE ACCESS TO US FOR RMG

 Bangladesh has sought a two-year duty-free access for its readymade garment products to the
US market as the coronavirus pandemic put the major export-earning sector in trouble amid
cancellations of global orders.
 Foreign minister AK Abdul Momen made the request to the US government considering the
current situation when he had a telephone conversation with US deputy national security
adviser Matthew Pottinger on Tuesday evening. He assured Bangladesh of continuing US
support to deal with the challenges of COVID-19.
 Bangladesh Garment Manufacturers and Exporters Association claimed that over US$ 3 billion
orders have been cancelled over the last couple of months.
Source: https://www.newagebd.net/article/106332/bangladesh-seeks-2-year-duty-free-access-to-us-for-rmg
Source: https://tbsnews.net/economy/rmg/foreign-minister-urges-us-allow-duty-free-entry-rmg-products-two-years-80887

CAPITAL MARKET

DSE PROPOSES CORPORATE TAX CUT FOR LISTED COMPANIES

 The Dhaka Stock Exchange (DSE) has proposed to cut corporate tax rate for listed companies to
attract new firms to the market and help improve the net profit.
 The reduction might result in 20 percent corporate tax for all listed companies excluding
financial, telecom and tobacco businesses.
 However, the corporate tax on banks, non-banking financial institutions, and insurers was
proposed to bring down to 32.5 percent from existing 37.5 percent.
Source: https://tbsnews.net/economy/stock/dse-proposes-corporate-tax-cut-listed-companies-80749

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