December 2011

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LANKABANGLA SECURITIES LIMITED

LankaBangla Securities Limited (LBSL) is a leading equity brokerage house in the country with a diverse clientele of institutions, high net worth individuals, foreign funds and retail investors. The company commenced stock broking activities in 1997 and over time has become the largest stock broking company in the country developed a strong team of highly skilled and experienced professionals. LBSL (Formerly known as Vanik Bangladesh Securities Ltd) started its stock broking business in 1997 trading on the Chittagong Stock Exchange (CSE) Ltd, while commencing trading on the Dhaka Stock Exchange (DSE) in 1998. The company was renamed LankaBangla Securities with effect from 27 April 2005 following a restructuring of the company. The company has the distinction of being the largest brokerage house in terms of transaction value in the Dhaka Stock Exchange for the last five years and the Chittagong Stock Exchange for the last six years. The companys success is underpinned by its strong network of key clients and its unparalleled standard of service quality, offering clients the highest level of convenience and reliability in transacting business. Furthermore the company has earned much recognition for its professionalism in its trade execution capability, settlement procedures and comprehensive research services from local financial institutions, leading custodian banks, corporations, international fund managers and brokers alike. The companys ability of fostering a diverse and loyal client base is a result of its commitment toward building long lasting relationships with its clients based on mutual trust and respect and providing its services with the utmost professionalism while promptly responding to customer needs. LankaBangla Securities provides investors with a platform to trade in both the Dhaka and Chittagong Stock Exchanges in each of its branches in Dhaka, Chittagong, Comilla and Sylhet zones. The company is a licensed by the SEC as a Stock Broker in both the Dhaka and Chittagong Stock Exchanges as well as being licensed by the CDBL as a fully pledged Depository Participant. LBSL is a 90.90% owned subsidiary of LankaBangla Finance Ltd (LBFL) one of the leading listed non banking financial institutions in Bangladesh engaged in Leasing, Credit Cards, Merchant Banking, Corporate Finance and Financial Consultancy. The companys main shareholders include a group of highly successful local business entrepreneurs, Sampath Bank Limited of Sri Lanka and One Bank Limited of Bangladesh and the General public.
Disclaimer
This document (the Report) is published by LankaBangla Securities Ltd (LBSL) for information only of its clients. All information and analysis in this Report have been compiled from and analyzed on the basis of LBSLs own research of publicly available documentation and information. LBSL has prepared the Report solely for informational purposes and consistent with Rules and regulations of SEC. The information provided in the Report is not intended to, and does not encompass all the factors to be considered in a best execution analysis and related order routing determinations. LBSL does not represent, warrant, or guarantee that the Report is accurate. LBSL disclaims liability for any direct, indirect, punitive, special, consequential, or incidental damages related to the Reports or the use of the Report. The information and analysis provided in the Report may be impacted by market data system outages or errors, both internal and external, and affected by frequent movement of market and events. Certain assumptions have been made in preparing the Report, and changes to the assumptions may have a material impact on results. The Report does not endorse or recommend any particular security or market participant. LBSL, its analysts and officers confirm that they have not received and will not receive any direct or indirect compensation in exchange for expressing any specific recommendation, opinion or views in its Report. The information and data provided herein is the exclusive property of LBSL and cannot be redistributed in any form or manner without the prior written consent of LBSL. This disclaimer applies to the Report in their entirety, irrespective of whether the Report is used or viewed in whole or in part.
Board of Directors
1. 2. 3. 4. 5. 6. 7. 8.
Mr. Mohammad A Moyeen Mr. B.W. Kundanmal Mr. Khondoker Monir Uddin Mr. Mahbubul Anam Mr. I. W. Senanayake Mr. G. L. H. Premaratne Mr. Mohammed Nasir Uddin Chowdhury Mr. Wali ul Islam
Chairman Director Director Director Director Director Director CEO & Director
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.
Mr. Mohammad A. Moyeen Mr. I. W. Senanayake Representing Sampath Bank Limited Mr. G. L. H. Premaratne Representing Sampath Bank Limited Mr. Mirza Ejaz Ahmed Representing SSC Holdings Limited Mr. Farman R Chowdhury Representing ONE Bank Limited Mrs. Aneesha Mahial Kundanmal Mr. Mahbubul Anam Mr. Tashsinul Haque Mrs. Jasmine Sultana Mr. Salahuddin Ahmed Khan Independent Director Mr. Mohammed Nasir Uddin Chowdhury Managing Director
Chairman Director Director Director Director Director Director Director Director Director Director
Mr. Wali ul Islam Chief Executive O cer & Director Mr. Mohammad Khairul Anam Chowdhury Chief Operating O cer (COO) Mr. S.A.R Md. Muinul Islam, PMP, PRINCE 2 Chief Technology O cer (CTO) Mr. Amir Hossain DGM & Regional Chief, Chittagong Mr. Mohammed Shamsuddin Senior Manager (In-Charge, Sylhet Branch)
December 2011, issue 59
Market Pulse
December 2011
Dear Patrons Welcome to the Year-end special Market Pulse, December, Issue 59. We like to convey our heartiest congratulation to LankaBangla Securities Limited for sustaining its top stock broker legacy in both bourses of the country again in 2011. LankaBangla Securities Limited firmly believes in the knowledge-based investment in the capital market to keep pace with the advanced market and to create information efficiency among investors. Apart from most efficient and effective brokerage services, LBSL is backed by the strength of a comprehensive Research Unit, which provides a range of services from constant market update to macro economy, industry and specific company research. Please be informed that, LankaBangla Securities Ltd. has been successfully publishing a monthly review named Market Pulse since February 2007 and has received high appreciation from the stakeholders. The monthly review is disseminated to top executives of financial and non-financial institutions, regulators, entrepreneurs of the country, presidents of trade bodies and associations, academicians as well as to the clients of LBSL both home and abroad. LankaBangla Research Team is working consistently on making the Market Pulse a world-class publication with enriched contents. In this year-end franchise, we have approached the experts; from Economy to Capital market, Energy to Information Technology, Banks to NBFIs and Asset Management to Real Estate who cyclically and optimistically, foresightedly and eruditely analyzed, described and prophesied the optimism, failure and challenges of their respective sectors in both 2011 and 2012. This special section What the Leader Says would satiate the comprehensive thirst of our readers. Experts Insight new section introduced from November Issue of Market Pulse with articles from renowned professionals and academicians of the country to have their expert analysis and opinion in different areas has been appreciated. In this issue, articles like How Successful Central Banks Monetary policy Transmission in Bangladesh for Ensuring Sustainable Growth, Price Stability and Employment by Prof. M. Muzahidul Islam and The Stock Market Collapse of 2010-11: Financial and Socio-Behavioral Impact Assessment by Suborna Barua will give our readers a rigorous insight to the topics. Also inside the binding, we have highlighted DSE in 2011 with graphical chronicle, World Equity Market in 2011, World Commodity Market in 2011, Mutual Funds in 2011, and Sector Review and Outlook. Moreover, paradoxical quotes of 2011, Financial Horoscope and Exchange In Focus will help you shrug aside the financial weariness. Thank you for your perennial support. Happy reading!
Md Ashaduzaman Riadh Research in Charge LankaBangla Securities Limited
Market 59 ISSUE Bloomberg LANB <GO> Pulse December 2011 www.lbsbd.com

Market Pulse
Issue 59, December 2011
Contents
04
Monthly Market Observation
Basic Company Information
74
Market at a Glance
05
Fundamental Information
80
Sector Ins and Outs
13
Technical Indicator
92
What the Leader Says
14
Forthcoming IPO
99
Sector Review & Outlook
43
Economic Overview of Bangladesh
102
How Successful Central Banks Monetary policy Transmission in Bangladesh for Ensuring Sustainable Growth, Price Stability and Employment
Experts Insight
Quotes in Paradox
104
- Prof. M. Muzahidul Islam

The Stock Market Collapse of 2010-11: Financial and Socio-Behavioral Impact Assessment
56
Quotes of Year 2011 Financial Horoscope
106 108
-Suborna Barua
65 Exchange In Focus (CSE) 110
External Voice
66
World Equity Index in 2011
68
Commodity Market in 2011
70
LBSLs Yearly Market Observation

Discerning the point of inflection in 2012
Year 2011 was a flip side of 2010 for the equity investors while DGEN said farewell ending at 5257.61 points or 36.58 percent down; starting the journey at 8290.41 points on 1st trading day of 2011. The hunker-down investors of stock market have not been surprised watching the 8th worst performance ranking of the benchmark index DGEN in the world whereas its position was 3rd best performing index in the world gaining 81.47 percent in 2010; the year is often branded as the year of Irrational Exuberance; a very popular euphemism used by the Alan Greenspan, former chairman of Federal Reserve . The Armageddon mind-set in 2011 raised a number of questions repeatedly: Where is the bottom of index hemorrhage? Is there any chance of index resurgence? When would PM intervene in the market to bring stability? Would the FM stop providing paradoxical comments? Would the inflation show the sign of abating ? How long would monetary tightening go on? Would sponsors buy back or be forced to buy? What is the fate of stability fund and bailout to affected investors? What would be the size of bank borrowing and budget deficit ? Would trade balance deficit widen and taka depreciate more? What would be the fate of the mega projects? Would banks exposure in the stock market be trimmed? Will the EU crisis hammer our export? Would squabbling politics and election uncertainty mitigate? --- And the list goes on. Liquidity tightening was in the extreme phase in 2011 to tame the stubborn inflation, e.g. central banks repo support has come down to zero at end of year; interest rate has surged to the record high and the credit expansion growth has declined. As of available data macro economic variables were under severe stress. Raging inflation rate, slower export growth at the end of the year, rising import cost propelled by the higher fuel demand, declining remittance, BDT depreciation against USD, plummeting foreign aid and loan created current account deficit keeping the BOP sweating.. Whopping revenue and expenditure mismatch for uncalculated furnace oil subsidy led to exceeding the government bank borrowing target within first quarter of the fiscal year. This acerbic condition of the above BOP component was not improved as foreign direct investment declined for not having adequate infrastructures. Severe stock market volatility and lack of sound corporate governance and strong regulatory framework could not allure mentionable figure of the foreign portfolio investment in our market. Squabbling relationship with donors and inept project implementation extended the queue of external borrowing pipeline. The domino effect has also been roiling confidence of investors in the stock market. Increasing inflation is making valuation more expensive and trimming corporate bottom line growth. Business and consumer sentiment were very low; so was the sentiment of equity investors. The trading volumes evaporated substantially and indices of both bourses have been on wild ride and record breaking brutal volatility in 2011. On one day, DGEN plunged more than 636 points and on the next, surged 1013 points. DGENs yearly volatility rose to 45.83 percent in 2011 which was 21.44 percent in 2010. Share turnover velocity ratio, an indicator of market liquidity, displayed sheer weakness of market activity in the bourse. The ratio declined to 56 percent in 2011 from 146 percent in 2010 implying the sign of illiquidity. Market liquidity has decreased substantially which got reflected in the 33 percent and 59.6 percent negative growth of average number of trade and average daily turnover respectively during the year. So what is the capital market expectation in 2012, especially for equity investors, which is going to start with the legacy of the contraction phase of economy in 2011? Consumption is expected to slow down in 2012 with the increasing burden of inflation and soaring interest rate, declining wealth effect for underperforming real estate and equity markets. Business confidence is likely to weaver in the state of high cost of borrowing and core infrastructure bottlenecks are hindering the private sector investment. Volatile crude oil market, local subsidy adjustment through energy price hike and taka depreciation will put immense pressure on non food inflation. Though oil and other commodities fell sharply in the international market in 2011, amid deepening fears of recession in Europe, slowing growth in China and extended economic weakness in the United States, high power money largely contributed to inflationary pressure offsetting the food price fall and money market tightening. Government is likely to adopt more belt tightening measures aimed at curving the budget deficit in 2012. Bangladesh Bank is expected to be more restrictive from monetary policy stance, typically pushing the policy interest rates higher and curving the credit growth to rein in the inflation. But external borrowing is becoming a dream and subsequent taka depreciation and printing money to finance budget deficit are fueling inflation. Private sector investment may also get hurt by the crowding out effect for extensive government borrowing in 2012. EU crisis and less than expected world economic growth has already started creating dampening effect on our export that slipped to 14.72 percent in the July-Dec period of current fiscal year. The export growth in H1 of 2010-2011 was 41 per cent. But encouraging 9.28 percent wage earner remittance growth has provided strong cushion in this stressing situation. In this situation, discerning the point of inflection in economic activities would be the discreet steps of circumspect equity investors in 2012 to spot the recovery. It is always advised that investors in common shares should analyze economic factors, first, in the way that they affect company earnings and, second, in the way that they affect interest rate and overall stock market liquidity. Investors can keep close eyes on whether inflation rate is approaching to target level, whether there is sign of melting monetary policy and liquidity easing resulting from lower policy interest rates e.g. repo and reverse repo, higher repo acceptance against demand, whether yield spread is steepening , whether government is strict to its target bank borrowing, whether European debt crisis and economic unrest are improving, whether there are comfortable foreign exchange reserve supported by the export growth, remittance growth and flexible external borrowing and above all, keep eyes on good governance and framework changes in stock market . We are expecting qualitative framework changes in the New Year. We are sanguine and like to congratulate the regulator for its very commitment to demutualizing the exchanges, enacting financial reporting act to ensure reliable accounting and auditing disclosure, ensuring more rigorous corporate governance practice by listed companies, rectifying slack insider trading act, allowing investment advisory services and equity research publications for the most efficient information dissemination to investors. The trend growth in the aggregate economy largely determines the trend growth in aggregate corporate earnings. Bangladesh economy has showed this trend growth consistently. Though there may be an output gap, we believe the trend will prevail. As an old Turkish proverb says, After you burn your mouth on hot milk, you blow on your yogurt. Relating this proverb to stock market we can conclude slightly customizing the commentary of Jason Zweig, because the crash of 2011 was so terrible, many investors now view stocks as awfully risky; but, paradoxically, the very act of crashing has taken much of the risk out of the stock market. It was hot milk before, but it is roomtemperature yogurt now.
Senior Research Analyst & In Charge ashaduzaman@lbsbd.com
Md Ashaduzaman Riadh
Market at a Glance 2011

Chronicle of DGEN January to June 2011
1.Theyear2011 startedwiththe goldenmemoryof 3.Largestever riseinasingle day. 5.Restrictive monetarypolicy 6.Regulatorapproveda mutualfundworthBD5000 million
7.Expectations regarding BangladeshFund
11.Expectation ofpositive budgetary support 9.Publicationof sharemarket scamreport
2.636 pointsfall inasingle day 4.Tradingwashalted forthreeconsecutive daysandtradingkept closefortwodays.
8.IMFopinion against
12.Nothingpositive inthebudget
10.Appointmentof newtopboss
Source : LBSL Research, Amibroker
1. 01.02.2011: The trading day of a New Year started with the golden memory of Year 2010 which ended at 8290 points which started at 4568 points posting around 82% gain. After hitting the top point of 8919 on 5th December the index started falling and index touched 7654 on 19th December. From 20th December market bounced back and the year 2010 ended at 8290. Investors started the new year with expectation to go into the past bull rally piercing the 8919 level and dreamt of setting a new high. Index rose 60 points at the opening bell led by the bellwether banking sector that registered robust operating profit growth in 2010. But price correction of banking scrip after consecutive rallies pulled the index down to 8304.59 points. 2. 01.10.2011: Market kept falling and did not see a green day since the second day of the start of the year. Dhaka Stocks broke all the support level experiencing record fall in the history. The Benchmark DGEN saw the 675 points free fall, ever highest in its history and finally closing at 7135 points losing 600 points on 9th January. On 10th January also frightened investors started offloading the shares from the opening bell of trading session and the benchmark plunged 635 points or 8.90% within one hour- some name it the black Monday. To avert the further decline, Regulator took rapid decision to halt the trading in both bourses of the country. Though regulator relaxed several directives to create buy pressure but the crisis lied behind elsewhere. Many investors got stuck at high price and were not getting confidence to put fresh funds. Market rather experienced sales pressure from the investors who were sitting on the accumulated profit over one year. Brokers could not extend additional loan facility to the clients due to costly borrowing. Institutions set idle due to expensive liquidity in the money market and are also reluctant to over expose to the stock market due to tight surveillance of the watchdog. Institutional investors remained inactive for several days after year end profit booking and were busy to manage own liquidity due to expensive money market. Commercial banks were also under pressure of liquidity for buying huge amount of dollar from BB to pay soaring import bill of foods and capital machineries. Investors started fearing that DGEN left behind it peak and caution from various parties in the bull market started proving to be true. 3. 01.12.2011: After the nightmares of last few days DGEN bounced back on 11th and 12th January. The benchmark DGEN jumped 1012 points or 15.58%, largest single day hike in the history of DGEN on 11th January. On 12th January benchmark DGEN jumped 178.60 points or 2.38% where market turnover increased 68.84%. After 1805 points decline only in six trading sessions, market reacted positively to the different sweeteners taken by the regulators. Market experienced huge buy pressure from retail and institutional investors. The devastating fall of 9th and 10th January Promoted SEC to increase the margin loan to 200%, permitting netting facility to non marginable shares, increasing merchant bankers capital market exposure limit, BB also directed the Banks not to sell shares and postponed the decision to adjust the industrial loan diverted to stock market. On 11th January, SEC further postponed item

no. 2 and 5 of the 5th Schedule of rule 56 of Securities and Exchange Commission (Mutual Fund) Rules, 2001 till March 31, 2011, For the postponement, individual unit fund now does not have any restriction regarding exposure to any particular security and sector. With rebuilt confidence of retail investors and institutional buy most of the stocks touched the upper limit of circuit breaker. But the magical jump of index was with lower volume. Another doubt regarding the trade was that market could not yet create a higher high since it left its peak behind. On 5th December 2010 market closed at 8919 and that was the highest closing and since then market started falling. It bounced back several times but never created a higher high which injected doubt regarding trend reversal and start of a down trend. 4. 01.20.2011: After 1190.6 points increase on 9th and 10th January, market lost another 1402 points in six trading sessions. The bourses of the country halted for the three consecutive days on 18th, 19th and 20th January amid extreme volatility due to utter fall of confidence. On 20th January the trading session stopped the progress within five minutes after losing 587 points. Regulator imposed circuit breaker for 225 points rise or fall of index in earlier day. But the benchmark fell in the blink of eyes and gave the DSE system no time to get refreshed so that software could curb the index. After bloodbath in six consecutive days, market was kept close on 23rd and 24th January. After two days of closure, on 25th, market resumed with renewed confidence resulting from different confidence building and liquidity easing measures taken by the government and regulator resulting in 777 points recovery in four trading sessions. 5. 02.07.2011 Market lost another 1178 points since 30th January. New monetary policy statement of Bangladesh Bank made investors conservative regarding return of stock investments. In the MPS BB revised the inflation target to around 7% from earlier target of 6.5% inflation in the budget of FY 11. But Monthly average inflation rate is expected to be higher than 7% where twelve month average basis inflation of Nov 2010 was 8.12%. It was clear in the minds of the investors that Taka will face the more depreciation pressure due to widening trade imbalance and slow growth of remittance inflow for less than expected GDP growth of the World economy projected by the World Bank. Weakening taka against USD would make the imported food and non food items costly in the local market fueling further inflation. Higher inflation will have a negative impact on consumer saving and reduces the company profit margin. Higher Inflation also demands higher discount rate for stock valuations trimming the fair value of stocks. Amid all these investors knew that tight monetary means scarcity of fund in market will worsen in coming days and this added pessimism. 6. 02.20.2011 Regulator approved a mutual fund worth BD 5000 million out of which 2000 million was ready for investment on immediate basis. Also governments direction to the state owned commercial banks to buy the shares from market that is suffering from demand crisis pushed the DGEN to green territory adding 346.85 points or 6.22%. Market ended in green territory on 15th February after the emergency fund support of the government to rescue the market from the continuous falling. This rally continued on the next trading session on 20th February. Market ended in green territory for the two consecutive sessions adding 809 points after the emergency fund support of the government to rescue the market from the continuous debacle. 7 03.10.2011: Dhaka stocks saw a very bullish week (from 6th to 10th March) amid bullish mood backed by high confidence and liquidity flow. The benchmark index DGEN gained 1211 points or 22.3% while average daily turnover witnessed stupendous 102% growth than that of previous week. The expectation regarding Bangladesh fund did the magic for the market. On the other hand investors started feeling that market may be has become undervalued and has already seen its bottom. The main optimism was market created a higher high for the first time since its peak on 5th December and ended at 6639 above its previous high 6326. 8 04.10.2011: After experiencing a bullish week, on the next trading sessions market experienced sales pressure of the investors who were sitting on handsome gain for consecutive rallies of the stocks. In next trading sessions index saw volatility. Crisis in the money market, ailing macro factors and rampant profit booking in anticipation further fall left gauge to deep negative territory. Investors took cautious move after the IMFs advice to BB to beef up surveillance on banks stock market exposure. Also IMF opinion against the proposed Bangladesh Fund to avert the moral hazard made the investors conservative. Investors took conservative view to see the outcome of probe report and materialization of long waited Bangladesh Fund. Index closed at 6557 on 10th April. 9 05-11-2011: Dhaka stock exchange benchmark index DGEN had strong jolt after the publication of share market scam report in an online news site. Investors got frightened and wanted to stay at safe side speculating the negative outcomes of the reports. Fierce sales pressure was observed from the middle of the session and DGEN plunged into deep red sharply losing 293.83 points or 4.48% on 11th April. After that market again went for a dive. Volume started falling again due to tight money market, big investors limited exposure to stock market after the probe report. Investors were eagerly waiting for

Bangladesh Fund to support them but there was no light. On 4th may Dhaka Stocks saw hope from the sinking mood banking on the news of go-ahead signal to special rescue scheme Bangladesh Fund by the regulator. But Dhaka stocks got back the sliding face again despite the debut purchase started by special rescue scheme; Bangladesh fund. On 11th may DGEN ended up at 5483 with a turnover of BDT 3823.63 million. 10 05-25-2011: Investors reacted positively to the appointment of top boss of regulator as a part of stock market reformation. Buying spree of investors continued riding on the expectation of more strong and transparent stock market framework after the reformations. Market went up by 255 points on 12th and 15th May. But after that a new concern of imposing capital gain tax on stock in next budget have been weighing heavily on investors sentiment and they started to react negatively and market started falling from 16th May again. 11 06-09.2011: Market saw a bull run for almost two weeks riding on the expectation of positive budgetary support to the stock market. Expectation regarding black money whitening, not imposition of capital gain tax, and many other expectations formed. On 9th June market ended at 6002 gaining 709 points since 25th may. 12 06-21-2011: Budget was presented in parliament on 9th June. Investors sharply reacted to the newly placed national budget for FY 2011-12. Investors were speculating about positive budgetary incentives for the stock markets which have been suffering from extreme volatility and confidence loss from the January 2011 after massive debacle of the index. Frustrating investors dream, Budget conveyed some negative signals to stock markets. Rise in the rate of tax deductible at source for brokerage commission of stock brokers listed with Stock Exchange from 0.05% to 0.10% would increase the transaction cost of the investors resulting in lower trade volume. Tax deduction rate for different savings instruments from existing 10 per cent to 5 per cent would also help divert the liquidity flow from the market. DGEN lost 313.53 points or 5.23% in single session on 12th june- the day after budget speech by Finance Minister. This fall continued till 19th June. People were confused whether government gives the option to black money holders to whiten them by investing in the stock market.
Chronicle of DGEN July to December 2011

Economic uncertainty

2.FMconcern
3.
Half yearly earnings
1.Blackmoney whitening
4.Action against manipulators
5. AIT reduction, extension of adjustment time, declaration of bank
6.Uncertainty over stabilization fund.
7.Prime ministers interference
1.
The second half of 2011 started with optimism regarding the black money whitening opportunity. Bangladesh Bank also decided to permit commercial banks to include other banks deposit in calculating Credit Deposit Ratio. This added liquidity boost with the black money whitening opportunity. Since the massive fall in December 2010 market first time created a new high over 6500 level. Finance Minister AMA Muhith expressed concern over the continuous upswing of the share market index and said he sees foul play behind it."I don't like the upswing of the market this way," he said. "Some old players were sitting idle and now they are investing money in the market to raise prices with an ill motive the minister said. Incentive like black money whitening opportunity was not there to sustain for long. Investors started becoming concerned about upcoming monetary policy and half yearly earnings declaration from companies. Less than expected earnings declaration of the listed companies frustrated investors. Investors kept booking consecutively accumulated gain watching the deteriorated earning declaration of companies to discount their previous price expectation. As of half yearly declaration, banking sector registered only 4 percent earnings growth which was 67 percent for same period of the previous year. Also earning of NBFIs, Cement and Textile sectors highly declined due to poor capital market activities, international fuel and clinker price hike and international cotton price decline respectively.
4.
The fall triggered further as apart from poor earning declaration by companies, the news of regulators forthcoming action against the some individual investors allegedly involved in the stock market manipulation found in the probe committee report came in front. To stop the continuous fall various incentives were being offered. AIT on brokerage commission was cut from .1 percent to .05 percent, tax rebate facility for stock investment was restored and income of mutual fund was exempted from tax to spur the market activities. BB came forward to extend the adjustment time of the single borrower exposure limit of Banks and NBFIs but this recipe hardly created any buy pressure in the market as most of the institutions dominant in the stock market activities have already been overexposed. Extreme euphoria of investors was observed following the assurance of the Association of Bankers on Saturday to garner a BDT 50 bn Stabilization Fund to stabilize liquidity hungry stock market. International Monetary Fund and World Bank sounded cautionary note about the formation of Stabilization Fund by banks and termed that it would increase moral hazard. BAB declared to contribute only BDT 10000 mn to the Stabilization Fund and the remaining sum would be collected through pre IPO and IPO retreating from their earlier stance. Investors took very pessimistic view after the declaration sensing no immediate solution to the ongoing liquidity crunch in market. Prime Minister's decision to sit with the key stakeholders of the market in order to restore the confidence attracted the speculative investors to take position. Most of the investors took position in their favorite stocks in the hope that Prime Minister's ministers interference which resulted in some very fruitful steps will produce coveted result.
5.
2.
3.
6.
7.
Indices
DSEGEN DSE All Share Price Index DSE-20
As on 31.12.2010
8290.41 6,877.7 5,205.0
As on 29.12.2011
5257.61 4,383.9 3,910.3
Change (%)
-36.6% -36.3% -24.9%
Market Activities
Total Turnover of the Year (BDT mn) Total Turnover of the Year (US$ mn) Daily Average Turnover (BDT mn) Daily Average Turnover (US$ mn) Total No of Trade (mn) Total Trade Volume (mn) Average Volume (mn)
2010
4,009,912.6 48,901.4 16,434.1 200.4 52.2 16,974.5 69.6
2011
1,560,912.0 19,035.5 6,642.2 81.0 33.7 16,967.1 72.2
Change (%)
-61.1% -61.1% -59.6% -59.6% -35.5% -0.04% 3.8%
Market Valuation
Market Capitalization (BDT bn) Market Capitalization (US$ bn) Market P/E* Market P/BV
As on 31.12.2010
3,508.0 42.8 29.2 5.3
As on 29.12.2011
2,616.7 31.9 14.5 2.9
Change (%)
-25.4% -25.4% -50.3% -45.1%
Technical Indicators (DSE GEN)

EMA (22 Days) RSI (22 Days) MFI (22 Days)
As on 31.12.2010
8234.0 55.0 50.08
As on 29.12.2011
5145.2 50.9 55.54
Change (%)
-37.5% -7.5% 10.9%
* Adjusted Trailing P/E
Top 10
TICKER DSHGARME TALLUSPIN MICEMENT ZAHINTEX MODERNDYE NHFIL ATLASBANG STYLECRAFT RENWICKJA LAFSURCEML
Yearly Performers
TOP GAINERS/LEAST LOSERS

GAIN (%) 20.9% 15.4% 10.6% 6.7% 2.1% 1.4% 1.1% -0.8% -2.4% -3.6% TICKER IMAMBUTTON BDFINANCE MIDASFIN MEGHNACEM MALEKSPIN BAYLEASING AFTABAUTO PRIMEFIN SAIHAMTEX EASTERNINS
TOP LOSERS
LOSS (%) -70% -69% -65% -65% -64% -64% -63% -62% -61% -59%
TURNOVER LEADER
TICKER BEXIMCO NBL TITASGAS UCBL UNITEDAIR GP PLFSL BEXTEX AFTABAUTO ONEBANKLTD Turnover (BDT mn) 58,411.63 37,489.48 35,647.20 35,018.24 34,825.99 34,707.32 32,957.01 31,700.20 29,793.21 25,199.37
Top Companies by Market Capitalization

TICKER GP TITASGAS SQURPHARMA NBL ICB ISLAMIBANK BEXIMCO BSRMSTEEL BATBC PRIMEBANK Market Cap (BDT mn) 220,774.05 63,687.04 62,792.32 57,472.42 54,793.13 54,542.03 40,171.76 38,636.85 37,578.00 34,701.53
Source : DSE, LBSL Research
10
Right Issue
2011
Code
ASIAINS FEDERALINS JANATAINS MERCINS PIONEERINS CONTININS FUWANGFOOD SINOBANGLA UCBL CMCKAMAL BDWELDING ILFSL BANKASIA SONARGAON SIBL UNITEDAIR CITYGENINS PREMIERLEA LAFSURCEML RUPALIINS
Proposed No of Shares Issued

1R:1 2R:1 2R:1 1R:1 1R:5 1R:2 1R:1 1R:1 1R:1 2R:1 2R:1 1R:1 1R:4 1R:1 1R:1 1R:1 1R:1 1R:1 1R:1 1R: 1 16,500,000 22,439,480 1,626,240 1,650,000 375,000 907,500 20,240,000 9,998,300 290,995,350 37,840,000 23,920,000 8,146,600 10,509,581 1,091,200 298,781,575 210,000,000 18,150,000 5,209,282 58,068,675 19,744,812
Premium (BDT)
10 Par 100 50 300 50 Par 10 5 7.5 Par Par Par 50 Par 5 5 Par Par 10
Issue Price (BDT)

20 10 200 150 400 150 10 20 15 17.5 10 10 100 150 10 15 15 100 10 20
record date
6-Jan-11 8-Aug-11 15-May-11 12-Apr-11 15-May-11 19-Jan-11 19-Jan-11 5-May-11 15-Feb-11 22-Feb-11 22-Feb-11 11-Aug-11 22-Sep-11 24-Mar-11 24-Mar-11 18-Aug-11 19-Apr-11 10-Oct-11 3-Oct-11 20-Dec-11
Fund Raised Through Right Issue(mn) (BDT)

330 224 325 248 150 136 202 200 4,365 662 239 81 1,051 164 2,988 3,150 272 521 581 395 Source : DSE, LBSL Research
11
IPO Summary
2011
500 160 4600 200 260 300 500 750 500 3348 275 1500 294.14 500 10 10 115 60 10 1000 10 10 10 111.6 10 10 18 25
Ticker
AIBL1STIMF DESHBANDHU Mobil Jamuna BEDL SALVOCHEM BRACSCBOND MBL1STMF EBLNRBMF SEBL1STMF MICEMENT RELIANCE1 LRGLOBMF1 RDFOOD ZAHINTEX
Sector
Mutual Fund Engineering Fuel Power Fuel Power Pharmaceuticals Corporate Bond Mutual Fund Mutual Fund Mutual Fund Cement Mutual Fund Mutual Fund Food Allied Textile
Fund Size/ Post IPO Paid up Capital (BDT mn)

1000 400 6096 860 401 3000 1000 1,500 1,000 1000 550 3000 400 450
Public Offer (BDT mn)
Offer Price Trade Debut (BDT)

10-Jan-11 17-Jan-11 26-Jun-11 19-May-11 21-Apr-11 8-Feb-11 8-Feb-11 23-May-11 23-May-11 22-May-11 7-Jul-11 19-Sep-11 28-Nov-11 28-Nov-11
Closing Price on Debut date (BDT)

9.4 74 145.2 72.8 68.7 938.5 10.9 10 10.2 132.5 12.7 9.8 37.8 45.4
% Gain
-6.0% 640.0% 26.3% 21.3% 587.0% -6.2% 9.0% 0.0% 2.0% 18.7% 27.0% -2.0% 110.0% 81.6%
Oversubscription (Time)
1.22 68.36 4.68 6.37 42.12
0.907 6.1 1.98
18.59 16.01 Source : DSE, LBSL Research
12
Sector Ins and Outs

Sector Listed Company Audited P/E* Forward P/E** Price / NAV Total Turnover (In BDT mn) Sector Capitalization (In BDT mn) ROE
Bank Cement Ceramic Engineering NBFI Food & Allied Fuel & Power Insurance IT Sector Jute Miscellaneous Mutual Fund Paper & Printing Pharmaceuticals Service & Real Estate Tannery Telecommunication Textile Travel & Leisure
30 6 5 22 21 16 13 44 5 3 9 37 1 20 4 5 1 25 2
9.75 19.21 26.38 18.37 14.46 15.35 14.25 19.67 30.76 22.09 6.64
12.20 19.58 24.72 24.64 20.61 19.48 14.30 27.46 28.95 34.34 6.41
2.3 4.0 3.3 4.6 3.2 6.1 2.5 2.0 1.9 1.1 3.1 1.3
388,825.40 56,854.64 37,828.44 128,662.76 174,685.03 35,187.66 123,628.49 127,408.81 8,784.44 790.94 69,822.52 53,754.76 182.47 96,953.14 15,800.90 8,919.06 34,658.23 150,404.72 34825.992
664003.45 69877.16 28614.34 101982.41 190358.31 56284.28 247468.12 114659.87 3773.19 792.45 59182.57 33012.63 773.30 171025.47 14610.69 13824.54 220774.05 74427.22 10539.90
23.1% 1.3% 11.2% 26.0% 22.9% 34.5% 18.6% 11.7% 5.9% 3.5% 33.5% 9.7% 3.7% 12.9% 23.2% 26.6% 22.3% 9.7% 13.3% Note : *Adjusted Trading P/E ** Annuaizd P/E
36.39 20.92 12.43 14.34 17.33 18.88 20.71
202.39 19.80 34.58 14.15 14.20 18.15 20.10
1.1 3.1 2.4 4.3 4.9 1.4 2.9
Sectorwise Market Capitalization(%)

35.00% 30.00% 25.00%
11.92%
20.00% 15.00%
31.98%
9.17%
3.37%
2.71%
2.85%
10.00% 5.00% 0.00%
4.91%
5.52%
8.24%
10.63% 3.59% Textile Telecommunication
1.38%
1.59%
0.04%
0.70%
0.18%
Engineering
NBFI
Fuel & Power
Insurance
IT Sector
Jute
0.04%
Service & Real Estate
0.67%
Pharmaceuticals
Travel & Leisure
Cement
Food & Allied
Miscellaneous
Mutual Fund
Paper & Printing
Bank
Ceramic
Tannery
0.51%
13
The Leaders
dr. m a taslim
-Professor, department of economics, university of dhaka
Bangladesh economy & Industry
selim r. F. hussain
-ceo & managing director, Idlc
shakil rizvi
-President, dhaka stock exchange
nasir ahmed choudhury

managing director & ceo, green delta Insurance co.
al maruf Khan
-President, chittagong stock exchange
md. Fazlul hoque

Immediate Past President, BKmea
dr. mahmood osman Imam

-Professor, department of Finance, university of dhaka
Dr. Toufiq M. Seraj

managing director, sheltech (Pvt.) ltd
ahasanul Islam
-senior Vice President, dse
Kazi saifuddin munir

-managing director & ceo, It consultants limited
shahidul Islam, cFa

-ceo, VIPB asset management
alihussain akberali, Fca

-chairman, Bsrm group of companies
mamun rashid
-adviser, dhaka Bank limited
dr. mohammad tamim

- head of the department of Petroleum and mineral resources engineering, Buet
Behind the Words
It was a chilly dawn when we headed for our first interview to initiate covering our most awaited arrangement of coming up with something that our readers have been wishing for long. The interview started with a story of a lady who slipped in front of a laundry shop in London. It took us a lot of courage to even plan for doing something like this as we had to begin with the most difficult part of the whole procedure that was to arrange interviews with the most prominent faces of our economy and business community. We are grateful to all leaders for giving us a valuable pie from their busy schedules. We were facing them, seeing their expressions- contented or sorrowful, following their hand gestures- positive or negative ones, and experiencing each of their nonverbal lexis- whether optimistic or pessimistic-- to the fullest. Like the story of laundry shop to describe insurance awareness, we tried to portray other horse mouth speeches in an infallible way and we believe these are some of the never miss write-ups while you begin your new year.
By Md Ashaduzaman Riadh & Tanzina Ahmed Choudhury

14
Bangladesh Economy

economy
Dr. M A Taslim
-Professor, Department of Economics, University of Dhaka
-The professor with a large following for his books and columns spontaneously delivers a thick treatise on the Bangladesh Economy
At very morning when Dhaka University Campus was buzzing with the sprit of youth, Professor M A Taslim sat in his department in a nervous macroeconomic mood. But Mr. Taslim took a sanguine view at the beginning, If you ask me about the economy in 2011, I would say the agriculture sector has done quite well. Though it has not got enough help from the part of the government, it is still performing very well utilizing whatever grants it has been getting, he starts the discussion with a happy note, but we should now be alarmed as our cultivable land is increasingly decreasing day by day whereas our demand is continually increasing with population. The professor meanwhile admires the agricultural scientists who are working at field levels, I highly admire them as they are showing really high efforts to check this and are continually coming up with new ways of crop-raising while utilizing less land resources. Another sector that has been doing very well until very recently is the export sector, Taslim sees the export sector performance to be quite steady. Unfortunately the performance is declining now which is because of global recessionary fear. Our demand for export is generally generated from North America and Europe and as they are in the grip of recession, their demand is declining and therefore our export sector is experiencing less growth, in fact we saw a very marked decline in our exports at the end of this year, he adds.
2011
Achievements:
Robust achievement in agricultural sector. Healthy export growth
Challenges Faced:
Coping up with the global economic crisis Dealing with the labor remittance and migration issues caused by Middle-Eastern political crisis
2012
Optimisms:
Remittance is going to offset most of the other externalities
The latest export growth figures show a very marked decline to 17% from the height of 42% which we saw during last fiscal year. And to my utter fear, I suspect that export growth might fall to single digit which is one big threat for our economy in the coming days.
Mr. Taslim does not expect the export performance for the whole year to be very positive, The first half will still be quite good but the second half is surely going to be a challenge for all of us. If we take the calendar year, we might find in fact a remarkable relative performance but when we will be considering the fiscal year, things will be appearing differently and the scenario we will be seeing is most probably going to be a loss, he adds. He cautioned that the fiscal discipline has been breached very significantly and the frightening fact is that the government is borrowing very heavily from the banking system which will contribute to more borrowing pressure unless it is offset by other aspects.
Challenges to be Faced:
Export growth may come down to single digit Inflation will soar more Re-strengthening the relations with multilateral agencies Establishing the practice of releasing updated data by the government agencies to trace the actual figures of economic indicators relative to the global gauges
The professor fears if private sector demand , one of the strong components of GDP , falls then it is going to impact very badly in GDP growth during coming days.
Inflation is also in a bad state. It has been gradually increasing. It is worse now and the situation is going to worsen more. At least, the situation is not going to be better than what it is today,
15
Bangladesh Economy
What the Leader Says ECONOMY

When asked about the sources of the troubles, Taslim articulates promptly, Most of the problems rose from the power sector. The government in the process to solve the electricity problem has indeed taken an economically detrimental step. Things should be balanced. You have a fixed budget every month. Now it is up to your decision whether you decide to stay one night at a five star hotel and rest of the month in a slum or the whole month in an on an average comfortable apartment house. The government is giving 30000 crore taka as subsidies on electricity which is closely 4 billion dollars whereas the Padma bridge could have been built with far less an amount than this. So, government has an achievement that it has solved the electricity problem at the cost of not attending to other important problems. While discussing about the challenges of 2012, Taslim stresses that another challenge of 2012 will be to re-strengthen the relationship with some multilateral agencies which has been seriously deteriorated in the last year with the cost of Padma Bridge and Metro-rail. Actually we falter in identifying the disease. If you have pain in your muscles, in your back, inside your head, etc.- these are not diseases, rather these are symptoms of a single disease- flue. Similarly, budget deficit, inflation, etc. are not the problem rather these are mere symptoms of the core disease caused by the excessive expenditure by our government. Our government has still quite substantial amount of money in the pipeline. But we dont know how and where to utilize the money, Regarding the money market, Taslim sees the money supply growth rate to be falling, Interest rate is continually going up which is hampering private sector investments. Speaking of the optimisms for 2012 Taslim emphasizes the positive balance of payments that Bangladesh has been experiencing since last 10 years, excepting 2004-05, I believe our remittance is going to offset most of the other externalities that can result in a current account deficit. 7% GDP growth rate is very hard to achieve as external sectors contribute a very large amount to GDP. Industrial growth depends heavily on external sector. I dont expect the industry to grow very well. Not in double digits in fact. Taslim doesnt see any worst case scenario unless the country is hit by any severe cyclone, flood or other kind of natural disasters, Natural disasters are beyond human control. We cant do anything about them. We can only stay prepared. When asked about his expectations for 2012, Taslim seems bit bearish and cynical, I am not expecting this year to be better than last year in terms of economic performance because whatever economic indicators we have, we dont see any sign of expected growth here. In fact we might see some sort of slowdown in 2012 and the global recession is going to have a big impact on our economy. Reduced space for private sector could also impact adversely. We have to figure out how reliable our statistical data are. As we put more emphasis on monetary figures in determining our economic state, there is no substitute for accurate statistics. We should watch our neighboring countries how they are jotting and representing their statistics, Taslim tells as a final note. Additionally, classifying a figure in the proper way is also very important. For example, if you buy a pen it is to be counted as a consumer good but when the same pen you buy from your company accounts, it becomes a capital good. So, while conducting governmental statistics, it is highly needed that all data are classified correctly otherwise the results we will be getting have high chances to become myopic and counterproductive. I am skeptical to the data published by the Bangladesh Bureau of Statistics or other agencies. It will not be unlikely if the current data is revised after 5 years. How can you trace the growth and research the economy if you do not have any data on quarterly consumer spending, quarterly GDP growth, monthly unemployment situation or industrial production? the professor concluded with a question but still, he is not sure whether this would be answered before the next year ends or would remain unanswered eternally.
You have a fixed budget every month. Now it is up to your decision whether you decide to stay one night at a five star hotel and rest of the month in a slum or the whole month in an on an average comfortable apartment house.
I am skeptical to the data published by the Bangladesh Bureau of Statistics or other agencies. It will not be unlikely if the current data is revised after 5 years. How can you trace the growth and research the economy if you do not have any data on quarterly consumer spending, quarterly GDP growth, monthly unemployment situation or industrial production?
16
Bangladesh Economy

stocK marKet
Shakil Rizvi
-President, Dhaka Stock Exchange Ltd.
-Being a President provides you with great responsibilities. Rizvi is no difference. The leader puts forth his affirmative views while responsibly criticizing the flaws.
It was noon. Scorching sun was burning the Motijheel streets. The President sitting in his cooled room cited that the price correction was not good for the individual investors but, If we consider in longer horizon, then the indices have improved tremendously but the shorter horizon we determine, the losses become magnified. He continues, In 2010, our indices gained 89% a record one of the highest in the whole world. Due to the continuous price rise since last 4 years, many stocks became really overpriced and the price correction took place. Rizvi doesnt see it is a crash; rather he would call it a major correction as even in 2009, the benchmark index was at 2400 level, Ill sincerely term it as a major price correction to level up the indices from a very high extreme of close to 9000 to a reasonable level. The President believes the fault was not done by a single stakeholder, The inquiry report highlighted some failures of the regulator, many employees lost their job; further inquiry is under process to check the regulatory failure. Also, I feel that banks over exposure was not properly checked when they first started investing heavily in the stock market. The exchanges kept up in performing their duties properly by conveying the regulatory directives to the investors but the exchanges do not have any authority to ensure the implementation of the guidelines, its the SECs responsibility where they faltered, shot the leader. But its sad that investors continually blame us considering the exchanges having the authority to do something about ensuring proper governance and surveillance which we are not authorized to do. Investors have to understand that the DSE is only like a business community body which conveys the issues from investors to SEC and vice versa, he continued.
2011
Achievements:
It is not a crash; rather a major correction SECs reform
Failures:
Regulatory failure Monetary policy failure Banks unchecked overexposure
2012
Optimisms:
Stability in 2012
Challenges:
Demutualization High bank interest rate
So, if regulatory failure was the major failure in 2011, we should now move on to the money matters, he opined. It should be properly investigated who were behind the inclusion of the massive piles of money in the stock market. Small investors did not come here at first. Full possibility is that they were induced by some people who wanted to play with the market. We couldnt clearly identify those people. This is another failure. Often people accuse the exchanges for organizing capital market fairs to induce people to invest. But if you dont have penny in your pocket, hundreds of fair will not make you purchase a thing. The fact was that, people had ample money at hand that time. Make the FDR rate 8% again; billions worth new funds will enter the market tomorrow; not a single fair is needed then. Everyone is talking but nobody is pointing out that whenever interest rates rise, stock indices fall. Earlier it was extremely difficult to get an interest rate of even 10%, but now we are seeing banks, leasing companies, insurance companies, etc. are offering 13-14%, even 15% rate of return.
17
Bangladesh Economy
What the Leader Says STOCK MARKET

The leader sees monetary policy failure to be one among the main problems. Lack of foresightedness is the reason behind.
I wont say SEC hasnt tried. SEC tried to put things into place but how can you prevent the approaching tides of a sea with only putting dams in front
When there is another allegation against brokerage houses that they induced the hike by establishing branches all over the country Rizvi said people have forgotten that the industry firms was in fact pressurized to widen their reach so that maximum people can access the market. Another failure was that the investors did not come here to invest; Rizvi commented sadly, they came with a trading mentality. Thats why they put their funds continually in the market not paying attention to the intrinsic values of the stocks they were investing in. Again, forgetting the trading mentality of the investors, the government had the duty to absorb the funds with good sharers, which we couldnt. Like, if Bangladesh Fund or stocks of the SOEs were released then, people would have surely bought those stocks, he continues. Rather than focusing on good stocks, we placed most of our attention in issues of direct listing, book building, etc. 48 more companies were also in process, more than 4500 crore taka of the investors went out of the market in the guise of placement, even about 9000 crore taka went out of the countrythese things should have been checked, the president asserted painfully.
SECs reform was an achievement. Management was reshaped and some good people sat on chair which is really appreciable.
Rizvi admits internet trading platform will be in function from 2012 but up to the mark internet trading will not be in practice unless all banks offer fully efficient online services as well as Bangladesh Bank offers their E-clearing service, I believe the stock market will come out of the instable state in 2012. Demutualization will take place though I believe this is not a solution. I dont encourage margin loans; people should invest from their own capital. Usually after demutualization, scopes for penetrating into other investment instruments open, But I feel derivative instruments are for very sophisticated markets; not for a small one like ours. When will we reach that level?- in response Mr. Rizvi told,
We will be mature through our experience gained during this hustle-bustle.

We are just thinking about the end. We have to think of the beginning as well. When we will be able to relate the end with from where we began, then I think there is not that much reason to be panicked about, he continues. Rizvi feels maximum portion of the price correction has been over. If bank interest rates rise further, then it is a sing to be a very big reason to worry. Foreign investors are increasingly getting involved in our market. Decision to allow foreign brokerage commission repatriation is a positive move. Small investors will absorb the shares as they have very less scopes to invest elsewhere, the leader ended putting a sanguine view.
18
Bangladesh Economy

stocK marKet
Al Maruf Khan
-President, chittagong stock exchange ltd.
-The President echoes his inner mind in saying that investors need to act more decisively to cut short the market crisis.
The busy president was wandering in the busy lobby of CSE office. Lets talk here Mr. Khan started the conversation. He was very articulate, Demutualization of the exchanges and maintaining the stability of the market are the most prominent challenges. We are trying and you see, the volume is going up since last several sessions which is good and we will be trying to maintain this growth in 2012 as well. Board restructuration after demutualization and ensuring corporate governance is going to be another big challenge, he added. Khan sees proper implementation of the packages is going to be another challenge in 2012, Also, the exchanges have to deal with the impact that the annual and first quarterly statements of the firms will be producing. The President is concerned about the future supply-demand state as well,
2011
Achievements:
Greatest painful learning.
Failures:
IPOs mispricing No prosecution for imperfect disclosure and auditing Yet to punish the main miscreants involved in manipulation
Some 34-35 issues are in the pipeline but if adequate demand to absorb the issues is not present in the market, then it is going to be a big reason to worry.
Khan believes the issue right and bonus shares might be another point of concern, When the rights and bonus will be mature to be sold off in the secondary market, then how it is going to impact is a point to ponder. So, the ultimate challenge will be to ensure sufficient demand against the supply. The President is confident that adequate supply from the SOEs is ready to enter the market through ICB, What we are concerned about is that after the book building reforms, how the upcoming IPOs under the new book building regulations will be treated by the investors is one point we should keep an eye on as we have not yet seen any issue entering after the amendments passed. The Financial Reporting Act is under planning and is expected to put before the end of 2012, Also, the index calculation issue is expected to be solved by next month. We are trying to expedite finishing the process of establishing a uniform index for both the exchanges. Khan admits IPO manipulation in terms of pricing, placement, disclosure in prospectus, etc. was a big flaw in 2011, We didnt see any issuer or auditor getting prosecuted for imperfect disclosure. Also, SEC and the exchanges themselves could not perform their large-scale surveillance to some extent. To add, Khan feels proper investigation has not taken place to identify the main miscreants behind the crash let alone the establishment of proper prosecution, Again, we couldnt properly pacify the investors during the turmoil, they were not provided with the perfect information they had been seeking, which is a failure indeed, he added.
2012
Optimisms:
Implementing financial reporting Acts and other steps
Challenges:
Absorbing the supply of new issues in pipeline Board reconstruction and corporate governance
I wont say achievement but I would rather say painful achievement in 2011 was the lesson that we all learnt following the crash. I would rather term this as learning through being wounded. The lesson learnt is a big thing for the investors, the regulator, and the exchanges; but its really a matter of sorrow that the miscreants who should have been the main lesson learners have smartly escaped from all allegations, sighed Mr. Khan.
As a final note, the President cited three specific points of counsel to the general investors, I should say in 2012, first and foremost the investors should apply their lesson learnt in 2011, secondly, investors should avoid such brokerage houses that lack discipline, and finally, investors should understand that doing business in stocks should be equity based. Khan discourages margin loans outright, Those people should come to invest who have excess funds of their own. They should explore and try to diversify their risks, he concluded.
19
Bangladesh Economy

economy & stocK marKet
Dr. Mahmood Osman Imam

-Professor, Department of Finance, University of Dhaka
- Through his amicable conduct he explains complex Finance theories and brings smile on the serious faces in his finance class. We felt glad to have our share in this issue.
Market crash is still flashing red and Imam is among those who disagree with the recent SEC directive to increase sponsor shareholdings to 30% of the total paid up capital.
I see it as a bailout. What I see is that governments objective is only to shoot the prices up- whether its a good stock or a bad one- it doesnt come into consideration.
I fear this might lead to an irrational boost of prices of those shares which are not fundamentally good, he says. Imam is confident that this is not going to help that much, One smart player can enter and do business within a period of 3 to 4 days. So there is a high chance that a retail investor who is thinking that hell be able to sell his holding when the price goes 20% up, will later find that maximum shares got sold when prices reached 15%. I really dont support the 30% lower limit as well as the 6 month time duration. I feel the time to acquire the stocks should be increased. If some phases are set, then it will be quite impossible to detect who will sell when and thus it will not impact the market severely, he continues with dismay. Sometimes we are seeing with some companies that maximum shares are on the free float and it has been in the same state for years, Imam was blunt. How come it is possible that no proxy contests are happening in the boards? This means some invisible hand is behind the control of the companies. In some way or the other they are controlling. Whenever they see prices are rising they buy and vice versa, comprehends the Professor. Imam feels banks should not be considered as a crucial institutional investors, There are four categoriesMerchant banks, Asset Management Companies, Life Insurance Companies, and Pension Funds. Only these can be considered as serious institutional investors. We falter in this identification also. Moreover, Imam finds the reason behind banks excess margin loan giving to be two faceted- first being excess liquidity and second, having no scope to invest in real sectors, Other than giving margin loans, banks directly invested in the stock market as well as in the real estate sector which poses full chance of getting devastated as real estate bubble has reached at its highest tolerable perimeter to my belief. In Bangladesh, most of the investors are retail. They speculate in the market-their behavior prediction is also very difficult. If institutional investors were more, then it would have been easy to predict as retail investors would have followed the institutional investors, says the Professor. Also, whenever it comes to recommendations for the retail investors, Imam always emphasizes on rebalancing.
Retail investors need to rebalance their portfolio after this severe price correction. In fact it is the only way to survive.
Rebalancing is selling the poor performing stocks and buying fundamentally good ones. If everyone does the same, all prices will be corrected. In addition, institutional investors should take long run policies, he accentuates. Also, who do not understand the market, falter in choosing proper stocks and rebalancing their portfolios, they should always invest through mutual funds. Again, they should not use leverage, or even if they do, they should make it less, adds the visionary. Being in the academics of Finance for more than a decade and having as many as more than 25 capital market articles, Veteran Mr. Imam feels banks should use customized debt to equity ratios to extend the loan to different industries. Say , if all banks set that they will not extend the loan to a spinner whenever its debt to equity ratio exceeds .8 then after reaching to that ceiling extent the company should be forced to come to raise the fund from stock market, he added. Again, the scholar believes firms have to be seriously encouraged to come to the market for long run development.
20
Bangladesh Economy
What the Leader Says ECONOMY & STOCK MARKET

Companies fear about disclosure, dilution of control, and about compliance of their norms; but they should shake off their fear for the sake of long run development of both themselves and the economy.
Imam stresses that brokers should avoid maintaining uniform margin rates, They should make judgmental decisions based on the risk taking and return generating capacities of the clients. I believe the best alternative to recalculate the index is to reintroduce it in a way that keeps a normal year, say 2008, as base and considers only free float market capitalization as the basis for calculation, Imam says while putting forth his views on reformation of the indices. Institutional investors and cross holdings should also be excluded other than sponsors. If it is executed then the new index will be a better representative of the market and then no 2-3 companies will be able to dominate the market movements as it used to do in the past, he added, And Index reintroduction will definitely have a positive impact on investors minds. Imam considers when the market crashed, regulators should have not moved for so prompt correction measures, rather they should have gone for releasing the restricted demands.
I believe the best alternative to recalculate the index is to reintroduce it in a way that keeps a normal year, say 2008, as base and considers only free float market capitalization as the basis for calculation,
We also havent seen any measures in the budget that considers stock market as a weapon for deficit financing and meeting other budgetary demand.
Our government has to reduce its unproductive expenditure and borrowing should be less. If borrowing continues, we wont be seeing any rebound in next three months, he adds with sigh. But a rebound in the first months is still expected provided institutional investors come to the market as they were wishing to, he continues. Imam believes lack of institutional prudence is also a major concern, Its a pity that no one demands any reform before any mishap happens, he adds. Moreover, while stock choosing, investors should identify the value and growth stocks. Growth stocks are which those have a great earning potential even if their EPS is less. These stocks should be held for long. On the other hand value stocks should be clearly identified to take proper decision on determining whether one stock is undervalued or not, he continues. I believe there should be a minimum limit for free float as well. If there is so less number of liquid stocks in the secondary market, then it becomes very easy to play with those, that is how the professor expresses concern on stock liquidity. Imam sees 2012 as a year of new hopes as well as new uncertainties. I would seriously like to see how the demutualization process impacts the market during 2012, he says. Proper disclosure by the firms is also seriously needed. Given a situation, if EPS is good, the company is goodthis concept is wrong and many firms are promoting this idea through merely releasing abridged versions of their statements publicly. This should seriously be checked and full disclosure should be promoted for all statements- both annual and interim ones, stresses the futurist. As a last piece of suggestion Imam opines, When comparing companies, investors should compare similar companies together. When asked to suggest some avenues, he replies with his usual smile, You see, the pharmaceutical sector is doing well and has good scopes in the international market. Also, the textile sector is still bearing a good prospect despite the negative earnings reported in the last quarter.
Its a pity that no one demands any reform before any mishap happens.
I believe there should be a minimum limit for free float as well. If there is so less number of liquid stocks in the secondary market, then it becomes very easy to play with those.
Proper disclosure by the firms is also seriously needed. Given a situation, if EPS is good, the company is goodthis concept is wrong and many firms are promoting this idea through merely releasing abridged versions of their statements publicly.
But the main thing is that, I can name many avenues but its ultimately the avenues, regulators, and investors who will dictate the stock movements eventually.
21
Bangladesh Industry

exchange & BroKerage
Ahasanul Islam
Senior Vice President, Dhaka Stock Exchange Ltd.
-The enthusiast leader never stops in his constructive criticisms and generously presents a crystal clear idea on the whole market in this extract
Major achievements of the capital market during 2011 were the reconstruction of SEC, the 20 point regulatory steps, and the amendments of the rights issue and book-building rules, wearing his amicable smile on, Islam summarizes the major achievements during 2011. Another key optimism that I find is, when the market crashed in 1996, the market took 4 years to return to a position from where it can revive; but this time, we are seeing the revival taking place within one year. Being an active broker in the industry since more than a decade, Islam senses the latent efficiencies inside the industry, Our members and exchanges have shown excellent efficiency during the mayhem. There is no other evidence on earth that all exchangesettlements were handled so efficiently without any error as our people showcased. Islam puts forth his strong belief that banks should not go for capital market investments as it places the depositors money in high risks, If I am asked to market stock investments over bank deposits, I would be highlighting the inflationary effects. The way bank returns are calculated, at the end of the investment tenure, there is very little gain if all returns are adjusted with inflation. In fact, to my own thinking I feel, keeping your money at banks is more like putting your money in a garbage dump.
2011
Optimisms:
Regulatory amendments and steps Resilience of market after the significant correction Emergence of equity research practices
Failures:
investors greed and sheer ignorance Vested interest manoeuvred the machanism Rampant margin loans Amateur financial journalism Information and data dissemination inefficiency of Exchanges
In fact, to my own thinking I feel, keeping your money at banks is more like putting your money in a garbage dump.
The leader sees year 2012 to be a positive year for IPOs, Internet trading platform is also one. We believe to put our plan into functioning by the end of 2012. Again, demutualization of the exchanges is also going to take place during 2012 which is very much appreciable. But I must mention that demutualization is not any solution to either of market boom and burst. Islam thinks demutualization might lead to a rather bad market situation as many new brokerage houses will try to enter the industry to have share of the fruits of demutualization, It takes quite significant time to work on the policies and management practices as well when it comes to the question of demutualization. Thats why, I feel materializing the demutualization plan efficiently is one among the biggest challenges of 2012. DSE is planning to introduce and develop more fees-based services by the year-end, So, another challenge for us is to develop our logistics and train our staffs in order to put our plan into effective functioning. Islam continues. We have got very little scopes to develop our market in the past. Now its high time to work on where we lack during this low-activity tenure. To my view, 2012 will be a new beginning for DSE. He is very optimistic about the newly appointed CEO of DSE.
2012
Optimism:
Internet trading and demutualization More efficiency from DSE end More rational investors behavior
Challenges:
Perfect execution of demutualization process Managing high operating leverage amid sliding turnover of Brokerage houses IPOs mobilization
Islam thinks of margin loans to be like a disease, You work on private placement rules, you work on public issue laws,- nothing is going to work unless you cure the existing margin loan cancer. It is more like you go through makeovers to look good from outside but you are neglecting the deadly disease that you are carrying inside. The DSE Vice President admits value addition in the brokerage industry is usually very low, But whatever they are, they are very pricey. In this slow market, the turnover that the houses are generating, it will gradually become extremely difficult for them to maintain their stand if they do not take help of technology and try to minimize their operating leverage. According to him, Every broker should do individual soul-searching to figure out their maximum potential ability, how much business they can handle. International banks like Standard Chartered and HSBC, they have not yet started financing in Garments sector but still they are making profit, they are making good money. Our brokers should also find their own special niches. He continues, Like- they need to see whether they should provide margin loans or not, should they be in cash market or in the institutional market, whether they should be doing business through internet or through numbers of branch offices, where they should be locating their offices, etc. Deciding these things is going to be a big challenge for our brokers in the next year.
22
Bangladesh Industry
What the Leader Says EXCHANGE & BROKERAGE

Cutting management costs is going to be another challenge. I think we have inflated our expenditures out of excess optimism. Now it is time that all our 238 houses check their costs and determine what should be a reasonable level of expenditure by them keeping in mind the low turnover that the market has been experiencing the whole last year, Islam urges. And importantly, they must distinguish their cash based turnovers from the leverage based turnovers while framing their cost-management plans, adds the SVP of DSE. Islam highly appreciates the emergence of stock market research practices in Bangladesh, Good thing is that, Industry is gradually valuing market researches. When I was a fresher in the exchange, I remember one could hardly find any statistics or research data easily available that could help him in making his investment choices. Let alone statistics, even latest stock prices were not used to be published in newspapers as they are today. We used to publish and distribute a booklet from our exchange desk everyday where all the highs, lows, and closing prices were listed and shareholders used that copy as guides to facilitate their trades. But things have changed today. Now we find all newspapers are giving high attention in providing people with information on the market besides the many websites solely dedicated to stock market purpose. But he doesnt forget to highlight the negative aspects as well, However, this is again a reason to be worried about as maximum of the rumors are created and spread through the media. The way news should be represented should be a major point to look at. Most of the time when I encounter them, they ask me when the market will go up, what is happening to the market, etc. rather than asking what your sectors condition is, how you are going to define your scopes of improvements, and questions like that. He also emphasizes on the lack of proper financial journalism, Amateur journalists without any financial knowledge make regular things look worse and crate weekend worries and nervousness among investors. People depend largely on media reports; we are now in dire need of developing good financial journalism. This is, I believe, another challenge that we have to overcome necessarily during 2012.
SEC can initiate guidelines to certify financial market reporting.

Main thing is that people highlight only negative issues whereas there are so many positive indicators. He continues, Say for example, the other day when the blasts jolted the Mothijheel street and other places in the city, market sentiment was not that much severely down whereas we see in other countries whenever any blast hits in any other country, their main indices almost collapse. We are lucky that our indices do not reflect these kinds of effects and that is in my point of view one big optimism for 2012 that our indices will remain sustainable with greater strength as the market went thought high corrections. While talking, Islam highly emphasizes on the importance of investors demonstration of rational behavior. Investors should see fundamentals of stock whenever before investing and should keep faith on their judgment that yes, I am going to get a good return out of it even if it takes a few years span. Incongruously our market has become a market for capital gain only. No one looks for growth, dividend, in short, prospects of the company. Everyone goes after the market prices and keeps on inflating them out of unjustified speculations. So, I wonder how far our market can improve if our investors do not act rationally with judgmental points of view. What stocks you would have been choosing if you were to invest? - If I were to take an investment decision, I would have definitely gone for a growth stock. I would see EPS and would rely on their growth prospects. To my view, a good company always takes a far longer time to reach to a stage from where they can distribute dividends, Islam promptly replies. See for example Yahoo, Google, Apple- they have not yet declared any dividend till today but they are increasing their sales, they are increasing their assets, they are increasing the beauty of their company. So, I think investors should now start seeing from different perspectives as well, they should see the growth prospects of the company, whether the company is adding value to itself or not rather than doing merely eye-washes by declaring stock dividends to please shareholders where on behind hampering their growth prospects, he continues. Islam thinks Investors should be more aware of what actually will help them enhance the value of their shareholdings rather than looking for so called items that are going to be high on speculation. They should look for researches instead, I know only one or two brokerage houses have extensive research facilities for their clients . When you go to a tea-stall and ask for a cup of coffee and many other regulars also do the same, the first two days, you will be turned down but on the third day, there is maximum possibility that you will be entertained otherwise from the next day you will stop going to that tea stall. Same works for brokerage houses as well. If people demand researches, those who want to stay in business will surely start research facilities and encourage rational investment behaviors.
Islam believes for raising capital, capital market should be the first choice, I think commercial banks should stop giving term loans. I wonder they borrow money for 7, 10 to 365 days and lend for 12 years to real estate industry. Bangladesh Bank must check this asset-liability mismatch. Share market is still liquid after the bubble-burst but I fear what will happen when the real estate correction takes place. Twenty percent price decline of real estate is just a beginning. When the massive burst will happen, banks will be the most affected. I wonder why some of our banks were awarded with AAA rating a while back!
What you would have been doing if you were given the authority to shape the chaos in stock market? - In response Islam is really enthusiastic, If I were given the power I would have at first canceled licenses of some so called merchant banks and brokerage houses. X merchant bank which has 10 crore taka worth paid up capital, and has given a 10 crore taka loan, and whose mark to market short fall is 15 crore taka, -its license should be canceled. Some brokers took huge loans from banks and financed their customers investments with those- their operations should also be shut down. A company with negative net capital must not be in operation even for one day only. This will do nothing but will enhance market inefficiency even further. I wonder nobody is talking about that. They are assuming they would be able to hide the facts and when market will rise, they will be able to revive their capital inadequacy and get out of the hassle.
The enthusiast continues, I strongly believe, trying to hide any scam widens the perimeter of the scam, increases the depth of the scam and in the end, it becomes an infection.
As a second step, I would have taken initiatives to revive the IPO market through making it thoroughly transparent and would have acted to promote investments through highlighting the positive factors to the potential investors. Finally, I would have stopped the weird talk shows. Only qualified people should talk about the stock market as every word counts in this typologically sensitive market environment rather than picking up a random person from the intellectual crowd and making him/her utter all his/her layman, unnecessary, and irrational thoughts. December 2011, issue 59
23
Bangladesh Industry

mutual Funds
Shahidul Islam, CFA

-CEO, VIPB Asset Management
With no mood to utter a single word of optimism, the bright Asset Manager, also a CFA and FRM Charterholder, speaks his heart out.
The evening was chilly and cozy until the CEOs room was heated by the steamed talks of the Asset Manager. The fundamental problem of our capital market is lack of corporate governance, he vehemently said. In my view, majority of the listed companies do not deserve to be listed. Many a times, it is really hard to differentiate the sponsors/ directors from their company. I wonder how many listed companies are companies in real sense. Upon being asked, he made a blunt elaboration, The fundamental concept of companies is that a company is separate from its owners but I wonder how come an entity is called a company in our country while its directors need to provide personal guarantees to banks when they seek for corporate loans!
2011
Optimisms:
Proposed long-term market stabilization steps
Pessimisms:
Failure in improving corporate governance So called rampant bonus share to console investors
The fundamental concept of companies is that a company is separate from its owners but I wonder how come an entity is called a company in our country while its directors need to provide personal guarantees to banks when they seek for corporate loans!
Later when asked to review the SEC activities, the fund manager shot, It is very unfortunate that SEC is mostly doing the firefighting work whereas its actions should have been to ensure proper auditing and reporting by the listed companies, to protect minority shareholders rights and overall corporate governance of the listed companies. Preventing market manipulation and insider trading is an important job of SEC. But persuading institutions to buy shares or not to sell their holdings is definitely not SECs job. When asked how you make prudent investment decisions under this environment, Mr. Islam painfully replied Nowhere else in the world it is in practice or is expected. He added If one investor is bearish, why should he be forced to buy shares against his will? - I dont really understand this. He also put in There is a rule that 75% money of the mutual funds has to be invested in the stock market but no time duration is mentioned which is appreciable because timeframes drive fund managers toward taking unwise investment decisions. Islam acclaimed, SECs mid- and long-term strategies are wonderful . The main problem is that they dont have capacity to implement those. Whatever capacities it has is mostly being used in trying to manage market movements.
2012
Optimisms:
Turn around in some domestic macro indicators such as inflation
Deteriorating external environment Proposed SEC initiatives might not be implemented
There are many companies who have raised funds from the public but they didnt and wont give back anything to the investors in return in the form of hard cash dividend. I am saying this because I dont believe in bonus shares which our investors happily consider as dividends. Bonus share is only an accounting entry that debits retained earnings and credit the same amount to the paid up capital. What difference does it make to the company? What economic value does it create?
As I said earlier, majority of the listed companies do not deserve to be listed and many do not have any intrinsic value, Islam said when asked about the market. There are many companies who have raised funds from the public but they didnt and wont give back anything to the investors in return in the form of hard cash dividend. I am saying this because I dont believe in bonus shares which our investors happily consider as dividends. Actually stock dividends are simply stock splits. Earlier you owned 4% of a company with 4 shares on hand, now after receiving a bonus you still own 4% of the total shares. So, whats the point on speculating on the basis of this bonus share issues? Dividend is only when a certain amount of cash flow is directed to the investors as a share of the earnings by the company. Bonus share is only an accounting entry that debits retained earnings and credit the same amount to the paid up capital. What difference does it make to the company? What economic value does it create? I believe the bonus share concept is being used to manipulate the market as many people dont know the actual implications. I believe SEC should take strong initiatives to get rid of this malpractice.
24
Bangladesh Industry
What the Leader Says MUTUAL FUNDS

Asked about the challenges faced, Islam was very candid, The most threatening challenge in my sector is most investors crave for short term gains only. While raising money, some managers tend to promise unrealistic returns. The concept of mutual funds is that investors, who lack the capacity to make their investment decisions, will invest through mutual funds and will delegate the decision making responsibility to the professionals. But its not happening in Bangladesh. As there is lack of proper investment mindset, it is indeed a challenge for the mutual fund industry. Also we dont have many deep pocket long-term investors such as pension funds, life funds, trusts, endowments etc, he added.
In reply to the question- In a market which is dominated by short-term oriented amateur investors how professionally Asset Management Companies managed their fund in 2011- Mr. Islam openly admitted the lack of professionalism among some of AMCs. I am not a great fan of investment approaches such as growth investing. Only thing that makes sense to me is value. When asked to elaborate Islam told, What is a financial asset such as a stock or a bond? It is something that offers you some future cash flows. You just need to discount the expected cash flows to derive their present value and if you find them undervalued, you invest in them; and if found overvalued dont. The whole idea of growth stocks is that their cash flows are back-ended which doesnt really matter. It also has its value based on its cash flow. I think we dont have the sufficient market depth that supports sector funds. I dont also think that our market is efficient enough for index funds. In an inefficient market like ours, securities mispricing is rife, investing in an index fund, you are bearing the risk of investing in overpriced securities. Whats the major flaws you find in the market? upon being asked this Islam pessimistically replied, Everyone runs after very short-term gains. Our mentality is totally trading-oriented, not investment-oriented. And many of our institutional investors are more like street investors and follows the herd. I have hardly seen anyone who things in terms of value.
Direct listing, book building etc sound great. But we need to have the first thing first. We need good ethical accounting and auditing professionals and we need to address corporate governance issues.
Another challenge of the mutual fund sector is the lengthy registration process. It should take merely days, not months, to finish up with the whole registration process which is not happening, Islam said passively. Also, there is no role for a custodian. Worldwide only three parties- asset management companies, trusties, and investors are involved in a mutual fund, to this Islam added, I defy the distinction of sponsors. I dont understand the role of sponsors in a mutual fund. Why should they be separately considered than the general investors? I really dont get it. When asked about his view on the valuations of the listed mutual funds he said that most of the mutual funds are currently trading at deep discounts to NAV. It can happen in a market where recently we had mutual funds trading at 4 to 5 times of their NAV. A mutual fund trading at multiples such as 1.5 times or more of book value is insanity. SEC should have stopped it. Direct listing, book building etc sound great. But we need to have the first thing first. We need good ethical accounting and auditing professionals and we need to address corporate governance issues. If the government/SEC implements the planned initiatives properly it will be good for the market. But I am doubtful. The good words from regulators were pronounced mainly to pop up the market. If a financial reporting council is established; if proper corporate governance is ensured; - then I see some optimism for the coming year but I am not hopeful, was the frank answer of the Asset Manager when asked about his expectations in 2012. I think in 2012, investors might lose their confidence further, many asset management companies that do not have any money under management will not survive. Raising money is going to be extremely challenging. Macroeconomic indicators such as export, remittance, balance of payment and budget deficit will worsen. Financial sector will be under tremendous pressure due to liquidity crunch and poor asset quality. But I hope as a result of ongoing contractionary policy inflation will be a bit moderated by the end of 2012 and central will be able loosen the belt slightly. Islam concluded. Holding the financial gold standard CFA Charter and Risk gold standard FRM designation, Islam later appreciated the young pool of professionals who have started taking entry in the capital market. Mr. Islam articulated that the more financially sound professional we get, the more efficient market will be. When asked whether we actually have dearth of knowledgeable professional, Mr. Islam threw the question, If it takes 9 years to detect the index miscalculation and if you can play with the news of stock splits, you will get the answer. At the same time, he feared brain drains. If the market condition continues to deteriorate; moreover if the professionals are not valued properly our market will lose many young talented financial professionals. In the meantime when cynicism has already engulfed the environment and Mr. Islam was boldly asked why are you still here and managing funds if you are so frustrated with the country? He smiled and replied everything is not so bad and the long term outlook of the country is positive. He promised a more detailed answer in the next year-end issue.
25
Bangladesh Economy

BanK
Mamun Rashid
-Adviser, Dhaka Bank Limited
-The pitches of the ups and downs going on inside his mind are clearly felt while reading any of his pieces. This time we decided to capture the pitches of his voice as an extra bonanza.
The gregarious banker on first shot evaluated the banking sector to be performing more or less in good ways. Why do I say good?- despite many of the banks who have seen reduction to large reduction in their operating profits at the end of 2011 because most of the banks who even showed some kind of decline in their operating profits, increased their core revenues by 15 to 30 % which makes me happy because I always think there should be less of surprising earning even large earning and more of earning from their core business what they are good at doing. Having said so, you might ask me that where that surprising revenue came from?- Those mostly came from windfall gains made out from the capital market; not necessarily based on real fundamental analysis, he added. Rashid, being one of the most experienced brains in the industry saw 2011 as a highly turbulent year, You see in 2011, during the first half, banks made a lot of money. But from the last quarter, they started to face the music. In fact it became turbulent from November-December whereas in 2010, they were more or less okay with their capital market gains. They had to really shrink their portfolio investments, proprietary investments, and in merchant banking most of the banks were not performing at the optimum level and have seen sharp reduction in their money coming from earnings and capital market activities. How did they cover up?- They went back to their basic then which is making more money from recurring businesses, core businesses. We have seen some of the banks like Eastern Bank, Brac Bank, City Bank- they have started to see respectable amount of money coming from, though for the first time may be, from retail banking touching the lives of the individuals, he continued. Putting more interest in core business was one of the achievements in 2011, thinks Rashid. They placed more concentration on their clients, client flows, asset-liability management- where to put my money and where do I get cheap money; and also placed more expansion of the transaction banking, receivable and payable management. These were the performances done by most of the banks and that is why, we could see even Islamic Bank, the largest private commercial bank, they are showing good growth in their core earnings coming from the client flows, the export import flows. Rashid Added, Same is with the National Bank. They increased their money and they did focus also on their classified loans which was again another one of the few successful banks who could show respectable earnings increase. They were very serious about not to allow classified loans and provisions required against those classified loans to go up.
2011
Achivements:
Most of the banks increased their core revenues
Challenges Faced:
Banks had to shrink their portfolio investments, proprietary investments, and in merchant banking, most of the banks were not performing at the optimum level and have seen sharp reduction in their money coming from earnings and capital market activities
2012
Optimisms:
Establishment of good corporate governance All banks will have some breathing period to do some homework to get reorganized
Chances of dead-defaults are there as our credit sector has not yet felt that much brunt last year with regard to loan losses, credit failures, and operational losses Improving IT delivery platform and monitoring tools, strengthening compliance
The banker does not see any achievement of the banking sector as a whole. Banks were in fact busy in reorganizing their home decors the whole year rather than doing some homework or getting into an expansion mood, and CEOs were under tremendous pressure to maintain the previous years revenue level. Some of them went for asset sales; some of them went for selling their real estate holdings; some of them even went for selling few of their licenses!- so we have seen some banks making some money in this way, he uttered with dismay. I would never say failure; I would rather say what we could have done better, said Rashid when asked to evaluate the year just passed. I had expected more innovative products to come to the market; I had expected better asset-liability management; I had expected corporate governance to improve, which didnt- somehow they managed though I hate to utter the word manage. They managed with the regulator; they managed within themselves to carry over and to hide some of their mistakes. So I would again focus more on corporate governance, accountability, and transparency of the numbers, he added with disappointment.
26
Bangladesh Economy
What the Leader Says BANK

As per Rashids view, failure in treasury management was that they could not predict that government borrowing will increase to such a great extent and government will be going to act like a competitor to their clients. This resulted in our interest rates to rise higher. We should read the governments deficit financing plan and should figure out what will be the impact on our deposits and loans of any governmental moves before the actual moves are taken. Treasuries had to face music as they faltered in their projections, continued the banker. Also, banks showed irrational logics and went for Syndicated loans increasing takas cost and its a pity that entrepreneurs are still not getting the courage to support the Greenfield Projects with the capital money. SEC and entrepreneurs should work together for this. We dont have deposits exceeding 3 years, whereas say for example in power sector, merely the payback period is for 12 years. So, there is indeed a serious mismatch, he was disgruntled as he had reasons to be panicked out of that. There is a lot increase in forgeries in the automated payment system. We should have been better prepared. It was observed that central bank was also quite unprepared. We should have thought about these beforehand. Frauds in our country are cunningly innovative. Many banks had to face losses due to these people, said Rashid while talking about the flaws of the automated payment system. Another operational challenge is improving delivery platform; and automation, integration, and centralization of them which was done at a very little extent in 2011. We should look into developing our human resources as well. Typical human resource management will not work. I have to look after him/her well. Otherwise there is a high chance that we might lose him/her as new banks are emerging, he added. Securities and collaterals should be continuously reviewed. The market is so volatile, if we dont review, any moment we can face a security shortfall. Then in distress, we might land up in a situation where our asset is not properly secured, the banker emphasized as n addition. In 2012, Rashid would like to see more supply side in the capital market, I feel SEC is busy but they should soon clear their laundry list and get into facilitation of the supply side. And regarding the banking sector, I would say that there will be some more corrections. If banks do not go for managing their liabilities properly, if they cant i their cost of funds by improving their transaction- then banking sector will face serious music. They must work in togetherness towards reducing their cost of funds, improving their asset liability management, and to avoid loan losses as well as operational losses, he added with regard to the banking sector. Rashid also put forth his views on inflation, Our export is now increasing at 15 to 17%. Our import has decreased. We had to do that through monetary tightening. When dollar rates get a bit more corrected, then our imports will increase again. There was no other way to contain our inflation. Moreover though he feels the rate at which urbanization is taking place, the rate commercial hubs are being built, there is hardly any hardship in establishing more branches throughout the country. But I feel in 2012, banks should rather concentrate on improving their delivery platform as well as distribution network. I dont necessarily feel the requirement to see more bank branches right now as we have more important things to do, he accentuated. I see in 2012, there will be dead-defaults as our credit sector has not yet felt that much brunt last year Rashid said as to his view, banks must take adequate measures to avoid any surprises with regard to loan losses, credit failures, and operational losses. They have to improve their IT delivery platform and monitoring tools, and they have to strengthen their compliance, he added. The banker believes operating profit cannot be a true reflection of banks ultimate performance as there will be provisions against credit losses and, If you apply qualitative judgment, which we havent seen till now, then operating profit will seem irrelevant, he added. Lastly, Rashid shared what features hell be looking at while selecting bank stocks for his portfolio, Ill be looking at the banks that are going for diversification, strengthening their revenue bases, earnings, delivery platforms, distribution networks, including alternative distribution network. Ill be going for the banks who are addressing the recruitment of the bests while being fair to the rest; and also the banks who are working smooth with larger banks of the world and trying to learn from the neighboring countries experiences.
I dont necessarily feel the requirement to see more bank branches right now as we have more important things to do.
I see in 2012, there be dead-defaults as credit sector has not felt that much brunt year.
will our yet last
If you apply qualitative judgment, which we havent seen till now, then operating profit will seem irrelevant.
27
Bangladesh Industry

NBFIs
Selim R. F. Hussain
-ceo & managing director, Idlc
- A world of experience and understanding was there behind the opinions of the CEO speaking of the flaws and prospects of the NBFI sector as a whole.
You see there were number of regulatory changes in the market. Advance-deposit ratio was tightened; liquidity got significantly squeezed; from March, cost of funds increased very significantly; - all these had great impact on our functions during the whole 2011, he sighed. Hussain painfully asserted the fact that loan-deposit ratio directives were present since long but there was no implementation. So when implementation took place in 2011, it drove all of us to a major disaster, he added. Also, costs of funds have increased by 3 to 3.5%, and even 4% in some cases. Naturally we would pass these extra costs to our loan customers. But we cant perfectly match this because of different tenure, different products, etc. Thats why we found it difficult to pass on the rates to our clients. And even if we do, we cant pass on the whole 3-4% rates. Thats why our margin, that is return on assets less cost of funds, is falling, he went on. So, two forces were there- when stock market crashed, NBFI revenues started decreasing tremendously. Secondly, keeping in touch with the regulatory changes and doing business accordingly was also very tough, admitted Hussain. Speaking of the drawbacks, Hussain highlighted the NBFIs overemphasis on capital market, Maximum NBFIs overinvested breaking all statutory limits. They lacked their own diligence. But as the CEO, I can proudly proclaim IDLC to be following the directives all the time. We did not do any proprietary trading exceeding our own limit of BDT 550 mn but other NBFIs did, he added.
2011
Achievements:
Revamping AFIB More supervision from BB
Challenges:
High cost of fund Poor capital market activities Compliance with AD ratio lack of proper internal control and policies
2012
Optimisms:
More consolidated synergy from new association.
Greed, lack of proper internal control and policies were big flaws in the NBFI sector in past years. Proper regulations were not there, and there was no proper implementation of the already existing regulations, whined Hussain.
Challenges:
High cost of borrowing More regulatory compliance Jittery macro economy
In 2010, NBFIs sector focus turned towards stock market and core, traditional, deposit-based business took a back sit due to the lucrative return offered by the stock market. So, in 2011, fund crisis became so severe that it was very difficult to earn good returns from the core lending and deposit businesses, muttered the CEO. NBFI business is traditionally a long term convention. As soon as commercial banks have penetrated this area since last 5 years, it has been hampering NBFI businesses. Commercial banks have lots of CASAs (Current Accounts and Savings Accounts) and their sources of funding are generally short term. I wonder why they race for long term financing! he added. Banks job is working capital financing and they are running after making lease finances, project financing, etc.- which is the role of NBFIs. So, banks have mismatched their asset-liability portfolio by themselves. I would say most of the banks in Bangladesh are acting in extremely unprofessional and unsophisticated way lacking proper corporate governance. And treasury functions of all banks, except some really exceptional foreign ones, are also extremely poor, mumbled Hussain. I can guarantee that our NBFI sector is in far better position than banks. At least our asset-liabilities match in terms of type and tenure, he continued.
To add, I dont support the demand of some NBFIs to the government for allowing short term lendingborrowing operations. I feel even making the minimum limit 6 months was not also right.
28
Bangladesh Industry
What the Leader Says NBFIs

NBFI sector is small, about 5-6% of the whole financial industry. But the resilience it possesses is very strong. The major achievement for the NBFI sector in 2011 was that, which I believe, we had no single voice; we have an association which was quite dormant in the past but since last six months, we have put new blood and effort to make it function properly and we are renaming it as Association of Financial Institutes of Bangladesh (AFIB), Hussain was conceited. As we are trying to unite and work with the single goal of overall sector development, we had talks with the Central Bank, Ministry of Finance and SEC as a group to sort things out--- this I consider as both an achievement of the last year and optimism for the next year, he added. I believe if our sector wants to grow in future, it has to be much more professional, it has to attract right quality people, top professionals, and we have to build a standard code of corporate governance and compliance within us. To do all these, its very important to get together as a group and show one consistent face in front of the public. We have taken an office for our association and we are having our fingers crossed to have things put into place, he continued. BB is now focusing much more on NBFIs than they did in the past. Earlier, BB had a stepmom attitude towards NBFIs; they did not closely supervise us. But since last four-five months they have become very serious and they are meeting all NBFIs on a Bi-monthly or quarterly basis to check on their bad debt provisioning, liquidity management, and general administration. Hussain seemed quite buoyant while saying, BASEL-2 took 2-3 years for banks to implement but we, NBFIs, will be moving for this by January 2012 at just a less than one year notice. Most of the NBFIs capital adequacy is quite high already, in fact much better than banks. General consensus says that the stock market will not rebound to any level compared to where it was in 2010. So, there will be a huge pressure in our margin loan portfolio and our own investment portfolio. Let alone profits, there might be some losses. Provisioning in both the portfolios is quite expected, he uttered fearfully. In 2012, the revenues are not going to match those in 2010. Loans and deposit businesses will be impacted squeezing the margin. But our import on account of fuel will continue next year improving electricity generation and ultimately, industrial production. So, we can expect business from the industrial growth. But I must say inflation control is important. As a containing effort, reserve rate increase will have an impact on our business as well. My ultimate point is that, I dont see interest rates coming down at least for another year, went on Hussain. Also, if there is a worsening of the socio political environment, then it is going to have an adverse impact on our economy, he continued with trepidation. The vital optimism for the next year is that we will be having more reforms in our association. But I believe some changes in perception are needed. Lots of effort will be put to address this. Also, an efficient bond market development has become very crucial now. Our NBR must assist BB in this. Our money market is very small, very shallow, very primitive; so a bond market is highly needed, concluded the CEO.
I believe if our sector wants to grow in future, it has to be much more professional, it has to attract right quality people, top professionals, and we have to build a standard code of corporate governance and compliance within us.
Earlier, BB had a stepmom attitude towards NBFIs; they did not closely supervise us. But since last four-five months they have become very aware and they are meeting all NBFIs on a Bi-monthly or quarterly basis to check on their bad debt provisioning, liquidity management, and general administration.
29
Bangladesh Industry

Insurance
Nasir Ahmed Choudhury

Managing Director & CEO, Green Delta Insurance Co.
Filled with experience and zeal, the insurance veteran recalls memories of 50 years behind whilst emphasizing on the importance of popularizing insurance among the countrymen.
High shoe heels grabbed under her arm, the old lady sprinting to her workplace came to a halt as she slipped in front of a laundry shop in a road of London hurting her knees quite dreadfully. At an instance she filed for a claim to the laundry owner who instantly informed his insurer about this claim. After reaching there, the insurance people found her to be resting in the drawing room with the pet dog in her lap. Her knees were so badly injured that the doctor ordered her to go for a bed-rest until 5 weeks. The lady was entitled to receive a state allowance of 6 pounds every week during her leave from work where she used to earn 10 pounds per week. Among the inspectors from the insurance company, it was the young trainee who wondered why the company made the decision to disburse 500 pounds to the injured lady when the whole compensation could have been made with merely 20 pounds to mitigate the 4 pounds gap she was getting deprived of. The young trainee felt that the injury was not severe enough to be compensated with that big amount. When asked, the trainees supervisor replied The extra 480 pounds are for compensating the pain the lady did went through the moment she slipped, it could have been 25000 pounds if the lady sued the laundry owner. This was the trainees first lesson as an insurer to value the minimum affliction of the claimant which guided the trainee throughout his career and in course of time. Over the time the young trainee Mr. Nasir Ahmed Choudhury emerged as the most successful insurer in the Bangladesh Insurance Industry.
2011
Optimisms:
Introduction of new insurance law Admission of large number of qualified fresh youth in the sector
Failures:
Struggling to strengthen market base Rampant stock market exposure Overcrowded market still on process of overcrowding
2012
Optimisms:
Fruits of the new insurance law are to come International accolades have generated foreign institutional interests to invest in our insurance sector.
When asked, the trainees supervisor replied The extra 480 pounds are for compensating the pain the lady did went through the moment she slipped, it could have been 25000 pounds if the lady had sued the laundry owner.
Mr. Nasir Ahmed Choudhury inviting us with his veteran smile in the corporate office of Green Delta Insurance Company started the conversation with above story to cite the popularity and awareness of insurance among the citizens of developed countries. I think the Bangladesh insurance industry lacks the popularity of general insurance to a severe extent. We dont care getting a little bumped while walking on streets and as a result we fail to enjoy the great benefits that the insurers offer. It is really ironic that our industry has so many insurance firms but the premium totals to only 1500 crore taka and only if people would have insured in maximum possible ways, the premium would have totaled to a minimum 10000 crore taka whereas the premium in the West Bengal market in India, which is slightly smaller than Bangladesh, amounts to 40000 crore rupees only in the health insurance sector, Choudhury exclaimed.
Challenges:
Checking and balancing the overcrowding in the sector Creating a sustainable employee pool Prudent strategic asset allocation
Therefore, the main drawback of the insurance sector in 2011 is that we have already reached at the end of another year but we have not been able to strengthen our market base as people still are less interested in securing themselves with insurances. The industry is still in the process of overcrowding with more firms in pipeline. Its time scrutiny should take place to curb the excess supply. Again, speaking of this, here lies the base of optimism for the next year that we would be able to thrive by digging the traditional preconceptions out of the mind of prospective customers as we have seen a large pool of highly qualified fresh youth getting into the sector, he continues.
30
Bangladesh Industry
What the Leader Says INSURANCE

Green Delta Insurance Company was the bottom line leader in the non life insurance industry. The company generated robust BDT 543.89 mn net profit after tax in 2010 mainly driven by the strong stock market exposure. Out of BDT 543.89 mn net profit BDT 455.767 mn or 83.79 percent came from sale of listed companies shares in 2010 which was only BDT 122.55 mn for the same period of previous year. The story of bottom line from capital market was relevantly same for most the insurance companies in 2010. We made the mistake like most institutional investors and we learned the lesson. Though our insurance business is growing we are getting hemorrhaged in this year by the slaughtering capital market activities. Mr. Nasir replied with utter dismay when he was asked whether his sector has been able to prudently manage capital market exposure. Speaking of the optimism in 2011, Choudhury highlighted the introduction of a long cherished new insurance regulatory act for the first time after liberation. I believe the new insurance law is going to act as the most important tool in getting all ducks in a row. Earlier, the regulatory authority has long been a kind of namesake controller of insurance. Surprisingly , even there was no insurance yearbook. But now we can expect things to change for the better. Adding to the sunshine, Mr. Nasir said increasingly our insurance sector is getting global attention as some of the local companies are doing really good in highlighting themselves in the global arena. International Financial Corporation (IFC) a financial arm of World Bank is interested to invest in our insurance company which is really a positive sign for strengthening our capital base and for equipping us world class insurance practice and expertise. So as for now, the most important thing we should do now is to focus on taking functional steps in developing efficient and sustainable manpower in the industry as well as we should advance in our marketing also to ensure a sustainable market who would willingly go for insurance policies rather than being dragged to make one like how it was in close past.
We made the mistake like most institutional investors and we learned the lesson. Though our insurance business is growing we are getting hemorrhaged in this year by the slaughtering capital market activities.
I believe the new insurance law is going to act as the most important tool in getting all ducks in a row.
31
Bangladesh Industry

garments
Md. Fazlul Hoque

Immediate Past President, BKMEA
-The adroit mind sees tremendous resilience in the sector as the year that had a bumpy start has finally passed away with quite pleasing upshots.
2011 was one of the most successful years for the Bangladeshi Garment Industry despite the many threats, challenges, and problems we had to face,- Hoque replied in his usual jovial approach when asked to evaluate the garments industry in the year 2011. Our overall performance was pretty satisfactory regardless of the high cottonbased raw materials prices as the average hike was close to 2.5 times higher than the normal rates. The main reason behind this sustainability was that globally, all our competitor nations were also facing similar, if not same, kind of hurdles as we were. As there was not that much scarcity from the demand side, we managed to book profits at levitated rates than what we did in past few years.
2011
Achievements:
One of the most successful years for the sector Competitor nations have been facing similar hurdles
Challenges faced:
High cotton-based raw materials prices at the beginning of year Cotton price slump No significant qualitative changes and product diversification Yet to allure large number of qualified fresh youth in the sector and dearth of mid level management
When asked about perennial notion of the immunity to the crisis for having lower end garments position, Mr. Haque instantly rejected the belief, I personally do not agree with the well-believed perception
Hoque, the farsighted, conversely opines, Import demand from Bangladesh is gradually on the decline; though the published statistics are yet to reflect it completely, concerned at ground levels are sensing the dearth. So, the coming year will be full with challenges as we need to see through different bits and pieces; we need to assess how the relaxation of the EU Rule of Origin would affect our business; we need to check the industry situation in Cambodia and Laos also- especially whether they are having any strong backward linkage with the Chinese fabric manufacturers or not; most importantly, we need to see when we are struggling, our competitors are also struggling or not. I will divide the potential hurdles into both internal and external ones, Hoque added. The most eminent external hindrance is the rising crisis in the European economy. As 70 percent of our knitwear and 45% of our woven outfits are sold to European importers, it is quite expected that hard times might be ahead. When asked about perennial notion of the immunity to the crisis for having lower end garments position, Mr. Haque instantly rejected the belief, I personally do not agree with the well-believed perception that our RMG exports might not get much hurt as we sell lower-end garments. I feel it is totally baseless because, when a country is hit by an economic crisis, every citizen cuts his budget. Now, while doing this, a billionaire will not minimize his clothe-purchase when he can save a lot more money if he cancels one among his several exotic holiday plans or personal car purchases. Yes, the middleclass, to some extent, might shift their demand from branded clothes to nonbranded lower-end ones but this shift would not help us much in boosting our revenues as the countries where we export, majority of the population are lower-income people who could clearly be expected to lessen their garment-purchase as their first move in handling the financial crisis.
2012
Optimisms:
Worker efficiency is expected to increase more Power crisis is expected to be dwindled
Drop in demand due to European economic crisis; looking out for new destinations Access to funds is getting tougher; cost of financing has become too high
Also, Pakistan can be a very big threat. If they get any subsidized facility and due to this, if even 10% of our textile export gets hampered, then it is going to be an omen for us, cautioned Mr. Hoque .
32
Bangladesh Industry
What the Leader Says GARMENTS

Moving on to the internal difficulties, Hoque emphasized on the governmental proposed plan to start ferry service on the Dhaka-Chittagong route. I dont see any logic in introducing ferry service in the Dhaka-Chittagong route. This will only make our growth slower as merely 2-3 hours extra delay in the lead time can cost us thousands of dollars in this highly competitive arena and fluctuating market conditions as delivery lags are by nature regular from our end due to the intense traffic jams in our highways. So, regarding the ferry plan I would rather recommend that the government can expedite its road-widening project that is already in progress, but Ill certainly say, it is very slow in progress. Another problem is electricity and gas. A while back I met with a delegation from Hong Kong who were literally stunned to see that everyone in the industry is operating on generators which is excessively costly and every remains stuck in traffic gridlock. I admit that the power condition has pretty much improved from its earlier state but the gas crisis is offsetting many of the benefits that are gained from the cost savings, Hoque added. But despite all odds, I believe the resilience that we proved in last two decades will further continue to give us strength. We just have to keep alive the faith on our strength, capacity, and intelligence, and should try addressing our challenges and finding ways to cope with; only then we can be on the right path to utilize our potentials to the fullest. Spinners aggregated the problems as their owners have good media back up. Spinners imprudently incurred the loss as they could not assess the world cotton demand and supply. They had to pay for their mistake but government has leniently provided them with cash incentives. The situation is not as dire as it was described. Both rise and fall of cotton price were steep so I believe the effect has been offset. Each and every investment needs some homework. When you set up a grocery shop, you think of the demand for different consumer products in the locality and accordingly you select which items you will be keeping in your store. Designing your portfolio is exactly the same, Hoque was relentless, for example you see, you are just loading your inventory without any justification only because you are seeing others buying that stock in a particular time- this is going to do nothing but can seriously weaken your overall investment. When asked about the stock market, he shied away, As a neophyte, I would recommend the investors to always look for fundamentals and sound corporate governance because these are the only things that bear the indications that you are going to be benefitted from a particular investment ultimately.
I dont see any logic in introducing ferry service in the DhakaChittagong route.
See, you have been offered a pen that is actually worth 4500 taka but you are encouraged to buy it at 6000 taka. When you know the real worth, would you still be buying the pen? Same thing is now happening in our stock market, Hoque concludes still wearing his regular smile on.
33
Bangladesh Industry

real estate
Dr. Toufiq M. Seraj

-BSc Engg. (Civil), MURP, PhD (UK), FIE (B), FBIP Managing Director, Sheltech (Pvt.) Ltd.
Inside the posh meeting room of Sheltech as how it is expected from a developer; sitting in front of a giant LCD screen Mr. Toufiq M. Seraj talks about the real estate sector. Believing the year 2012 to be a grim year for real estate sector Mr. Seraj rings the cautionary bell for the realtors.
Real estate sector is clearly in trouble. The abnormal price rally in 2009 and 2010 had to end at some point and 2011 was the year for that. Sales have gone down; and it is speculated that price will follow. 2011 was a bad year for real estate sector, especially the second half of the year. Continuously sales fell. According to our estimation sales have gone down by 30% to 35%. Clearly it is very ominous for any industry. Real estate sector in our country observed a boom in 2009 and 2010 and with the New Year may be the expected correction has come. said Mr. Seraj.
2011
Achievements:
No achievements to mention.
Pessimisms:
30% fall in sales.
2012
Optimisms:
Real Estate Developers will reposition themselves.
Interestingly price correction has not yet started

Along with the fall in volume price is also expected to fall. Many are speculating that there will be a bubble burst in the real estate sector as we saw in Western World and North America. But Mr. Seraj differs in view: he says Interestingly price correction has not yet started. I do not think there will be a bubble burst, because unlike those markets in Western World and North America here lots of equity is involved and there was no speculative buy. But buysale will go down. If volume goes down price will also slightly go down. But yes in the rosy conditions many took projects aggressively without proper calculation, so when the demand is low they will have to reduce price to save themselves. But that may not be a permanent fall.
Further sales volume slide Price correction Inflation High interest rate
In Bangladesh everyone can be a developer. All you need is a land and a trade license.
In the rosy days many players came in the market. Seeing obvious profit in construction business many came to do real estate business. When that happens in an industry, it becomes overcrowded. When asked if the market is overcrowded he said-It obviously is overcrowded. In Bangladesh everyone can be a developer. All you need is a land and a trade license. Nowhere in the world can someone be a developer in that way. Because construction is serious business, everyone should not be allowed to do it. That is why we see television and print media reporting poor quality of construction by many developers. When asked whether it is due to inefficiency of policy framework he said It is not inefficiency of policy framework. Policies of Bangladesh are probably more adequate than many developed countries. It is the compliance and competence of those who will implement these policies.
The price of land in Dhaka is very high. It is higher compared to the cities of developing countries. It is probably more comparable with Tokyo, London and New York.
Many believe that demand side of real estate sector has weaken due to purchase power of buyers of apartments has weaken. Recent poor performance of stock market, high interest rates, high inflation, poor performance of banks and NBFIs all have contributed to the slowness of real estate sector demand side. I believe the reason is price. The price of land in Dhaka is very high. It is higher compared to the cities of developing countries. It is probably more comparable with Tokyo, London and New York. What happened is seeing abnormal profit many started taking projects, supply exceeded demand. Before that supply came to the market land price went up. But now when the supply will hit the market prices will at least be flat if not fall. said Mr. Seraj.
34
Bangladesh Industry
What the Leader Says REAL ESTATE

Government decisions like not giving gas and power connections to new apartments also hampered real estate industry. There are many ready apartments in the hands of realtors that they are not being able to deliver. According to REHAB the number is around 16000. It has caused a huge problem. Especially the decision not to provide electricity harmed the most. The policy of government making it mandatory to have minimum 3% energy from solar panel is not a well thought decision. In urban scenario where there is a established distribution channel, adding such an expensive component is not practical. As developers are not being able to deliver, buyers are not differing installments as they cannot live their right now. So money is getting stuck and cost of financing is rising. People will gradually become accustomed to using cylinder gas. said Mr. Seraj. There is only one real estate company listed with the stock exchanges no other company has raised capital from the capital market. When asked, why they are not considering coming to the capital market, he blamed ad hoc policies. Current policies are very ad hoc. You cannot do long term planning if policies are ad hoc. Every policies are ad hoc regarding this industry, even tax. Every year we have to wait what new is coming. That means I cannot plan for five years. And unless I can plan for five years how can I come to the capital market! said Mr. Seraj. 2012 does not promise to a good year. It will be a year when realtors will reposition themselves. 2012 will be a healing year for real estate sector. We will have to reposition ourselves. The prices went up too high. Every developer has to make their own corrections being in their own financial positions. We have decided to focus more on small sized apartments as purchase power of buyers has eroded a bit. On the other hand we have decided to take projects on big lands where we can develop say 100 units. It will bring economies of scale through lower management cost, easier supervision and standardization. said the MD. Among all the pessimism Mr. Seraj expects government will come forward with helping hand. He says Government has to rethink regarding real estate sector. Real estate is not just a business, at least not to those who buy it. This is his basic need. Think about a first time home buyer. It will be his biggest ever investment and government has an obligation for that. He should have the right to buy his first apartment at a reasonable price, in a reasonable area with reasonable utility connections and he should be able to get financing at a reasonable interest rate.
2012 will be a healing year for real estate sector. We will have to reposition ourselves.
Real estate is not just a business, at least not to those who buy it.
35
Bangladesh Industry

InFormatIon technology
Kazi Saifuddin Munir

-Managing Director & CEO, IT Consultants Limited
-If technology non-acquaintance is a worry for the country, penetrating in avenues for using technology is the hope. Munir running Bangladeshs biggest IT firm feels optimistic to see Bangladesh as a high-tech country if all else remain supportive.
ITCL, formed in 2000 has added more than 28 banks in its network until present, which is popularly known as Q-Cash. Sitting in his high tech office in a sunny dawn, the CEO felt proud in sharing some of the success stories of not only ITCL but also of the whole industry, ITCL from its very beginning struggled to manage the very complex nature of its business and clients as well and has been successful. Giving the public a flavor of being a local third party payment processor, our firm is contributing to the national economy by saving millions of the national fund, as by keeping money rolling within and not by any foreign third party processor to gain advantage on it, he added. Speaking of the prospects of IT in Bangladesh, Munir admits in relation to other developed countries, Bangladesh has not seen a tremendous amount of growth in so called overall IT sector but there are some mentionable achievements that might add some feathers in the crown, The recent e-Asia can be mentioned. But unfortunately the applications that were presented as a tool to boost up in Health, education, business, communication industries-were all conceptualized and been developed abroad, Munir asserted with dismay. We rarely see a local entrepreneur to be
2011
Achievements:
Mind set up change due to Digital Bangladesh Slogan. Mobile banking Governments policy to everyones right to information
Challenges:
Dependency on India Lack of Quality educational institutions and brain drain
in the forefront but still manageable successes are seen overall as the education sector is and will go through some massive changes as Interactive learning tools, i.e. graphics board, animations, project based studies will be introduced shortly, enthusiastically he added.
2012
Achievements:
High potential to exploit Digital Bangladesh
Also, the widely spoken E-Commerce is one key area that has gone through some mentionable changes. Bangladesh Bank is currently working on establishing mobile banking and through the pilot project, a number of landless farmers had an access to the government fund through a mobile number and afterwards kept track by that only single mobile no. No bank account was necessary in the whole process. So, this will be a real cloud of prosperity if E-commerce is fully established shortly, said the optimistic.
Challenges:
High initial investment and high operational costs Efficient human resources
The well-awaited Bangladesh Post Office automation project now is in full roll as the Third Party Payment Processor Q-Cash is now taking the baton in hand and taking this unique PPP funded project to its destiny. As yet more than 250 POSs are been deployed in district levels and all are operational. Online Cash deposit machine KIOSK has been introduced. Also, Q-Cash has introduced Mobile wallet, online payment system which are similar to PayPal. NBR & Sonali Bank are also working to automate the Taxation and Chalan procedure using online payment procedures. Critical foreign funds for example EDCF has been allotted for Bangladesh IT infrastructural development for projects like Bangla Gov Net, Info Sarker etc. Tender process and RFPs are been already floated. Governments policy to everyones right to information is another achievement. Also, permission for TV channels with terrestrial broadcasting facilities has been approved. The concept of National Server/Payment Server has been taken into account for implementation. MICR and Automated Clearing House projects have reached the end of their first phase of development and the second phase is in roll to be introduced all over Bangladesh. Licensed WIMAX and nationwide WiFi have been decided to be widely spread. Also, new mobile telecom operator licenses have been awarded, Munir continued breathlessly.
Mother and child health care has been prioritized through Web-Conference in some selected Upazilla health centers though availability of technology and then physician remains a big question.
36
Bangladesh Industry
What the Leader Says INFORMATION TECHNOLOGY

Munir sees the challenges faced by IT Sector in 2011 to be multidimensional, The policies were made but the fund allocation and governmental functional bureaucracies still remain a big hurdle to overcome. Local entrepreneurs are not being seen at large in this sector. High Tax and tariffs in service sectors has hampered IT indirectly. Initial investment and high operational costs is another challenge to overcome and infrastructure is yet to be developed as we largely depend on foreign resources and skills, he added. Promises are only being made from the government as due to other external factors. For example the share market fall has demoralized the growth of the IT sector. Also, resource and fund allocation is still mismanaged while rapid changes in legislation during 2011 hampered the growth a lot. Changes in technology also cost a lot while in addition, peoples mindset and resistance to changes is another big issue. Also, duplication of resources poses a great problem where local and foreign funds are been depleted unnecessarily, Munir continued with aversion. Munir feels the Central Bank of Bangladesh should not play as an operator where it supposed to be a regulator and to monitor the whole issue, The National Payment System NPS is a bright example. We can talk about State Bank of India and Reserve Bank of India. As such, we can use our Sonali Bank, which has its deepened reach all over and all through the country. He expects NPS guide line and regulatory policies to be given by the Central Bank for which they might have to take consultancy and expert opinion from the World Bank. Central Bank taking loan from WB to implement this project is a complete wastage of money as I feel Sonali Bank should have taken the leading role in this project and all other scheduled banks and private switch operators would become stakeholder for this Payment Gateway under PPP model. The roll of each and every government functional body has to be defined and resource allocation has to be optimal, he continued with disagreement. Creating healthy competition should be promoted; not creating competitors by our own self, added Munir. Also, BB should stick to its regulatory duties and should not emerge as a competitor and should use and promote using proven best methods, he continued. IT companies do not come to the capital market because of low paid up capital. As intellectual property is not properly accounted in Bangladesh, we suffer the most as our main assets are our various software and the brains behind and proper valuation for which is still quite hard to find in our country, he sighed. The leader confirms a second submarine cable other than SEA-ME-WE-4 will be introduced. We may also get to see 3G connections from the Telecommunications. As judicial authorities have been introduced in districts and Upazilla levels, we hope to see the concept of Good Governance be true in reality, said the CEO positively. The projects that have been mentioned earlier may be awarded for execution. Knowledge based development workshops and skill exchange programs will be introduced from government sponsorships. Net enrollment of funds allocated for the rural unbanked people through mobile banking will also be ensured. We expect a common technical and commercial platform for E-Payment or Virtual Payment without any Bank or real time account which will not have any bank or vendor dependency. But Munir later counters his own view with sigh, Our internet penetration has increased but we couldnt increase the bandwidths which is putting severe obstacles in our growth. Munir feels that the most prominent risk that IT sector faces is unsecured and unavailability of fund in the middle of a running project, And also sudden changes in legislative issues are a big threat. Withdrawal of foreign funds due to crossing project deadlines, misuse of foreign aids, lack of local skilled manpower are some major variables that pose risks, he added. Some of our universities, though with very little scopes for research, produce good brains but incongruously they migrate to other countries as there is so little a scope here to contribute and grow in our engineering sector, said Munir to mark the high extent of brain migration our country is experiencing nowadays. Another important issue remains that the governments focus might get diverted as the upcoming 2012 is somehow near to the next electoral year and reshuffling in certain areas may hamper the growth of IT sector which might slow down, if not becomes less, he went on. And, I must not miss pointing a very important fact. The government is aiming to produce low cost PCs for the general countrymen; but would they be able to provide low cost safe internet access as well still remains a question- at least, to me, the CEO ended the dialogue. December 2011, issue 59
The policies were made but the fund allocation and Red governmental functional bureaucracies still remain a big hurdle to overcome.
Also, BB should stick to its regulatory duties and should not emerge as a competitor and should use and promote using proven best methods, he continued.
As judicial authorities have been introduced in districts and Upazilla levels, we hope to see the concept of Good Governance be true in reality.
And, I must not miss pointing a very important fact. The government is aiming to produce low cost PCs for the general countrymen; but would they be able to provide low cost safe internet access as well still remains a question- at least, to me, the CEO ended the dialogue.
37
Bangladesh Industry

steel
Alihussain Akberali, FCA

-Chairman, BSRM Group of Companies
Mr. Alihussain Akberali, having more than 30 years of experience in steelmaking business in Bangladesh, is often regarded as The Steel man. The Steel man talks with his usual Xtreme 500 poise about steel sector.
Slowdown of real estate sector and uncertainty regarding government projects were two of the most discussed issues of 2011. It does not take much to infer the impact of these two issues on demand of construction materials. Bangladesh economy also seem to be smelling the downturn of business cycle amid high inflation, tight monetary policy, fiscal austerity and plummeting real estate price and weakening currency. Steel may be going to bear the brunt of the slow economic activity. All these give a general perception of a bad year coming. But Mr. Alihussain, the veteran in Bangladesh steel industry, seems to be optimistic. I do not think steel industry is in bad shape. The only problem is fluctuation of raw material price in international market. On the other hand the value of taka is going down everyday which increases our import cost of raw material. But the demand is there for a growing country like Bangladesh where lots of infrastructural development to be made. says Mr. Alihussain. He does not think that slowdown of real estate sales will affect the demand of Steel. Apart from that BSRM STEELS is not heavily dependent on consumption of steel by real estate sector. They cannot stop construction even if the demand is slow. They have to keep on building. If gas and electricity supply is assured I believe the real estate demand will again boost up. Moreover, real estate companies want cheap materials. We produce quality products and charge higher price. We mainly supply to government projects, Army projects and retail homebuilders who want quality says Mr. Alihussain.
2011
Achievements:
Increased capacity
Challenges Faced:
Confusion regarding government projects Slowing real estate demand
2012
Optimisms:
End of confusion regarding government projects
Slowdown of economic growth High inflation High interest rate Slow real estate sector Higher energy price
At the moment there is a set back and probably this is temporary. Government should try to overcome the situation.
Our economy has been growing at a healthy rate of around 6% in recent years. Construction sector grew at CAGR of 12.2% in last 10 years. This year also the economic growth was projected to be 7%. But due to high inflation, slowdown of remittance, pressure on BOP, tight monetary policy the overall situation seems to be a bit gloomy. At the moment there is a set back and probably this is temporary. Government should try to overcome the situation. And every business has its cycle; every country has its cycle. We had a honeymoon period for so many years. This is the time we should tighten our belt and face the situation.
Another problem is overcapacity. Many big manufacturers went for expansion and some big players came new to the business. Abul khair Steel is one of the big newcomers, which has come up with largest capacity in the industry with a capacity of 800000 tons. BSRM Steel is also continuously increasing capacity. Their current capacity is 600000 tons and billet capacity is 150000 tons. Being the market leader in steel sector BSRM Group understands the need to reduce uncertainty of raw material supply. BSRM Group is currently considering setting up a 1.2 million tons melting factory. After this plant is established margin will see improvement. After this plant is set up the whole demand of billet by BSRM Group will be met from this plant. This will reduce uncertainty regarding raw material price fluctuation.
38
Bangladesh Industry
What the Leader Says STEEL

Steel is already a low margin industry. Products are undifferentiated; supplier power is also high due to not having own raw material. Buyers are price sensitive. So it is not possible to charge much higher price compared to competitors. Steel companies in India enjoy better margin as they are fully integrated. Most of the companies of Bangladesh import billet from India, Korea or China. We do not have iron ore in our country. So already tight margin, if added with excess capacity may threaten margin further in future. Our demand is around 4 to 4.5 million ton while the installed capacity is more than 5 million ton. But it is not being utilized. Now the demand is low because many government projects are uncertain. And again the capacity installed is not all high grade material. We produce high grade material and our market share in high grade material is 20% to 25%. Indian companies will always enjoy higher margin as they have iron ore. Our raw material cost is higher says Mr. Alihussain. Expansion plans are hindered by infrastructural bottleneck, especially the gas crisis. Definitely gas supply shortage is a very big problem. Karnaphuli Gas had committed us gas for BISCO plant three years ago and we duly paid all demanded fee, but till today they have not given us gas. We have to use LDO which is expensive. Every month we are losing 1 million taka. Power shortage is also a very big concern. We are sometimes out of power even in peak hours. On the other hand government is increasing price of electricity, which will increase our cost. said Mr. Alihussain. Despite all the current problem steel industry is there to stay and is there to grow. The per capita steel consumption in Bangladesh is 3.5 Kg while even in India it is 22 Kg. So you can see there is huge growth potential. In a densely populated country like Bangladesh vertical growth is a must. So real estate will bring the main growth. said Mr. Alihussain with confidence and optimism in his voice.
39
Bangladesh Industry

energy
Dr. Mohammad Tamim

- Head of the Department of Petroleum and Mineral Resources Engineering, BUET.
-He is precise, he is specific; he is buoyant, he is cynical; all his words count and make us think differently for the better.
2011
Achievements:
Resolving short term power shortage by Rental Power Plants (RPPs)
Tamim preferred to start from a few years back, We have to look through the past. Our problem basically lies on our primary energy problem which first surfaced in 2007 but was exposed to the public in 2008 that we were in shortage of gas which was our main, in fact, only primary energy available in Bangladesh. There is little coal production in Boropukuria but that is very insignificant compared to gas as contribution to our primary resource. Since 1998, no big power plants, let alone gas-based big power plants, were built- the latest one being AES Haripur and AES Meghnaghat with capacity of 360 MW and 450 MW which produced affordable power with production cost being less than 2 Taka per unit. So, clearly, we have problems with our power production capacity. The Professor says we falter in building our capacity.Enhanced use of gas in various sectors other than power made gas unavailable. When we had the capacity to build gas-based power plants, gas was available; but now, due to all those CNG requirements as well as industry and domestic growth, gas has become scarce to be a capacity base, he added. BNP, in their last tenure allowed industries to go for captive power plants which was a stop gap solution, otherwise there would not have been any industrial growth in our economy. As gas crisis became acute, rental power plants were introduced. Why did we go for rental, a much costly process?--- The idea was to buy some time at high price. In 2011, lots of rental power plants started operating. Yes, you can argue that this has jeopardized our balance of payment; it has jeopardized our currency situation, contributed in devaluating taka, etc. but there is another side. If this was not done, and if we had 3000 MW or 4000 MW of power deficiency, what would have been the economic condition, what would have been the political situation of the government he continued.
Challenges:
Many plans remained not entertained Improper assessment of economic and financial implications
2012
Achievements:
If coal development could be started, itd benefit all Major gas exploration required
Challenges:
Making stakeholders realize the benefits of fuel price hike Ensuring energy security for all
So just to say that this was a stupid decision and shouldnt have been done- would be a wrong perception. I believe, in that sense, providing electricity to the people, even at a high price, was the right decision and it was absolutely required. If that was not done, the country would have headed towards even a bigger disasterfrom both political and economic perspective. So, rental power plants are one of the achievements of 2011 by providing power to the people, at least reducing the gap, or maintaining the gap at whatever level it was. We wont be facing any severe power problem in next summer as more rental power projects are expected to start functioning, he sanguinely added. Now, the main points of making decision are two- to what extent we want to solve our short term power problem with the RPPs, and what is the percentage of oil-based power we want to produce. We are now producing about 200O MW, 38% of total power we are producing on and off, some picking is there and that is costing us USD 2.5 billion worth additional oil import, he groaned. We are also exposing ourselves to oil price fluctuation on which we dont have any control. So if the oil price now goes up to 120 dollars, we will fall in a big problem to utilize the facilities installed, he was sarcastic. Tamim finds location to be another problem, Many of our RPPs are not located properly in terms of installing the facilities to where supply input, which means oil input, is least costly and from where distribution is easiest. In papers there are many plans but none is working, added the professor with disagreement. We simply cannot afford oil based rental, small capacity, rather inefficient power plants for long. The original idea was to buy time and in the mean time to keep in projects that will produce mid-term and long term affordable power. So if you talk about 2011 as well as 2009 and 2010, my position on rental is very clear. My criticism for the government is that no major or visible effort has been taken to provide affordable base-load type 150-500 MW capacity power plants, he continued.
In papers there are many plans but none is working,
40
Bangladesh Industry
What the Leader Says ENERGY

600 MW of electricity could not be generated due to the non-availability of gas. So, alternate fuel for base load power is the only solution since we do not have sufficient gas reserves. Coal can be the next primary fuel since we have not yet exploited our existing proven reserves of coal. The government thought about another alternative LNG. I am not in favor of dependency on this highly expensive imported fuel. As part of the initiatives, government has signed contracts to generate two 1320 MW coal based power plants. Recently they also signed an MOU with a company for three coal based power plants of 1000Mw total generation. These are right steps but we only see plans, which ultimately remain unimplemented, he went on with resentment. The professor thinks of the issue of fuel subsidy to be a bit tricky, When fuel consumption was 3.7 million ton, then 1.7 million ton were consumed by the government. The amount sold to public through pumps was 2 million. Now the total has increased to 6.5 million tons. I would say about 4 million ton is used by government. Public demand is only in the transport and agriculture sector and the demand is quite at a stagnant level. So, the ultimate thing is that public is getting subsidy for only 2 million ton of oil. If government says that we are giving 4000 crore taka worth subsidy then public is actually getting 1000 crore taka worth support. Now we should see where the government is using the subsidized oil, he was blunt. If subsidy is given in true sense, then it is going to the power sector. As we see BPC is buying oil at say 70 taka and selling to PDB for 55 taka. Now whether PDB buys at 55 taka, or 20 taka or zero taka, its governments money. That means by this way or that, government is getting the subsidy. So, roughly we can say, public is getting subsidy on only 2 million ton of oil and the rest are basically going to the power sector he added. Tamim said, The average cost of electricity production is 5 taka per unit and government is selling at 3.8-3.9 taka at a loss of roughly 1.1 taka. Last year, government gave subsidy of 5000 crore taka and next year it is going to increase more, might be 6000 crore to 7000 crore taka. So if the government says that they are giving subsidy in energy and meanwhile do the same calculation for oil- it will do nothing but just give a myopic judgment. So the main point is government is not giving subsidy in both sides in true sense. To my view, all energy prices should be at market price; said Tamim, but that doesnt mean government should produce electricity at 20 taka per unit, which is not affordable. Accessibility, Affordability, and Availability- these 3 As are necessary to ensure energy security. Our government is increasing availability; accessibility is also increasing to some extent- at higher rates in cities, and lower in villages but at the cost of affordability he puts forth his belief that we are not getting energy security. At this instance, I would like to state my own tale, he began. When I look back, I now regret reducing diesel prices from 55 taka per litre in 2008. It was indeed a wrong move. As long as any price is subsidized, once increased, it should never be decreased anymore. If you are making money, then yes, you can decrease the price. Another reason why I dont think it should be decreased is because public dont get any benefit of the reduction. I was aware that it was not going to benefit when I saw prices were cut short to 48 taka, then 46 taka, and then 44 taka. But it was more a political decision. Awami League came with a popular big mandate. Why did they reduce the price of fuel as economy was already adjusted? I was also part of the same mistake and if I had realized then, I would have resisted. Now what happened is that when prices increased later, prices of other related things increased disproportionately which should have been proportionate in general. Adjusting the disproportionate prices is going to be another challenge, as for example, if all bus owners strike today, from tomorrow, government will be stuck up, said the thinker. To my view, rational talks, some political influence, some incentives - all these have to be employed in a much planned manner so that the effect is not disproportionate. I would say rental power plants were the only achievement and without them, our 2011 summer would have been horrendous. But we wont be able to afford it for long if we generate power from resources other than our indigenous ones, said Tamim. He thinks for future, immediately coal should be developed, As a coronary to my comment, not developing coal in 2011 was a major set back. I believe there is a political reason and the government is not politically motivated to do this. There is never a scope of extracting natural resources without harming the nature. Whether it is within reasonable and acceptable limit- that is what we have to monitor. There are guidelines, mark ups of acceptability- if we comply with all those, then whats wrong with that! A proper institute to verify and regulate our compliance must be established, Tamim hoped. 2012 summer will be difficult but not as bad as 2010. 2010 was one of the worst. We will have to move from oil dependency to resolve our long term energy and economic trouble, blew the Professor. We should thoroughly examine the position of oil based energy consumption in Bangladesh. To my view energy mix for electricity should be 10-15 % oil based, 30% gas based, 50% coal based, and 5% from other resources. In terms of long term planning that is where we should head towards.
Coal can be the next primary fuel since we have not yet explored our existing proven reserves of coal.
So if the government says that they are giving subsidy in energy and meanwhile do the same calculation for oil- it will do nothing but just give a myopic judgment.
Accessibility, Affordability, and Availability- these 3 As are necessary to ensure energy security.
To my view, rational talks, some political influence, some incentives all these have to be employed in a much planned manner so that the effect is not disproportionate.
2012 summer will be difficult but not as bad as 2010.
41
Bangladesh Industry
What the Leader Says ENERGY

Tamim doesnt like to comment on mining, I am not a mining engineer and generally dont comment on it. But if I look at the examples around the world, then any coal, anywhere discovered, the first attempt taken is to go for open pit mining. Because you maximize your resource extraction by open pit mining without looking into anything else. Then you see is there any barrier to do that. What is the depth, whether there are aquifers or not, what is the distance- there are many other factors- dislocation of people, all these things together if you think then if you find that it is impossible to do open pit, then you go for deep shaft or underground mining. Now if you find that it is not suitable for underground mining then you eliminate all the possibilities and you say we cannot do underground mining. I believe this is what we should do. If you cant do underground mining, then the third option is to go for coal-bed methane but the energy recovery is less than 10%. If it doesnt work then we go for underground coal gasification which is still in an experimental stage. That we do when a coal mine is 5000 ft below. But it is very expensive and in fact could be environmentally disastrous as well. I see some of the experts are talking about underground coal gasification and coal bed methane method because they want to avoid both the first two options. All mines other than the one in Jamalganj are above 700 meter depth and open pit mining could be done. There is an aquifer above the coal seams but it is an engineering challenge that has been dealt with in other places in the world. Environmental issues should be handled in an internationally acceptable level, puffed the Professor. The main problem in coal sector is the random opinion of non experts pretending to be experts. When a sociologist or an economist starts talking about mining methodology, it shows the poor state of our countrys expert pool. If government is truly concerned, they must leave it to a third party expert as we do not have mining expert in this country. They should see if any proposal is viable or not, how the contract should be made, does everything comply with the environmental requirements or not. We could find a consultant not necessarily from World Bank or ADB only. I believe Bangladesh can afford to pay few million dollars for a consultant easily, said Tamim. Tamim feels Asia Energy contract could be renegotiated or put on a Swiss challenge to match an alternate best offer. Royalty is not the only way of generating revenue. There are many aspects from where government can generate revenues in a project. We have about 30% coking coal and it would be a waste if we produce electricity from it. Coking coal has a much higher international price that could bring valuable foreign currency for the country said Tamim with revelation. All is needed is the right intention and negotiation with good faith be it in a joint venture or license agreement, he added.
Environmental issues should be handled in an internationally acceptable.
All is needed is the right intention and negotiation with good faith be it in a joint venture or license agreement.
Our economic focus should be a low energy intensive growth path using our human resources, concluded the visionary.
42

Observation highlighting 2011 & 2012
Bearish 2011: Dampening domestic infrastructures demand, high operating leverage due to excess capacity, clinker and crude oil price hike and currency devaluation affected the earnings growth of cement companies. Cyclical cement Industry will feel more pressure of Economic slowdown in 2012.
Cement companies passed a depressing year in 2011. In expectation of higher infrastructure demand in 2011, cement companies showed herd instinct; investing heavily in capacity additions to meet the expected demand from some mega projects and booming real estate. Cement industry faced higher prices for raw materials due to higher freight cost caused by the fuel price hike in the international market in last one year. Apart from rising fright and energy price , international price hike of main raw materials like clinker, gypsum all of this significantly affected the operating environment of cement manufacturers with the high cost adversely affecting the construction sector. In addition, many companies have already expanded capacity anticipating high cement demand in 2011 and are suffering from capacity overhang and operating leverage for slow local demand in real estate sectors. Stock market bearishness, high inflationary pressure, declining remittance flow and no gas and electricity connection for new apartments have highly affected the demand of real estate in urban and rural real areas. Subsequently negative effects have been observed in local cement demand. Cement consumption in government sectors has grown less than expected pace for the dillydally in ADP implementation and some project uncertainty The effects of high key input costs, slow demand and currency depreciation have been observed in the 9 months bottom line growth of listed cement companies in 2011. Earnings plunged for most of the cement companies in as of (July-Sep) 2011. Earning of the Aramit, Confidence, Meghna, and Heidelberg cement declined 44.46 percent, 57, 46 percent, 112.85 percent and 52.85 percent respectively. Industry earning growth excluding MI and Lafarze followed the same trend and it was 15.12 percent lower than that of same period of previous year. MI cement registered envious 118.74 percent earning growth. However, the main driver of this earning growth was not the core business rather it came from other nonoperating income component which was transitory in nature. Other non-operating income of the MI cement spiked to BDT 98.202 mn in first quarter 2011, which was only BDT 2 mn in the same period of previous year. Most of the non-operating income came from the interest income as the cash and bank balance of MI Cement Company increased substantially for recent IPO proceeds. Comparing one-year dividend adjusted price, we found stock of Meghna Cement mostly underperformed the benchmark index DGEN plunging 65 percent followed by 55 percent price loss of the confidence cement whereas DGEN lost 36.58 percent in the same time horizon. MI Cement Company gained 11 percent beating the benchmark. Expected sales growth of cement sector largely depends on the macroeconomic performance and systematic risk like political instability, mounting inflationary regime and subsequently tight monetary policy and natural adversity that may jeopardize construction sector reducing the growth of overall demand. Finally negative wealth effect due to recent nosedive in the stock market may not keep the real estate investors in comfortable situation in 2012. In the slowdown phase of economy and business cycle, cyclical shares of core cement companies are not expected to yield large upside to equity investors.
CEMENT
SECTOR HIGHLIGHTS
Cement Sector Price (Market Cap. Adjusted) Performance Graph
100000 90000 80000 70000 60000 50000 40000 30000 20000 10000 0
10/2/2011
11/2/2011
129.15 MICEMENT
Daily Average Turnover (BDT mn)

140.00 120.00 100.00 80.00 60.00 40.00 20.00 0.00
62.80
59.28
6.68
14.49
LAFSURCEML
HEIDELBCEM
CONFIDCEM
23.67
ARAMITCEM
Price Performance 2011

-36.6% 11% MICEMENT CONFIDCEM (41.55%) -65% MEGHNACEMENT DGEN LAFSURCEML (-24.9%) Top Revenue Gainer & Loser
Performance Leader Revenue

Company HEIDELBCEM MEGHNACEM LAFSURCEML MICEMENT CONFIDCEM ARAMITCEM 2010 (BDT mn) 8321.77 5715.17 5655.37 4022.27 1718.92 917.63 Growth (%) 15.46 21.47 (24.90) 28.62 41.55 8.74 Company HEIDELBCEM MEGHNACEM LAFSURCEML CONFIDCEM MICEMENT* ARAMITCEM 9 M 11 (mn) 6386.44 4541.19 3584.85 1676.96 1009.65 724.46 Growth (%) (0.41) 2.44 (21.26) 30.52 7.3 (0.81) *1st Q
Adjusted Trailing P/E Company

HEIDELBCEM CONFIDCEM MICEMENT ARAMITCEM MEGHNACEM
MEGHNACEM
Trailing PE
14.28 18.57 18.85 23.26 38.28
Net Profit
Company HEIDELBCEM MICEMENT CONFIDCEM ARAMITCEM MEGHNACEM LAFSURCEML 2010 998.73 435.94 240.99 79.36 50.15 (1638.45) Growth (%) 17.38 31.26 68.05 30.76 (63.31) (189.89) Company HEIDELBCEM CONFIDCEM MEGHNACEM ARAMITCEM LAFSURCEML MICEMENT* 09 M 11 (mn) 589.86 158.94 99.94 40.07 (1354.80) 200.6 Growth (%) (29.23) (9.29) (17.72) (19.39) nm 118.7 *1st Q
Disclaimer: The analysis made here is the own view of the analyst. Analysis is only based on the company financial statement and disclosure without any management discussion and meeting.
ashaduzaman@lbsbd.com
DGEN
6642.2
12/2/2011
1/2/2011
2/2/2011
3/2/2011
4/2/2011
5/2/2011
6/2/2011
7/2/2011
8/2/2011
9/2/2011
43
TANNERY
Observation highlighting 2011 & 2012
Footwear industry in Bangladesh has experienced 18-20 percent growth mostly dominated by fragmented small shoe markers that accounts for 65 percent of total local market share. From remaining 35 percent, Bata holds 25 percent domestic footwear market followed by Apex Adelchi and other organized manufacturers 6 percent and 4 percent respectively. The overall market size of footwear in the country is around Tk 20000 mn per year where Batas largest organized competitor operating at the upper end of the market is Apex Adelchi, a listed local manufacturer with 130 retails outlets producing high quality footwear exported to Italy with around 20 percent of its output sold locally. While Apex tannery is almost exclusively in leather, Apex Adelchi and a few other local and Indian brands also compete in the same space for share in both branded footwear as well as basic functional footwear market. The demographics of the country present obvious potential for sustained long term growth for footwear manufacturers. Long term prospect of footwear and leather is bright for having the reputation of quality product of Bangladeshi Manufacturers, reduced export by India and china for WTOs antidumping rule, and expectation of economic recovery of European country . Bata has a very small market share in total export basket , which is mainly dominated by Apex-Adelchi Footwear Ltd, Jennys, Landmark, Leatherex, Bay Footwear and Picard Bangladesh. Footwear and leather export from Bangladesh was $297.80 mn and $297.83 mn or 46 percent and 32 percent higher in the fiscal year 2010-11. In the first half of the fiscal year 2011-12, local footwear demand has slightly dampened due to high inflation and bearish stock market effect. Export growth of leather and footwear has already started bearing the brunt of nervous macro economic situation of European countries where more than 60 percent of footwear and leather are exported. Also basic raw materials like imported chemicals from the volatile international market at higher prices are creating constant pressure whereas India manufactures these chemicals domestically. Though our tannery industry enjoys cheap labor compared to Europe, the sector is suffering from dearth of skilled labor force. The only advantage that Bangladesh has is the availability of quality leather. On an average, the current capacity utilization of tannery sector is about 50-55 percent due to lack of smooth supply of raw materials and infrastructure facilities. The leather industry in Bangladesh has already missed substantial size of relocated Chinese footwear and footwear related companies as Bangladesh failed to provide required facilities to allure those companies. All stocks of tannery and footwear sector companies listed in the DSE generated negative return in 2011. Stock of Apex tannery , Apex Adelchi Footwear, Bata shoe company , Samata leather and Legacy footwear lost 33 percent, 28 percent, 11 percent, 28 percent and 23 percent respectively and mostly underperformed the Benchmark index whereas DGEN lost 36.58 percent in the same time horizon. Though tanners have been able to collect leather at a competitive price for not having any price flooring of raw hide in the recently held biggest festivity, export of leather and leather goods will face the pressure of dissipating European consumers spending and sliding confidence resulting from sovereign debt crisis in the major European economies. Local footwear demand growth may also see a slower pace amid declining local consumer spending for high inflation and under performance of equity and other asset classes.
20000 15000 10000 5000 0
SECTOR HIGHLIGHTS
Tannery Sector Price (Market Cap. Adjusted) Performance Graph
1/2/2011
2/2/2011
3/2/2011
4/2/2011
5/2/2011
6/2/2011
7/2/2011
8/2/2011
9/2/2011
10/2/2011
11/2/2011
45.96% -50.83%
Daily Average Turnover (BDT mn) 20

15.34 6642.2 13.31 7.46 2.27
15 10 5 0
0.32
Price Performance 2011

Apex Tannery Bata Shoe -11% -33% -36.6% Top Revenue Gainer & Loser
APEXTANRY SAMATALETH DGEN
Performance Leader Revenue

Company APEXADELFT BATASHOE APEXTANRY LEGACYFOOT SAMATALETH 2010 (BDT mn) 6961.12 5663.09 2515.87 89.70 20.50 Growth (%) 19.32 10.15 45.96 14.11 (50.83) Company APEXADELFT BATASHOE APEXTANRY LEGACYFOOT SAMATALETH 9 M 11 (BDT mn) 7181.00 4856.34 1793.67 89.65 19.90 Growth (%) 33.69 14.92 55.92 45.02 64.93
Adjusted Trailing P/E

Company APEXADELFT BATASHOE APEXTANRY LEGACYFOOT SAMATALETH P/E 13.06 13.67 16.5 40.98 n/m
Net Profit
Company BATASHOE APEXADELFT APEXTANRY LEGACYFOOT SAMATALETH 2010 542.57 228.2 142.9 8.24 -2.6 Growth (%) 21.04 7.89 (32.21) 56.36 (18.18) Company BATASHOE APEXADELFT APEXTANRY LEGACYFOOT SAMATALETH 09 M 11 (mn) 432.04 188.00 72.27 3.61 (0.27) Growth (%) 5.29 17.43 Disclaimer: The analysis made here is the own view of the analyst. Analysis is only based on the company financial statement and disclosure (24.55) without any management discussion and meeting. 58.33 (90.29)
ashaduzaman@lbsbd.com
44
DG
EN
12/2/2011
PHARMACEUTICAL - CHEMICAL
SECTOR HIGHLIGHTS
Observation Highlighting 2011 and 2012

Despite the economic stiffness, pharmaceutical industry has shown strong resilience by passing another growing year after 2010. During this period, industry turnover grew by 24.63% relying on the growing local demand (According to IMS, 3rd quarterly Report) and total pharmaceutical sales stood at BDT 8048 Crore. Conversely, the industry export growth remained stagnant. Among the major companies, square pharma recorded 17% growth in last 12 months (From Oct 2010 to Sep 2011), followed by Beximco pharma (21 percent), Renata (25 percent) and glaxosimth kline (32 percent) respectively. Besides, the newly listed, Active Fine, recorded 162% growth in turnover as sole local API producer in Bangladesh. However, the yields of growth didnt reflected to the profitability of the pharmaceutical companies. Dollar appreciation with consequent increase of raw material cost and increasing operating cost due to greater expansion in 2010 have contributed largely to the meager profit growth. Pharmaceutical Industry exported approximately $44.27 million products to 95 countries in 2010-2011, as against 73 countries in 2009-10. As a generic drug producer, they export most of their products in unregulated market. However, for the very first time Bangladesh pharmaceutical industry has surmounted another milestone by exporting their products in highly regulated market like U.S.A. However, costly product registration in regulated market and required manufacturing certification impeded the industry expected export growth over the years. Though in last couple of years industry invested significant amount of money in this regard. Therefore, it is anticipated that industry export revenue will get the real boost very soon after completing the product registration and required certification in regulated market. However, the raw materials dependency on other countries has equalized the TRIPS benefits largely. Pharmaceutical companies either purchased APIs on the domestic or global market or manufacture them in-house. Bangladeshi pharmaceutical companies dont have significant domestic API production capacity, so firms purchase most APIs on the global market. About 80% APIs are imported in Bangladesh. Despite the utmost requirement, pharmaceutical industry couldnt manage efficient backward integration due to lack of production facilities and scientific know-how. Moreover, dollar appreciation against BDT has made this dependency more costly in 2011. Eventually, it cut the gross profit margin of pharmaceutical companies with soaring raw materials cost. Considering the future export and contract manufacturing opportunities, this is the rudimentary issue for the pharmaceutical industry to invest in infrastructures. To comply with the regulated market certification, like USFDA and UKMHRA, pharmaceutical companies need to concentrate on infrastructure development. During last couple of years, a good number of investments have taken place in the pharmaceutical sector in the form of facility expansion/upgrading and new entrants. It is estimated that a total investment of BDT 2500 to 3000 crore has been made in this sector in last three to four years. Globally contract manufacturing emerges as a growing arena for the countries like India, China and Brazil. Several developed countries began searching ways to minimize expenditure on drugs. Therefore, Bangladesh has extreme opportunity in contract manufacturing as the labor, transport and energy costs are lower than the other developed countries.
220000 210000 200000 190000 180000 170000 160000 150000 140000 130000 120000
Pharmaceutical Sector Price (Market Cap. Adjusted) Performance Graph
1/23/2011
2/13/2011
3/27/2011
4/17/2011
5/29/2011
6/19/2011
7/10/2011
7/31/2011
8/21/2011
9/11/2011
10/2/2011
12/4/2011
Source: LBSL Research
Pharmaceutical Sector Turnover (BDT Mn) Performance Graph

1600 1400 1200 1000 800 600 400 200 0
1/23/2011 2/13/2011 3/27/2011 4/17/2011 5/29/2011 6/19/2011 7/10/2011 7/31/2011 8/21/2011 9/11/2011 10/2/2011 12/4/2011 1/2/2011 3/6/2011 5/8/2011 10/23/2011 11/13/2011 12/25/2011
TOP GROWING COMPANY (ACCORDING TO 3RD QUARTERLY REPORT,2011)

Scrips ACTIVEFINE ACIFORMULA BEACONPHAR GLAXOSMITH RENATA Revenue Growth (In %) 161% 38% 38% 32% 25% Scrips ACIFORMULA ACTIVEFINE RENATA BXPHARMA IBNSINA Profit Growth (%) 309.5% 238.5% 16.0% 15.2% 2.8%
Source: LBSL Research & Company Financials
TOP GROWING COMPANY (ACCORDING TO HALF YEARLY REPORT, 2011)

Scripts SQURPHARMA MARICO Revenue Growth (In %) 17% 7% Scrips SQURPHARMA MARICO Profit Growth (%) 4% 4%
1/2/2011
3/6/2011
5/8/2011
10/23/2011
11/13/2011
12/25/2011
45
PHARMACEUTICAL - CHEMICAL
SECTOR HIGHLIGHTS
Top performers
Turnover Leaders (2011)
Scrips SQURPHARMA BXPHARMA KEYACOSMET BXSYNTH ACTIVEFINE ORIONINFU SALVOCHEM BEACONPHAR ACIFORMULA MARICO Total Turnover (BDT In Mn) Average Turnover (BDT In Mn) 19858.9 16905.8 15367.3 8789.2 6749.1 5255.8 4783.2 4727.1 2580.9 2069.8 87.1 73.5 67.1 38.5 29.3 24.6 30.1 20.6 11.2 9.0 Scrips IMAMBUTTON BEACONPHAR SALVOCHEM PHARMAID ACI GLAXOSMITH RECKITTBEN ACTIVEFINE ACIFORMULA
PRICE PERFORMANCE DURING 2011 (%)

1 Year -70.3% -51.9% -48.0% -47.5% -44.6% -41.5% -39.9% -39.6% -36.5% Script KEYACOSMET KOHINOOR LIBRAINFU MARICO BXPHARMA AMBEEPHA BXSYNTH SQURPHARMA RENATA 1 Year -33.1% -25.5% -23.5% -23.4% -20.8% -17.7% -15.9% -10.3% -6.2%
Scrips
MARICO SQURPHARMA BXPHARMA GLAXOSMITH ACTIVEFINE RENATA KOHINOOR ORIONINFU BXSYNTH
Forward P/E (x)

15.50 15.83 18.75 23.43 24.01 24.77 28.03 29.18 29.43
Scrips
ACI RECKITTBEN ACIFORMULA IBNSINA KEYACOSMET PHARMAID SALVOCHEM LIBRAINFU BEACONPHAR
Forward P/E (x)

29.80 30.81 30.86 36.92 37.44 40.82 41.12 53.29 78.47
Md. Mahfuzur Rahman
Research Analyst Bank |Pharmaceuticals | Mutual Fund mrahman@lbsbd.com
46
BANK
SECTOR HIGHLIGHTS

z Strong economic growth, tremendous remittance inflow, growing export and import, rising investment in manufacturing sector, growing presence in capital market operation, higher liquidity, favorable demographics and greater access to the banking were the main driving forces of banks growth over the last five years. However, some economic phenomenons are getting stiff and may arise as bigger obstacles for sound growth of the industry in forthcoming years. z Increasing budget deficit and growing government subsidy enhanced the government borrowing from local banking channel through the issuance of Treasury bond and Treasury bill. Besides, government failed to pick up the targeted foreign aids. Consequently, economy falls in crowding out effect, which created obstacles in private credit spending as the interest rate is soaring and getting costlier for the private sector. z During the last ten months, inter-bank call money rate was on an average 10.46% much higher compared to the average of 8.05% in 2009 and 4.39% in 2008. For some times monthly average call money rate hit the high of 20%. z Bangladesh private banking industry grew at a 4 years CAGR of 35.3%. At the end of 2010, industry-operating revenue stood at BDT 194236 Mn in 2010, while in 2007 it was only BDT 80798 Mn. In 2010, industry exhibited 47% growth in operating income as against 25% growth in 2009. z Private commercial banking industry is highly fragmented. However, the top fifteen banks control 69.58% market share in 2010. Islami bank retained their top position by attaining 8.09% market share among the PCBS, followed by National Bank 6.74%, AB BANK 6.18%, PRIME BANK 5.56% and BRAC BANK 5.35% respectively. z According to the data of 2010, PCBs generated 26% of their operating income from investment income. Over the last 4 years, investment income growth dwarfed the growth of total operating income. Investment income had two sources- Investment income from government bills and bonds, investment income from proprietary investment income in capital market z In last year, industry deposits grew by 20.77%, while private commercial banks posted 23% growth during the similar period. Deposits growth of small PCBs was relatively higher due to higher deposits rate offering. Among the Private commercial banks, Bank Asia posted highest growth (52%) in deposits, followed by premier bank 46%, UCBL 45%, Jamuna Bank 43% and SIBL 40% respectively. The top 15 list demonstrates that how desperate the small banks were in deposits collection. z In 2010, in economy credit grew by 23.09%, while private commercial banks loans grew by 32% in 2010. Apparently, PCBs disbursed more credit than the State owned and foreign commercial banks. This growth mainly facilitated by economic growth and unhealthy exposure in capital market operation through margin loan. z By the end of 2010, government started to borrow heavily from the banking sector as they were running larger budget deficit and foreign aid has virtually stopped. As a result, interest rate in the money market has increased substantially. PD banks are buying low yield government bonds and these bonds are piling up in their balance sheet as the other financial institutions are unwilling to buy these low yield bonds. z Non-performing loan ratio of PCBs has declined substantially since 2006. Nonperforming loan ratio (NPL) of PCBs was 5% in 2006. It has come down to 3% of the total loans and advances in 2010. In2011 this ratio is likely to remain stable or increase slightly.
1100000 1000000 900000 800000 700000 600000 500000 400000
Bank Sector Price (Market Cap. Adjusted) Performance Graph
10/2/2011
11/2/2011
12/2/2011
Bank Sector Turnover (BDT Mn) Performance Graph

24000 22000 20000 18000 16000 14000 12000 10000
1/23/2011 2/13/2011 3/27/2011 4/17/2011 5/29/2011 6/19/2011 1/2/2011 7/10/2011 7/31/2011 3/6/2011 8/21/2011 9/11/2011 5/8/2011 10/2/2011 12/4/2011 10/23/2011 11/13/2011 12/25/2011
Top performers
Top Bank in terms of profit growth (Accordingly 3rd Quarterly Statement, 2011)
Net Income (BDT In Mn) 2011 SIBL JAMUNABANK MERCANBANK ALARABANK DHAKABANK RUPALIBANK NBL ISLAMIBANK SOUTHEASTB SIBL Source: LBSL Research 713 1101 1564 1698 1515 751 4496 4650 1393 713 2010 334 600 928 1054 995 522 3324 3528 1133 334 Growth 2011 113% 84% 68% 61% 52% 44% 35% 32% 23% 113%
1/2/2011
2/2/2011
3/2/2011
4/2/2011
5/2/2011
6/2/2011
7/2/2011
8/2/2011
9/2/2011
Outlook for 2012

z As the government borrowing is expected to rise further, banks will face challenging time containing liquidity crunch. z Overall export and import growth is slowing down. Commission, exchange and brokerage income growth will slow down. z Net interest spread will continue to feel the downward pressure due to high cost deposit collection. z Capital market nightmare scenario of 2011 is over and banks will not have to keep larger provision for capital market loss. Bottom line might improve as a result.
47
BANK
Turnover Details (BDT In Mn) 2011
Scrips NBL UCBL ONEBANKLTD SOUTHEASTB CITYBANK SIBL ABBANK PRIMEBANK ISLAMIBANK MERCANBANK UTTARABANK PUBALIBANK EXIMBANK SHAHJABANK PREMIERBAN Average Daily Turnover 161 152 110 94 88 86 82 68 64 63 61 59 54 53 47 Script STANDBANKL NCCBANK ALARABANK BRACBANK EBL JAMUNABANK IFIC MTBL FIRSTSBANK DHAKABANK DUTCHBANGL BANKASIA TRUSTBANK RUPALIBANK ICBIBANK Average Daily Turnover 44 42 42 40 38 36 31 26 26 26 26 25 24 6 5 Scrips UCBL ABBANK ICBIBANK SHAHJABANK SIBL UTTARABANK EXIMBANK NCCBANK SOUTHEASTB IFIC STANDBANKL MTBL PUBALIBANK DUTCHBANGL PREMIERBAN
SECTOR HIGHLIGHTS
PRICE PERFORMANCE DURING 2011 (%)

1 Year -52% -51% -49% -46% -43% -42% -41% -41% -40% -39% -38% -38% -38% -36% -36% Script PRIMEBANK ONEBANKLTD BRACBANK NBL TRUSTBANK CITYBANK FIRSTSBANK ALARABANK MERCANBANK JAMUNABANK DHAKABANK BANKASIA RUPALIBANK EBL ISLAMIBANK 1 Year -35% -35% -33% -33% -29% -29% -27% -26% -26% -23% -21% -18% -18% -17% -9%
Year End P/E (2011)

Scrips ABBANK ALARABANK BANKASIA BRACBANK CITYBANK DHAKABANK DUTCHBANGL EBL EXIMBANK FIRSTSBANK ICBIBANK IFIC ISLAMIBANK JAMUNABANK MERCANBANK Forward P/E 13.5 10.9 10.5 9.2 13.9 8.0 15.9 14.3 27.4 18.1 0 16.1 8.8 8.7 8.2 Script MTBL NBL NCCBANK ONEBANKLTD PREMIERBAN PRIMEBANK PUBALIBANK RUPALIBANK SHAHJABANK SIBL SOUTHEASTB STANDBANKL TRUSTBANK UCBL UTTARABANK Forward P/E 17.9 10.4 16.2 9.7 26.8 10.7 14.3 19.4 11.9 18.5 13.4 14.2 10.3 16.1 14.7 SIBL
Top Bank in terms of revenue growth (According to 3rd Quarterly Statement, 2011)
Operating Income (BDT In Mn) 2011 2876 4452 3986 3516 4589 1871 3697 14707 419 6417 2010 1706 2711 2629 2395 3305 1371 2739 11288 332 5135 Growth 2011 69% 64% 52% 47% 39% 36% 35% 30% 26% 25%
SOUTHEASTB ALARABANK JAMUNABANK MERCANBANK FIRSTSBANK RUPALIBANK ISLAMIBANK ICBIBANK DUTCHBANGL
Industry Growth (According to 3rd Quarterly Statement, 2011)
Net interest income

Income from investments Commission, exchange and brokerage Other operating income
Source: LBSL Research & Company Financials Disclaimer: The analysis made here is the own view of the analyst. Analysis is only based on the company financial statement and disclosure without any management discussion and meeting.
Percentage Change 12% 11% 24% 41%

16%
Md. Tareq Ibrahim
Total operating income Total operating expenses

Profit before provision against loans and advances Total provision Provision for tax
32% 8% 21% 6%
-2%
Research Analyst Banks | NBFIs tareqibrahim@lbsbd.com
Md. Mahfuzur Rahman
Research Analyst Bank |Pharmaceuticals | Mutual Fund mrahman@lbsbd.com
Net profit after tax for the year
48

z According to data from 2010 71% of the total operating income of the NBFIs came from investment income. z In 2011 overall investment income of the NBFIs declined substantially. According to data from 3rd quarter financial statements investment income declined by 69%. z Overall growth in net interest income was moderate (19% according to 3rd quarter statements). z Brokerage subsidiary of the NBFIs suffered significant decline in revenue. Commission, exchange and brokerage have declined by 32%. z Overall operating income declined by 23% whereas operating expense increased by 24%. z Up to September 2011 data NBFIs showed 39% decline in the bottom line. z Price performance of the NBFIs followed their financial performance. Sector wise market capitalization declined by 52% during the last 12 months.
SECTOR HIGHLIGHTS
450000 400000 350000 300000 250000 200000 150000 100000 50000 0 Industry Capitalization 2011
NBFI
Sector Turnover (In MN.)

3000 2500 2000 1500 1000 500 0
Outlook for 2012

z Overall interest income is expected to show positive trend in 2012. Although net interest spread is expected to decline. z NBFIs depend heavily on bank borrowing to finance the lending activities. Due to liquidity crisis many smaller finance companies will face extreme liquidity crunch. z Overall sector is expected to see slight positive or flat growth during the year of 2012.
NBFI 3rd Quarterly Statement
Industry Growth Net interest income Income from investments Commission, exchange and brokerage Other operating income Total operating income Total operating expenses Profit before provision against loans and advances Total provision Provision for tax Net profit after tax for the year 19% -69% -32% 24% -23% 24% -29% -15% -6% -39%
Best and worst performers

Operating Income Growth
Top 10 UTTARAFIN FASFIN ULC FLEASEINT ISLAMICFIN IPDC PREMIERLEA NHFIL PHOENIXFIN ICB 52% 19% 11% 8% 3% -1% -8% -12% -14% -17% BIFC DBH IDLC LANKABAFIN PRIMEFIN PLFSL UNIONCAP MIDASFIN BAYLEASING BDFINANCE Bottom 10 -21% -21% -28% -29% -31% -31% -35% -49% -56% -83%
49
SECTOR HIGHLIGHTS
Net Profit Growth (3rd Quarterly)
Top 10 FAS FIN ULC UTTARAFIN PHOENIXFIN NHFIL PREMIERLEA DBH FLEASEINT ICB LANKABAFIN 277% 42% 15% 5% -3% -4% -12% -19% -30% -38% UNIONCAP PRIMEFIN ISLAMICFIN BAYLEASING ILFSL IDLC MIDASFIN BIFC BDFINANCE IPDC Bottom 10 -44% -44% -48% -62% -62% -67% -71% -93% -109% -442% LANKABAFIN IDLC ICB PRIMEFIN PLFSL UTTARAFIN ILFSL ULC UNIONCAP PHOENIXFIN Top 10 1591.50 1553.43 1426.17 1166.45 826.44 797.08 667.62 493.09 476.66 381.69 BAYLEASING NHFIL IPDC BIFC PREMIERLEA FLEASEINT ISLAMICFIN FASFIN MIDASFIN BDFINANCE
NBFI
Revenue Leader (In MN.)

Bottom 10 221.83 220.99 209.25 207.69 195.01 186.93 175.68 151.77 55.26 50.44
Profit Leader (In MN.)

Top 10 ICB LANKABAFIN PRIMEFIN UTTARAFIN PLFSL IDLC PHOENIXFIN BAYLEASING UNIONCAP ULC 899.98 845.79 763.33 580.56 495.32 336.09 228.70 184.78 184.21 155.74 NHFIL FLEASEINT DBH PREMIERLEA FASFIN ISLAMICFIN IPDC MIDASFIN BIFC BDFINANCE Bottom 10 107.94 95.60 91.98 69.95 61.08 36.84 23.29 16.54 5.71 -15.81 BAYLEASING BDFINANCE BIFC DBH FASFIN FLEASEINT ICB IDLC ILFSL IPDC ISLAMICFIN LANKABAFIN MIDASFIN NHFIL PHOENIXFIN PLFSL PREMIERLEA PRIMEFIN ULC UNIONCAP UTTARAFIN NBFI Industry
Price Performance
1 Month 0% -3% -3% -11% 24% 0% -1% -5% -1% 2% -4% 10% 9% 5% 3% -2% -1% -5% -6% -3% -1% -1% 3Month -20% -27% -19% -29% 4% -24% -35% -29% -20% -19% -24% -11% -34% -15% -23% -23% -4% -20% -24% -22% -28% -26% 6 Month -38% -32% -24% -24% 10% -31% -41% -32% -25% -21% -25% -20% -43% -10% -27% -42% -8% -35% -34% -40% -37% -34% 12 Month -64% -69% -52% -29% -31% -39% -48% -52% -42% -50% -58% -48% -65% -14% -59% -59% -30% -62% -46% -57% -59% -52%
Turnover Leader (BDT In Mn)

Sector PLFSL BAYLEASING LANKABAFIN UNIONCAP PRIMEFIN ILFSL FLEASEINT IDLC PREMIERLEA PHOENIXFIN Source: LBSL Research & Company Financials Average Daily Turnover 140.84 86.85 83.03 61.37 44.56 37.29 37.19 34.03 33.65 30.53
Md. Tareq Ibrahim
50
CERAMICS
2012 will be a challenging year for ceramics sector. In case of tableware manufacturers the main obstacle will be the slowing export demand due to crisis in Europe. We have already seen ceramic export growth slowing down. We have seen ceramic export growth in July to November 2011 was only .33 percent while growth in last year for the same period was 13.24%. This growth may go into negative territory in 2012. 47% of Monno Ceramic revenue and 80% of Shinepukur Ceramics revenue comes from export sales. So if the European economic crisis intensifies top line will hamper seriously. For companies producing tiles, the slowdown of real estate sector will hurt the top line. According to estimate of SHELTECH apartment sales have gone down by 30-35 percent. Many are expecting that there will be a bubble burst in housing market. If that happens, demand of tiles will fall. In terms of price performance the whole ceramic sector performed very poorly in 2011. But still FU-WANG CERAMIC performed the best. It lost 18% price. In first 3 quarters of 2011 Fu-Wang Ceramic revenue saw a 49.61% growth. Net profit grew by 250.77%. This abnormal growth in net profit was due to profit from sale of land. If we exclude that then current forward P/E of 14.65 will become 21.88. So it is not as cheap as it seems. In terms of price performance Shinepukur Ceramics Limited was the worst. It gave a -58 percent return in 2011. Sales dropped by 2.49% but net profit fell by 35.66%. The main reason was high leverage. In this period financial expense rose 36.8 percent. For a highly levered company like SPCERAMICS which has total debt to equity ratio of 91.33 percent this is expected in years of low sales. Ceramics Sector Market Capitalization
60000 50000 40000 30000 20000 10000 0
SECTOR HIGHLIGHTS
1/2/2011
2/2/2011 3/2/2011
4/2/2011 5/2/2011
6/2/2011 7/2/2011
8/2/2011
9/2/2011 10/2/2011
14.65 40.44 29.17 23.62 76.35
Ceramics Sector Specific Stock Return

0% 10% 20% 30% 40% 50% 60% 70%
18% 26% 33% 49% 58%
Top performers
Revenue growth in first 3Quarters of 2011
Scrips FUWANGCER RAKCERAMIC SPCERAMICS Source: LBSL Research & Company Financials Revenue (BDT Mn) 505.67 3440.50 1458.36 Growth 49.61% 13.83% -2.49%
Net profit growth in first 3Quarters of 2011

Scrips FUWANGCER RAKCERAMIC SPCERAMICS Source: LBSL Research & Company Financials Absolute Basis (BDT Mn) 91.98 551.27 1458.36 Growth 250.77% 8.83% -35.66%
Turnover Leader in 2011

Scrips SPCERAMICS FUWANGCER RAKCERAMIC MONNOCERA STANCERAM Source: LBSL Research & Company Financials BDT million 13702 12424 10076 1190 437 Scrips FUWANGCER MONNOCERA RAKCERAMIC SPCERAMICS STANCERAM
Adjusted P/E
Trailing 12 month P/E 27.769 48.820 29.403 19.011 66.292 Forward P/E as reported in DSE
Maksudul Haque Chowdhury

Research Analyst Ceramic& Services maksudul.haque@lbsbd.com
11/2/2011 12/2/2011
51

The thrusting energy sector has become the burning issue in the outgoing year and it will continue to be in the scorching line since demand-supply gap is widening even after additional electricity generation. The outgoing year ended with reasonable but costly electricity generation in medium of rental and quick rental power plants, unbearable subsidy in fuel and electricity, petroleum price hike, retail tariff hike followed by significant bulk tariff hike, failure to augment natural gas supply substantially through on-shore and off-shore exploration and different policy adjustments in energy sector. GoB has raised the bulk tariff rate threefold in the outgoing year by 12.50 percent to BDT 2.61 per unit (Kwh) from February 2011, by 7.28 percent to BDT 2.80 per unit (Kwh) from August 2011, by 16.79 percent to BDT 3.27 per unit (Kwh) from December 2011. The bulk tariff rate will increase by 14.37 percent to BDT 3.74 per unit (Kwh) from February 2012. The retail tariff rate also adjusted upward by 5.00 percent to BDT 4.20 per unit (Kwh) from February 2011, by 12.14 percent to BDT 4.71 per unit (Kwh). The retail tariff rate will also experience a hike by 6.58 percent to BDT 5.02 per unit (Kwh) from February 2012. The additional electricity generation of FY 2011 was about 885 MW. Oil import reached to 54 tonnes amounting USD 3.00 billion in FY 2010-11 and it is expected that oil import will increase up to 70 tonnes amounting USD 6.50 billion in FY 2011-12. The petroleum sector was also in strain of high global price and demand pile subsidy pressure that imposed GoB to augment the petroleum price four times in 2011. The prices (per litre) of Petrol, 95-Octane Gasoline, Diesel, Kerosene and furnace Oil has been fixed at BDT 91, BDT 94, BDT 61, BDT 61 and BDT 60 respectively. CNG price also hiked by 48.65 percent to BDT 24.90 per cubic meter in the outgoing year. The energy sector consists of electricity generation companies, oil marketing companies and gas marketing company and other companies with diversified petroleum products. BEDL, Summit Power and KPCL had experienced tremendous earnings growth of 116.17 percent, 68.34 percent and 61.34 percent respecticvely as of 3rd quarter 2011 resulted from commissioning of new power plants and selling electricity with average plant load factor of 80 percent in summer and standard plant load factor throughout the year. The decision of GoB to generate more electricity through rental power projects helped boost the top line of those electricity generation companies. Jamuna Oil and Meghna Petroleum, oil marketing companies, had closed their books with gleaming results; posted earnings growth of 79.85 percent and 90.01 percent respectively. Both the oil marketing companies seems to have healthy outlook in forthcoming year since GoB has to continue with rental power plants. It is to be noted that no load based power plants had been commissioned by this time and coal based power plants will come into commercial operation not before than 2016. DESCO and Power Grid posted poor earnings; 17.35 percent and 42.45 percent negative earnings growth respectively. The bulk tariff hike (proportionately high to retail tariff hike) and foreign exchange loss due to Taka depreciation against dollar raised the COGS and hurt the gross profit and bottom line heavily. No upward adjustment of Wheeling Charge and embezzlement of BDT 63.75 crore made the outlook of Power Grid very grimy.
Energy Sector Price (Market Cap. Adjusted) Performance Graph

350000 330000 310000 290000 270000 250000 230000 210000 190000 170000 150000
SECTOR HIGHLIGHTS
ENERGY
Energy Sector Turnover (BDT Mn) Performance Graph

3000.00 2500.00 2000.00 1500.00 1000.00 500.00 0.00
Top performers
Scrips Titas Gas DESCO KPCL Power Grid MJLBD
Top 5 Revenue Leader as of 3rd Quarter 2011

Scrips Growth Basis (%) 85.44 49.07 32.59 26.38 22.30 Titas Gas KPCL DESCO Power Grid MJLBD Absolute Basis (BDT Mn) 48,555.05 8,900.03 8,882.47 4,516.94 4,390.64 Scrips MJLBD KPCL Jamuna Oil Summit Power LINDEBD Growth Basis (%) 51.57 46.20 37.14 27.64 17.43
Top 5 Revenue Leader in 2010

Absolute Basis (BDT Mn) 64,557.07 10,989.19 7,945.76 5,929.64 3,847.95 Scrips EASTRNLUB BEDL Mpetroleum Summit Power Jamuna Oil
Top 5 NPAT Leader as of 3rd Quarter 2011

Scrips Growth Basis (%) 63.86 60.82 48.10 34.56 34.47 Titas Gas Power Grid DESCO Summit Power Absolute Basis (BDT Mn) 5,139.53 1,068.53 1,058.86 845.18 Scrips BEDL MJLBD Jamuna Oil KPCL Summit Power Growth Basis (%) 116.17 92.18 72.71 68.34 61.34
Top 5 NPAT Leader in 2010

Scrips Titas Gas DESCO Power Grid Summit Power Jamuna Oil Absolute Basis (BDT Mn) 7,333.06 1,788.73 1,607.01 1,144.58 564.07 Scrips Summit Power BEDL MJLBD Jamuna Oil Titas Gas
LINDEBD 490.43 Source: LBSL Research & Company Financials
52
ENERGY
SECTOR HIGHLIGHTS
Top 5 Turnover Leader in DSE during 2011
Scrips Titas Gas MJLBD Summit Power DESCO Jamuna Oil Source: LBSL Research Average Turnover (BDT Mn) 153.2 96.19 74.11 57.44 56.96 Highest Turnover (BDT Mn) 813.51 509.51 574.36 336.87 672.86 Scrips BDWELDING BEDL LINDEBD DESCO EASTRNLUB Jamuna Oil KPCL MJLBD
Price Performance during 2011 (%)

1M 0.89 4.69 (5.28) (0.70) 15.00 (22.12) 0.48 (2.53) 9.09 (8.19) (3.98) (8.61) 3M (16.67) (27.12) (5.70) (8.46) (20.75) (30.03) (14.23) (28.53) 0.00 (15.39) (20.45) (14.47) 6M (23.79) (25.25) (8.44) (15.73) (41.73) (28.63) (10.59) (34.19) (9.39) (18.88) (9.12) (13.29) 12M (42.47) (26.48) (13.70) (30.09) (53.06) (35.78) (32.60) (23.67) (28.92) (31.03) (30.11)
Scrips
Titas Gas Jamuna Oil LINDEBD Mpetroleum Summit Power DESCO Source: LBSL Research
Adjusted P/E (x)

7.34 12.48 12.82 17.05 19.35 20.01
Scrips
Power Grid BEDL MJLBD KPCL EASTRNLUB BD Welding
Adjusted P/E (x)

23.51 24.09 25.24 26.04 57.53 116.93
MPetroleum Power Grid Summit Power Titas Gas
Note: BEDL and MJLBD started trading in DSE from 19 May, 2011 and 26 June 2011 Respectively. Thus the 12M price return is calculated based those trading date. Source: LBSL Research
Rajib Kumar Das

Research Analyst rkdas@lbsbd.com
53
INSURANCE
Insurance sector is a crucial component for economic development of Bangladesh Nonetheless, it only accounts for a small segment of the domestic financial landscape. The sectors potential is underscored by its low penetration rate (premium as a percentage of GDP); this segment only represented 0.90% of the countrys GDP. Bangladesh ranks 75th among the global insurance markets. It has a world market share of 0.02 percent. Per capita spending on insurance is USD 4.4 only. Currently, in addition to the two government corporations, 17 life insurance and 43 general insurance companies are operating in the country. With an increasing number of players, market competition has heightened, especially in the general segment. On the other hand, price-based competition is easing, with more emphasis on product innovation and service quality. Not surprisingly, overheads eat into the profitability of the general segment. Some industry players focused on increasing reach by opening branches, however, corresponding premium growth was not achieved. As a result overheads were further pushed up. Profitability is instead driven by investment income. Prospectively, companies will focus on redefining their business models to maintain performance in light of the increased competition and receding interest rates. Improving operational efficiencies will be a key factor, together with rationalizing of product portfolios to more appropriately reflect risks underwritten. General premiums were dominated by marine premiums and fire premiums followed by motor and miscellaneous premiums. The keen price competition in the general segment is supported by high investment returns. It will be challenging for the companies to maintain their margins due to bearish mood of capital market. Although investments are an integral part of insurance companies, investment management remains rudimentary. The outgoing year experienced implementation of some provisions of Insurance Act 2010 by Insurance Development & Regulatory Authority (IDRA). Some provisions were: z Prohibition of directors and dependents business with their respective insurance companies and providing details of all policies/cover notes and endorsements issued to their directors and their dependants. z Restriction on receipt of premiums in cash by non life insurance companies Going forward, macroeconomic fundamentals must improve before the industry can reach its full potential. The growth prospects afforded by such a change would also ease competitive pressures and facilitate risk-based premiums. Increased penetration, together with prudent underwriting standards, will enable the industry to amass diversity in its portfolio, thus augmenting its risk-absorption capacity. At the same time, the industry must place greater emphasis on risk management and balance sheet strength. However, the lack of qualified personnel is a major hindrance that could limit the industrys growth.
SECTOR HIGHLIGHTS
Insurance Sector Price (Market Cap. Adjusted) Performance Graph

140000 120000 100000 80000 60000 40000 20000 0
Insurance Sector Turnover (BDT Mn) Performance Graph

2500 2000 1500 1000 500 0
Top performers
Top 10 Net Premium Leader in FY 2010
Scrips Green Delta Insurance Reliance Insurance Pioneer Insurance Pragati Insurance Rupali Insurance Phoenix Insurance BGIC Eastland Insurance Nitol Insurance Peoples Insurance Absolute Basis Scrips (BDT Mn) 770.31 Paramount Insurance 618.07 Asia Pacific General Insurance 531.30 Nitol Insurance 474.69 Standard Insurance Limited 411.23 Islami Insurance 304.93 BGIC 273.58 Reliance Insurance 271.54 Northern General Insurance 267.35 Sonar Bangla Insurance Ltd. 229.34 City General Insurance Growth Basis (%) 119.04 79.85 61.19 51.17 50.76 44.38 43.65 42.44 39.00 38.29 Scrips Eastland Insurance Green Delta Insurance Pioneer Insurance Phoenix Insurance Pragati Insurance Karnaphuli Insurance Eastern Insurance BGIC United Insurance Peoples Insurance Source: LBSL Research
Top 10 Net Premium Leader as of 3rd Quarter 2011

Absolute Basis Scrips (BDT Mn) 163.90 Nitol Insurance 152.41 Eastland Insurance 100.33 Eastern Insurance 94.66 Phoenix Insurance 92.60 Federal Insurance 66.77 Pioneer Insurance 63.38 Mercantile Insurance 61.02 Rupali Insurance 54.83 Asia Insurance 54.46 BGIC Growth Basis (%) 290.85 71.77 30.19 27.71 26.25 21.49 19.47 14.29 12.94 10.27
54
INSURANCE
SECTOR HIGHLIGHTS
Top 10 NPAT Leader as of 3rd 2011
Growth Basis (%) 314% 197% 182% 174% 173% 154% 134% 133% 100% 96% Scrips Eastland Insurance Green Delta Insurance Reliance Insurance Pioneer Insurance Phoenix Insurance Pragati Insurance Karnaphuli Insurance Eastern Insurance BGIC United Insurance Source: LBSL Research & Company Financials Source: LBSL Research & Company Financials Absolute Basis Scrips (BDT Mn) 163.90 Nitol Insurance 152.41 Eastland Insurance 143.88 Eastern Insurance 100.33 Phoenix Insurance 94.66 Federal Insurance 92.60 Reliance Insurance 66.77 Pioneer Insurance 63.38 Mercantile Insurance 61.02 Rupali Insurance 54.83 Asia Insurance Growth Basis (%) 290.85 71.77 30.19 27.71 26.25 23.97 21.49 19.47 14.29 12.94
Top 10 NPAT Leader in FY 2010

Scrips Green Delta Insurance Pioneer Insurance Reliance Insurance Asia Insurance Dhaka Insurance Eastland Insurance United Insurance Pragati Insurance Rupali Insurance Karnaphuli Insurance Absolute Basis Scrips (BDT Mn) 543.89 Asia Insurance 221.63 Rupali Insurance 217.64 United Insurance 197.88 Islami Insurance 164.28 Pioneer Insurance 154.69 BGIC 150.04 Green Delta Insurance 144.02 Purabi Gen. Insurance 119.59 Karnaphuli Insurance 108.79 City General Insurance
Price Performance during FY 2011 (%) Top 10 Turnover Leader in DSE during FY 2011
Scrips ASIAPACINS EASTLAND KARNAPHULI GREENDELT ASIAINS CONTININS MERCINS PHENIXINS DHAKAINS CITYGENINS Source: LBSL Research Average Turnover (BDT Mn) 23.42 20.79 20.07 19.80 19.61 18.23 17.96 17.64 15.03 14.50 Highest Turnover (BDT Mn) 126.76 155.62 226.56 123.85 140.10 109.23 144.52 179.03 122.36 96.32 Scrips AGRANINS ASIAINS ASIAPACINS BGIC CENTRALINS CITYGENINS CONTININS DHAKAINS EASTERNINS EASTLAND FEDERALINS GLOBALINS GREENDELT ISLAMIINS JANATAINS KARNAPHULI MERCINS NITOLINS Audited P/E (x) 17.2 17.3 17.9 18.5 18.5 NORTHRNINS PARAMOUNT PEOPLESINS PHENIXINS PIONEERINS PRAGATIINS PRIMEINSUR PROVATIINS PURABIGEN RELIANCINS REPUBLIC RUPALIINS Disclaimer: The analysis made here is the own view of the analyst. Analysis is only based on the company financial statement and disclosure without any management discussion and meeting. SONARBAINS STANDARINS TAKAFULINS UNITEDINS Source: LBSL Research 1M 6.63 3.65 8.48 6.05 23.78 1.52 13.73 8.10 4.66 16.20 (0.50) 5.45 1.58 9.25 6.51 3.83 15.99 12.69 4.97 12.46 1.55 11.28 20.50 18.05 2.78 6.63 31.37 5.49 5.34 22.85 9.04 3.83 23.46 (0.74) 3M (15.00) (17.56) (15.18) (0.39) (6.69) (17.11) (16.93) (23.87) (24.77) 2.11 (-25.69) (23.18) (12.00) (6.21) (28.60) (7.04) (12.37) (18.28) (26.48) (8.00) (13.82) (12.12) (11.29) (11.75) (18.38) (15.00) (11.50) (12.68) (22.39) 3.19 (13.64) (12.63) (8.03) (19.98) 6M (22.59) (23.76) (22.92) (5.93) (5.99) (22.84) (21.57) (19.98) (38.40) (2.65) (16.54) (36.04) (18.96) (17.31) (42.39) (19.15) (17.25) (23.59) (32.27) (26.99) (21.40) (9.90) (15.00) (16.47) (25.30) (22.59) (6.75) (8.21) (25.10) 1.76 (25.69) (20.22) (20.51) (26.44) 12M (49.58) (69.10) (55.59) (26.40) (28.16) (41.44) (35.39) (28.64) (59.43) (23.66) (41.12) (45.93) (53.60) (48.90) (38.94) (37.76) (31.72) (38.22) (41.35) (49.98) (58.80) (34.51) (34.45) (40.29) (57.55) (49.58) (42.41) (20.00) (39.53) (9.21) (45.38) (41.51) (42.00) (58.94)
Top 10 Lowest P/E during FY 2011

Scrips ASIAINS GREENDELT KARNAPHULI DHAKAINS UNITEDINS Source: LBSL Research Audited Scrips P/E (x) 7.5 EASTERNINS 14 EASTLAND 15.3 CITYGENINS 15.8 PRIMEINSUR 15.8 RELIANCINS
Rajib Kumar Das

55
Experts Insight
How Successful Central Banks Monetary policy Transmission in Bangladesh for Ensuring Sustainable Growth, Price Stability and Employment
- Prof. M. Muzahidul Islam

Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability as well as creating employment. Monetary policy can be either expansionary or contractionary. Whereas an expansionary policy increases the total supply of money in the economy more rapidly than usual, the contractionary policy expands the money supply more slowly than usual or even shrinks it. Expansionary policy is suggested for an economy where there is huge untapped resources, both natural and human, that can be used by accelerating the economic activities. Traditionally this policy is used to try to combat unemployment in a recession by lowering interest rates in the hope that easy credit will entice businesses into expanding. Contractionary policy is intended to slow inflation in hopes of avoiding the resulting distortions and deterioration of asset values. Other than these two basic types monetary policy can be accommodative if the interest rate set by the central monetary authority is intended to create economic growth. A monetary policy is neutral if it intended neither to create growth nor combat inflation whereas a tight monetary should have a strong commitment to control inflation. Bangladesh Bank (BB), as the central bank, has legal authority to supervise and regulate all banks and non-bank financial institutions. It performs the traditional central banking roles of note issuance and of being the banker to the government and banks. Given some broad policy goals and objectives, it formulates and implements monetary policy manages foreign exchange reserves and lays down prudential regulations and conduct monitoring thereof as they apply to the entire banking system. Its prudential regulations include, among others: minimum capital requirements, limits on loan concentration and insider borrowing and guidelines for asset classification and income recognition. The Bangladesh Bank has the power to impose penalties for noncompliance and also to intervene in the management of a bank if serious problem arise. It also has the delegated authority of issuing policy directives regarding the foreign exchange regime. As the chief regulator of the countrys money market Bangladesh Bank has some major objectives to attain, which may be summarized as follows: Price stability both internal & external Sustainable growth & development High employment Economic and efficient use of resource Stability of financial & payment system Major Strategies and Policies of the BB Reserve management strategy Bangladesh Bank (BB) is empowered to hold and manage the official foreign exchange reserve of Bangladesh. It maintains its foreign exchange reserve in different currencies to minimize the risk emerging from widespread fluctuation in exchange rate of major currencies and very irregular movement in interest rates in the global money market. BB has established Nostro account arrangements with different Central Banks. Funds accumulated in these accounts are invested in Treasury bills, repos and other government papers in the respective currencies. It also makes investment in the form of short term deposits with different high rated and reputed commercial banks and purchase of high rated sovereign/supranational/corporate bonds Exchange rate policy Bangladesh adopted Floating Exchange Rate regime since 31 May 2003. Under the regime, BB does not interfere in the determination of exchange rate, but operates the monetary policy prudently for minimizing extreme swings in exchange rate to avoid adverse repercussion on the domestic economy. In the forex market banks are free to buy and sale foreign currency in the spot and also in the forward markets. Interest rate policy Under the Financial sector reform program, banks are free to charge/fix their deposit and Lending rates other than Export Credit. At present, Loans at reduced rates (7%) are provided for all sorts of export credit since January 2004. With a view to controlling the price hike and ensuring adequate supply of essential commodities, the rate of interest on loan for import financing of rice, wheat, sugar, edible oil (crude and refined), chickpeas, beans, lentils, onions, spices , dates and powder milk has been temporarily fixed to a maximum of 12%. Now, banks can differentiate interest rate up to 3% considering comparative risk elements involved among borrowers in same lending category. With progressive deregulation of interest rates, banks have been advised to announce the mid-rate of the limit (if any) for different sectors and the banks may change interest 1.5% more or less than the announced mid-rate on the basis of the comparative credit risk.
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Capital adequacy of the banks With a view to strengthening the capital base of banks and making them prepare for the implementation of Basel-II Accord, banks are required to maintain Capital to Risk-Weighted Assets ratio 10% at the minimum with core capital not less than 5% effective from December 31, 2007. However, minimum capital requirement (paid up capital and statutory reserve) for all banks will be Tk.200 crore as per Bank Company (Amendment) Ordinance, 2007. Banks having capital shortfall will have to meet at least 50% of the shortfall by June, 2008 and the rest by June, 2009. Revaluation reserves of held to maturity (HTM) securities (up to 50% of the revaluation reserves) has been added to the components of supplementary capital. Besides, Hedging the price risk of commodity transactions has been included in Short-term self liquidating trade related contingencies. Loan classification and provisioning In order to strengthen credit discipline and bring classification and provisioning regulation in line with international standard, Bangladesh Bank issued a master circular on loan classification and provisioning. The revised policy covers an independent assessment of each loan on the basis of objective criteria and qualitative factors which is appended below : Any Continuous loan/Demand loan if not repaid/renewed within the fixed expiry date for repayment will be treated as past due/overdue from the following day of the expiry date. A Continuous loan/Demand loan/Term loan which will remain overdue for a period of 90 days or more, will be put into the Special Mention Account(SMA). Interest accrued on Special Mention Account (SMA) will be credited to Interest Suspense Account, instead of crediting the same to Income Account. A Continuous loan/Demand loan is classified as Sub-standard if it is past due/over due for 6 months or beyond but less than 9 months, classified as `Doubtful if it is past due/over due for 9 months or beyond but less than 12 months and classified as `Bad/Loss if it is past due/over due for 12 months or beyond. If any installment(s) or part of installment(s) of a Fixed Term Loan is not repaid within the due date, the amount of unpaid installment(s) will be termed as `defaulted installment. In case of Fixed Term Loans, which are repayable within maximum five years of time- If the amount of defaulted installment is equal to or more than the amount of installment(s) due within 6 (six) months, the entire loan will be classified as Sub-standard, if the amount is equal to or more than the amount of installment(s) due within 12 (twelve) months, the entire loan will be classified as Doubtful and if the amount is equal to or more than the amount of installment(s) due within 18 (eighteen) months, the entire loan will be classified as Bad/Loss. In case of Fixed Term Loans, which are repayable in more than five years of time and if the amount of defaulted installment is equal to or more than the amount of installment(s) due within 12 (twelve) months, the entire loan will be classified as Sub-standard. If the amount is due within 18 (eighteen) months, the entire loan will be classified as Doubtful and if the amount is due within 24 (twenty four) months, the entire loan will be classified as Bad/Loss. The Short-term Agricultural and Micro-Credit will be considered irregular if not repaid within the due date as stipulated in the loan agreement. If the said irregular status continues, the credit will be classified as Substandard after a period of 12 months, as Doubtful after a period of 36 months and as Bad/Loss after a period of 60 months from the stipulated due date as per loan agreement. Most Recent Policies of the BB Among others the central bank asked the countrys top bankers to improve liquidity management of their companies through implementing the reform programs. The commercial banks were asked to fulfill the conditions of BASEL- II where it has been made mandatory to maintain 10% reserve against risk bearing assets of the bank. The CRR and were increased as a part of the effort to maintain sufficient liquidity in the banking sector. The BB said that the banks will have to avoid unethical competition and disorderly behavior, as these might create instability in the financial system. The banks were directed to have a contingency plan to address risks, if any. The BB has planned to make 2012 a year of reforms and the scheduled bankers are advised to take preparation to that end. In 2011 the BB had put special emphasis on ensuring stability in the banking sector, considering an instable situation in the countrys capital market in 2010. The central bank also asked the commercial banks to comply with the existing credit-deposit ratio (CDR) properly. It may be noted that the BB has already set CDR at 85 per cent for the conventional banks, while for the Sharia-based Islamic banks it remains at 90 per cent as the safe limit. Meanwhile the BB have also advised the commercial banks to take necessary steps towards the implementation of the Basel-III framework from 2014. The Basel-III is a new global regulatory standard on banks capital adequacy and liquidity, agreed upon by the members of the Basel Committee on Banking Supervision. It aims to strengthen bank capital requirements and introduces new regulatory requirements on bank liquidity and bank leverage. The year 2011 may be termed as historical year for the countrys banking sector as there were various innovative changes, which came following a series of guidelines of the Bangladesh Bank. Introduction of school banking, mobile banking and farmers account opening, and emphasis on SME loans and environment-friendly schemes, among others, were the much-talked-about issues of the sector in the outgoing calendar year. The vast majority of people, who so far remained beyond the coverage of the traditional banking system, would get complete banking facilities through their mobile sets from now on. It is an extra-ordinary initiative of the central bank. A significant number of students have already linked themselves with the School Banking, which would help them achieve higher education, if they meet any fund shortage in future.
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All the guidelines are important for the country, especially those regarding various environment-friendly schemes, like - the financing of solar energy, bio-gas and ETP, as Bangladesh is in the most vulnerable position in the wake of climate change and subsequent natural disasters. Up to October 2011 the banks have invested Tk 0.17 billion in the environmental-friendly schemes. The directives given by the BB emphasizing corporate social responsibility (CSR) activities of the banks were of paramount importance. According to the BB data, the banks spent Tk 3.91 billion in 2010 for CSR activities, whereas it was only Tk 0.55 billion in 2009. The BBs SME guideline is truly praiseworthy for a developing country like Bangladesh where untapped resources are enormous. If all the banks invest properly in the potential sectors under their SME financing umbrella, the countrys economy will be changed soon. In 2011 the farmers have been able to avail modern banking facilities by opening an account at a cost of Tk 10 only, which is also an extra-ordinary phenomenon for the countrys banking sector. Almost 9.5 million farmers have taken the opportunity in the year. Monetary Policy and Sustainable Growth and Development Countrys GDP (gross domestic product) growth has been projected by different policy research organizations to be between 6.7 to 6.8 per cent for fiscal year (FY) 2011-12. Even the Finance Minister A M A Muhith Wednesday (27.12.11) expressed his doubt in achieving the GDP target by saying that it would be difficult to achieve the projected 7.0 per cent economic growth this fiscal year (FY), considering the countrys prevailing economic scenario. Mr Muhith said: Since the countrys domestic resource mobilization rate is low, foreign direct investment is unsatisfactory, foreign trade is under pressure I had said about the difficulty of realising 7.0 per cent growth. Containing the rate of inflation at a tolerable limit is a prerequisite for achieving the targeted 7 per cent GDP growth of the government for the current fiscal year (FY) 2011-12. But unfortunately the rate of inflation could not be controlled at any stage of the implementation of the current monetary and fiscal plan. The import payments and export earnings were estimated at US$ 35400 million and $25700 million respectively in the FY 2011-12. The gap between national savings and total investment might increase at Tk. 316.7 billion in FY 2011-12 which might be 9.74 percent higher than that of FY 2010-11. Overall deficit (excluding grants) in FY 2011-12 is estimated at Tk. 452.04 billion which is 5 percent of GDP and 14.96 percent higher than FY 2010-11 and 31.57 percent higher than FY 2009-10. Considering the inclusion of grants in FY 2011-12, the overall budget deficit is estimated at Tk. 402.66 billion which is 4.4 percent of GDP and is 16.67 percent higher than the past fiscal year and 37.77 percent higher than FY 2009-10. About revenue collection the government has estimated the total revenue collection to be Tk. 1183.85 billion in FY 2011-12 against Tk. 951.87 billion of the revised budget of FY 2010-11. On the other hand, the revenue expenditure in FY 2011-12 is estimated at Tk. 1635.89 billion. The total expenditure for development sectors is estimated at Tk. 506.42 billion and Tk. 1129.56 billion for non-development sectors in FY 2011-12. In FY 2011-12, the overall public debt/borrowing has been estimated to be Tk. 402.66 billion, up by 31.59 per cent from the revised budget of FY 2010-11 and 47.50 percent higher than the revised budget of FY 2009-10. The total estimation of government borrowing from domestic sources in FY 2011-12 is Tk. 272.08 billion which is 23.26 percent higher than FY 2010-11. The government borrowing from banking sector in FY 2011-12 (up to September, 2011) is Tk. 72.28 billion which is 0.8 percent of GDP. The gross foreign exchange reserve is declining over the years. It has declined to US $ 9285.20 million in November 2011-12 from US$ 10338.3 million in October 2011-12, the lowest ever in the last 12 months. About the annual development program (ADP) it can be said that the monthly trend suggests that only 66.73 percent of ADP might be implemented in FY 2011-12 while the yearly trend says that about 88.35 percent of the ADP might be implemented by the end of the current fiscal year. According to the business as usual scenario, in FY 2011-12, total growth rate of manufacturing sector might be 9.76 percent, while the growth rate of small and cottage industry and medium and large industry might be 7.36, and 10.76 percent respectively. In a modern production system power is considered as most important and expensive infrastructural factor that is a pre-condition for economic growth and social development of any country. In case of Bangladesh the price hike of fuel has increased production cost of electricity, resulting in the increase of subsidy in power sector. Subsidy has increased to Tk. 52000 million in FY 2011-12 compared to Tk. 42000 million in FY 2010-11. The growth rate of subsidy in power sector has increased by 23.81 percent in FY 2011-12 than the previous fiscal year. If the cost of electricity and fuel price in international market remains the same, oil subsidy bill might reach more than Tk. 200000 million by the end of the FY 2011-12. Production costs of the RMG sector increased significantly compared to their global competitors due to recent hike in the prices of diesel and furnace oil as well as high rate of bank interest. Under the circumstances, it will be very tough for garment manufacturers to keep the growth continuing. Production cost of the local RMG products will go up further, decreasing their competitiveness in the export market. The enhanced electricity tariff will push up the prices of every product of the backward linkage industries, thus raising further the overall production cost of the local apparel items. The BGMEA requested the government to retain the previously charged power tariff in the garment factories for protecting the struggling sector where more than three million people were employed. How Successful the Policy to ensure Price Stability Inspite of a contractionary monetary policy the target of bringing stability could not be attained. Rate of inflation was increasing continuously and reached double digit. Consumers had tough times throughout the outgoing year as the local currency depreciated by more than 15 percent against the US dollar in 2011. Bangladesh Bank (BB) data shows the taka had depreciated only by 0.54 percent in 2008, 0.47 percent in 2009 and 2.09 percent in 2010. BB data also shows the inter-bank exchange rate (also known as wholesale rate) was Tk 71 against a dollar on January 10 this year, which reached Tk 71.60 on March 10, Tk 73.88 on June 09, Tk 74.20 on September 11 and Tk 81.90 on December 29.
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Experts Insight
This devaluation of local currency is not good for the financial sector. It has negative impacts on the economy as a INTERBANK whole. It did not only fuel inflation, but also increased the prices of intermediate goods and raw materials and input EXCHANGE RATE costs of manufactured goods. For example, if a businessman imports $10,000 worth of things, he had to spend Tk IN 2011 700,000 in January 2011. It is now Tk 820,000, up by over 17 percent. An importer, no matter what he imports, 71 has to bear this additional cost for the exchange rate. This additional cost is passed on the consumers, So, this 10-Jan unprecedented devaluation of the taka acted as a catalyst to a hike in prices of fuel, food, capital machinery and 10-Feb 71.15 industrial raw materials. Import costs went up for the depreciation that had a direct impact on the consumers.
10-Mar 10-Apr 10-May 9-Jun 10-Jul 10-Aug 11-Sep 10-Oct
71.6
The extremely deleterious consequences of the cumulative price hike need no emphasis, but one is at a loss that the wise men that are running the country's economy are not able to see what is coming. The worst-hit is the manufacturing sector, bulk of which is run on furnace oil. And this has been hit the hardest by nearly two and a half times rise since the beginning of the year in four installments. Rise in price of diesel, particularly at the beginning of the next cropping season is bound to affect the farmers and in turn the greater portion of the population that are in the middle and low income groups, as will the rise in transport cost. And there is the import bill and inflation to contend with. For the government the easiest option is to increase the prices of things to offset deficit. And in any case, people do not buy either the excuse of subsidy or the price hike of oil in the international market. If anything, there is downward trend in oil prices and the problem of subsidy could be tackled by other measures.
72.86 73.17 73.88 74.37 74.75 74.2 75.5
A sliding foreign exchange reserve, now at around $9.7 billion, has further worsened the situation, while the central 10-Nov 76.39 bank cannot pump up enough dollars into the market to stabilize the exchange rate. Business costs may go up if 81.9 foreign banks ask for a third party guarantee, seeing the declining reserve. In fact the central bank is in a dilemma 29-Dec over the falling exchange rate. Neither can it inject dollar into the market to stabilize the exchange rate in the wake of a falling reserve and balance of payments, nor can it bear the soaring inflationary pressure. But exporters and remitters had good times as they got more taka due to the depreciation. Exports were more competitive in the outgoing year due to the devaluation of the taka. In has been observed that the expatriates Bangladeshis, in particular, those who are working in the Middle Eastern countries sent home more money in the recent months to cash in on the soaring exchange rate. Bangladesh's trade deficit is likely to be enormous in the current fiscal year (FY), as petroleum price is projected to cross $170 per barrel by the middle of the next calendar year. A forecast of the International Energy Agency (IEA) for 2012 said the crude oil price that started rising in November last (from $80 per barrel) is likely to cross $150 per barrel by the middle of the upcoming summer. A continuation of depreciation of Taka in tandem with the rising oil price will simply aggravate the trade gap, as importers will have to pay higher prices for importing commodities, including petroleum, to be needed for the oil-fired power plants. The trade deficit of the country stood at Tk 576.75 billion ($7.69 billion) in the fiscal 2010-11, about 49 per cent up from the previous fiscal's (2009-10) Tk 386.25 billion ($5.15 billion), a data of the Bangladesh Bank showed. A US dollar which was available in the country's Kerb market at Tk 70 in early 2011, was traded at Tk 84 in the same market Thursday, a foreign currency dealer told the FE.Officials of the state-run BPC said the country's annual requirement of fuel oil rose, owing to setting up of some 40 oil-fired power plants over the past two years. More oil-based power plants are likely to be installed in the coming months, unless the authorities concerned do not change power plant policy. The country's fuel import bill surged over 101 per cent year on year to $1.195 billion in the first quarter of the current FY, as more oil-fired power plants went into operation. The fuel import bill is likely to cross $5.0 billion in the current FY against $4.0 billion in the last FY. The import of fuel/furnace oil is expected to be doubled to 12 million barrels, while diesel import to rise some 25 per cent to 28 million barrels, according to the BPC source. Besides, the BPC will also import 2.9 million barrels of jet fuel, 750,000 barrels of octane, and 675,000 barrels of kerosene in the current FY. In this connection experts have suggested that we should switch over to coal as primary fuel for power generation as quick as possible. It is advised that the authorities concerned should opt for exploring coal instead of importing costly fuel. It may be noted that the oil-fired rental and peaking plants were set up mainly under private sector as part of the government plan to generate 20,000 megawatts (mw) of electricity by 2021. Crash of the Stock market was yet another benchmark to worsen the instability in the financial market and the economy in general. The general index of the countrys premier bourse, Dhaka Stock Exchange, lost 37 per cent in 2011 suffering its worst crash ever and wiping out investments of thousands of investors. The DGEN which was at 8,290.41 points on December 31, 2010 closed at 5257.60 points losing 3,032 points in last one year, on Thursday the last trading day of the year. The market capitalization of the bourse also declined by 25.42 per cent during the period to Tk 2,61,673 crore from that of Tk 3,508,00 crore. Eight equity securities, six mutual funds, and a convertible bond got listed this year with stocks worth Tk 1,250 crore through public offerings and pre-IPO placements. Although the market boomed in 2010 with the DGEN gaining 3,771 points from January 1, 2010 to December 31, 2010, luring thousands of investors, two severe crashes that overshadowed the crash in 1996, left the investors in agony through 2011. Shortsighted government policies and lack of efforts to implement those is blamed for the prolonged depression in the last 12 months. Lack of coordination between the concerned regulatory authorities and other stakeholders also made the stabilizing measures taken by the government to rejuvenate the countrys ailing capital market ineffective as the Dhaka stocks continued its bear run. Unexpected remarks by the government high ups, especially finance minister time and again made the investors panicky and damaged the market. Government frequently changed its policies about capital market in 2011 which did not help to stabilise the situation. Some of the government policies were untimely and as a result could not bring the expected results. So the situation worsened in some cases. In June, the government allowed investment of undisclosed money in stocks with a condition that the investment must be kept for two years and 10 per cent tax on the invested amount have to be paid. The decision boosted the market for a short time but failed to sustain the momentum. Until December, the National Board of Revenue had to clarify the issue three times as other government agencies created confusion about investment of undisclosed money in stocks. In August state-run Investment Corporation of Bangladesh along with seven state-owned enterprises
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formed Bangladesh Fund, with a sponsor amount of Tk 1,500 crore in a bid to stabilize the volatile capital market but the fund failed. Retail investors, who lost their capital in a series of stock plunges, took to the streets numerous times protesting the free fall of shares prices. They went on rampages in the streets of Motijheel and locked in clashes with the law-enforcers on several occasions in demand of a stabilized capital market. Institutional investors, especially commercial banks, were also responsible for the market bubble in 2009-10 and the crash in 2011. Their greed and the central banks lax monitoring were the main reasons for the market collapse, but the government rewarded them with incentives without paying attention to our needs, he said. In the latest move to revive the market, the Securities and Exchange Commission on November 23 announced a stimulus package in line with the instruction of prime minister Sheikh Hasina. The stimulus package that divided in short-, mid- and long-term goals seems to have failed to create any positive impact on the market as the DSE index lost 440 points within two weeks after the announcement. Employment and the Monetary Policy With the rising unemployment situation, the real wage may decline which is being fuelled by the overall rate of inflation (point to point) of 11.58 percent with food inflation of 12.47 percent. With the increased number of unemployed people and reduction in income and real wage, the aggregate demand might be lowered, putting negative effect on investment and output. Ready-made garment is the biggest source of employment in Bangladesh. In the US market Chaina has occupies the first position as exporter of the RMG. Vietnam occupies the second position and Bangladesh got the 12th position. In the changed world scenario the exporters of the RMG were expecting the position of Bangladesh to be upgraded which could not happen mostly because of some internal factors. According to a recent newspaper report at least 300 garment factories has been closed that added to the unemployment pressure. The factors responsible for failure to exploit the global opportunities of the RMG sectors include; deteriorating law and order situation, shortage of supply of Gas and electricity for the sector, terrorism and stortion mugging, and high rate of interest. Another big source of reduction in employment has been identified as the construction sector. Development and repair work for roads and highways were not taken care of for quite some time. In particular, housing sector of the country has been showing a sluggish for last few years. As we know, in Bangladesh around 25 million people are direcly or indirectly dependent on real estate sector. It feared by the concerned businessmen that almost 50% of the housing business has been reduced because of many reasons. Some of them are: unprecedented increase in the cost of registration by eight times unsettled and uncertain issue of Detailed Area Plan and Govt. decision of not giving new Gas and Electricity connection. According to the REHAB as a result of the aforesaid issues they are not being able to hand over 16000 flat to their clients that caused a slow-moving trend in the housing sector, which reduced at least 10 lac employment in this particular sector. Yet another source of recent unemployment is the declining trend in exporting manpower. For last few years remittance was the single largest source of foreign currency. KSA, Malaysia, Kwait, Qatar are the main manpower recruiting countries from Bangladesh. But because of various reasons these countries are showing reluctance to recruit from Bangladesh. For example, the KSA being the single largest importer of manpower from Bangladesh used to export 1.5 lac to 2.0 lac manpower per year from Bangladesh. For last three years this number has gone down to 10 thousand only per year. According to a newspaper report during last three years total number of departure to the KSA is 30 thousand whereas total come-back from the KSA during the same period is around 50 thousand, which shows a negative growth. Same is the case with Malyasia and some other countries. To conclude, one point should be kept in mind is that monetary policies alone cannot bring hundred percent success in terms of sustainable growth, price stability and creation of more employment. It must coordinated monetary and fiscal policies along with other Govt. policy intervention that all together ensure growth and development in every aspect having a balanced compromise with the price level. In Bangladesh, Government policies and intervention, in some cases does not care the economic consequences of those decisions. Central bank also sometimes seems to be helpless especially at the execution stage of their policies due to various pressures from political and elite forces of the country. We need to build a healthy corporate financial culture where central bank will exercise its authority with cent percent independence and decisions relating economics and finance at all levels should taken considering economic factors only.
M. Muzahidul Islam is a professor in the Department of Banking, University of Dhaka. He was the Chairman of the same department in during 2007-10 periods. He is the author of 20 published research article and co-author of three books. He also edited three books in the field of Finance and banking. He is a Member of a number of Shariah Supervisory Committees of different banks and MFIs like Pubali Bank Ltd, Prime Islami Life Insurance Company Ltd,. RDP Group, Dhaka. Shatabdi Group, Dhaka and , MAXIM Group, Dhaka. He is Member, Academic Council of Dhaka University, Darul Ihsan University and Fareast Islami Life Insurance Company. He is acting as Member, Finance Committee, and Research and Development Committee of Manarat International University, Dhaka. Currently he is the Executive Director, Centre for Development Studies, Dhaka, AGS and Member, Executive Committee of Islamic Economics Research Bureau, Dhaka. He is the Associate Editor of the Journal of Banking and Financial Services, Dhaka and Member, Board of Editors, Thoughts on Economics, Dhaka. He is a regular contributor in media as well as daily newspapers and magazines. Professor Islam visited a number of countries including the USA under the International Visitors program hosted by the US state department. The opinions expressed in this article are solely of his own which neither represent the views of his associated institutions nor the views of LankaBangla Securities Limited and its affiliated organizations. To contact the author of this article: muzahid75@yahoo.com
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Experts Insight
The Stock Market Collapse of 2010-11: Financial and Socio-Behavioral Impact Assessment
Black Swan (and capitalize it) is an event with rarity, extreme impact, and retrospective (though not prospective) predictability. A small number of Black Swans explains almost everything in our world, from the success of ideas and religions, to the dynamics of historical events, to elements of our own personal lives.
Nassim Nicholas Taleb The Author of The Black Swan A Mathematical Trader and Professor at Polytechnic Institute of New York University
Introduction As said by Nassim Nicholas Taleb, a famous essayist, a master in mathematical finance, The Black Swans are events that change the reality vitally. The crash in worlds stock markets essentially indicates that such events cannot be avoided. As Nassim thinks, Crash is inevitable, and every crash is a Black Swan. We only know Black Swan will come but we dont when it will. Bangladesh stock markets are not an exception to this. Bangladesh stock market has already seen a few crashes in the last 40 years of history. The first big shock was encountered by the participants of the market in 1996. The DSE general index stood at 507.33 in November 1999 with a cumulative decline by 83.44% and annual average decline by 27.82%. Investors confidence was drastically broken down because of extreme level of speculations and illegal manipulative activities. In the advent of this zero confidence and belief level of the common people on stock market, there was virtually a stagnant market up to 2004. The Crisis of 2010-11: A Repeat of the Collapse The market had been getting new highs every day or every week before it reached to a far pick level on December 05, 2010 where the index stood at 8918.51346 - the highest ever index value Bangladesh has witnessed in its entire history. The growth started smoothly from 2004 rushed with a greater pace during 2008 and 2009. The following graph clearly depicts how the market surged rapidly during 2009 and 2010 and reached extremely high 5th December 2010 and then collapsed down.
DSE General Index: Up and Down

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The Pick Point:

Date: 05.12.2010 Index Value: 8918.513
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The market on December 5th compared to last day of trade in 2005 had grown enormously a 431.70 percent surge in DGEN Index and an astonishing 10963.03 percent growth of turnover value with 1510.29 percent growth of market capitalization (Table 2). It was beyond control growth and never backed by fundamentals. Suspicions and criticism were already blowing around regarding the inorganic growth and required corrections. The market at the end collapsed after its pick point on 15th December, 2010 with a one day fall by more than 500 points (around 6.31 percent down) in the DSE General Index and that was the start. The market kept falling for the following couple of months moving to the greatest correction of the history. Table 2: The Pre and Post of 2010 Stock Market Crisis
After Crisis Scenario Short Term Declined by
-68.80% -59.69% -84.94% -34.44% -41.66%
Before Crisis Indicator 12/29/2005

Total Trade Total Volume Total Value in Taka(mn) Total Market Cap. in Taka(mn) DSE General Index 10080 1675311 293.733 228574.85 1677.34579
Pick Point 12/5/2010

389310 130966772 32495.756 3680714.195 8918.51346
Long Term Total Decline

-72.30% -60.53% -90.10% -35.51% -47.87%
Grew by
3762.20% 7717.46% 10963.03% 1510.29% 431.70%
2/28/2011
121467 52798795 4894.189 2413072.93 5203.08482
15/11/ 2011
107849 51694333 3217.447 2373681.40 4649.32735
The two exchanges DSE and CSE, the Securities & Exchange Commission (SEC), the Ministry of Finance all were busy trying to stop this fall with different policy measures including increasing margin loan facilities, removing trading halts etc. the market followed no policy and every steps taken by the regulators seemed to be poorly ineffective. On the last day of February 2011 the index was in extremely low state with a 42 percent decline in the DGEN, 85 percent decline in turnover value, and around 35 percent decline in market capitalization compared to the pick point of 5th December, 2010. Impact Assessment of the Crisis of 2010-11 Usually in developed markets, analysts and academicians conduct impact assessment studies after any such large scale shocks to the economy and society. This is important because regulators and the government authorities may develop appropriate post-crisis policy tools to recover, and also to avoid such incidents in future. Although not to an elite level, a survey on around 2000 individual investors has been conducted in February, 2011 in Dhaka Stock Exchange (DSE) immediately after the crisis incepted in December, 2010. Data has been collected on different financial, micro-economic, and socio-behavioral variables for two different points of time - before December, 2010 and after January, 2011 considering December, 2010 January, 2011 as the core period of the crisis. In this quick excerpt, a sample of 200 investors has been extracted and an impact assessment analysis has been done exclusively for LBSL Market Pulse. Below, the findings of the assessment of impact on financial and socio-behavioral status of the individual investors have been presented. Before detailing on the impact, its important to learn about the characteristics of the sample investors surveyed. Characteristics of Surveyed Investors The sample includes around 58 percent of the investors labeled as Micro with investment size less than BDT 0.5 million, and another 19 percent are termed as small as they have investment size between 0.5 to 1 million. This essentially has matched with the expected scenario of our market since most of the individual investors have small amount of investment in the market.
Investor Type Micro Small Medium Large Very Large Total
Investment Size of the Sample (N=200)

Investment Size <500000 500000-1000000 1000000-1500000 1500000-2000000 >2000000 % Distribution 57.89 19.3 14.04 3.51 5.26 100
Profession of Investors (% Distribution)

8.77 8.77
Investment Horizon of Investors (% Distribution)
33.33
Govt. Service
31.58
Private Service Business Others
Short Term Long Term

66.67
50.88
62
Experts Insight
Quite interesting to see that 67 percent of the investors have invested with short term profit making intention while the rest 33 percent have long term investment objective. This is important to notice since investors with long term target investment setting is expected to gain better and not to be affected too much with momentary market downturn. Therefore, this finding confirms once again that the stock market is yet to see a good number of long term investors. Another aspect with respect to profession of the investors, it is found that about 51 percent investors are originally businessman and 32 percent of them are engaged in private service. Therefore, the characteristics of the samples fairly represent the factual scenario of our stock market. Financial Impact of the Crisis The financial impact has been ascertained using Five Variables including Value of Investment, Profitability, Income Level, Consumption Level, and Individual Savings. The data has been collected on these variables for two different periods before the core period crisis and after the crisis. A drastic fall in all the variables has been observed from the assessment. The table and graph below shows the extent of the downturn. The Chain Effect: The financial impact has been identified with a chain rout of devastation. At the first instance the direct impact of the crisis is on their already earned profit. With sharp decline in the prices of stocks, the pre- crisis accumulated profit wiped out. After the profit dropped sharply, capital value started to reduce. Very quickly investment started to cross the red lines. i With the loss of income from the market, their overall income dropped. Since most of the investors have their own basic profession, their extra income wiped out. i Since the extra income vanished, trying to maintain their economic and living status that they used to have with higher income at the time of booming market, investors had to consume up their savings slowly. i Once the savings could cover any more, their consumption started to drop. They bring down substantially their consumption expenditure. This chain effect has been quite evident in the latest crisis. i Due to lower consumption expenditure of the investors, a sluggish demand for goods and services is a normal consequence which our economy is facing in different sectors (for example: Tourism this year has been sluggish and the stock market downturn is considered as one of the major reasons behind this).
Before December to After January Micro-Economic Indicator
Value of Investment Monthly Average Profit Monthly Average Income Monthly Average Consumption Monthly Average Saving
Value of Investment Monthly Average Prot Monthly Average Income Monthly Average Consumption Monthly Average Saving
% Change
-24.14% -149.60% -23.41% -28.90% -117.38%
Direction

24.14% -23.41%
The situation is horrible. Value of Investment of the investors has gone down within two months by about 24 percent. The severe impact has been noticed for Average Profit of the individual investors that they could earn in a month. Compared to what they could earn as profit monthly before the crisis has drastically fallen by about 150% down to the red lines. Investment in stock market has always been a 2nd option immediately next to the original profession of the investors. Therefore, the high level of profit generated in the last 2-3 years from the stock market helped many of such individual investors to build a good amount of personal wealth. Thus it is quite natural that at the time of such downturn, the basic income level of the individual investors will not be affected but still the additional income opportunities the investors had before the crisis have been shut down and wiped away. Any such big shocks must first wipe out their savings and then affect their income level.
i i i i i
-28.90%
-117.38%
-149.60%
63
Experts Insight
This is evident from the fact that this huge downturn has pulled down the average monthly savings of the investors by a huge 118 percent and probably the secondary subsequent affect has wiped out about 25 percent of the investors monthly average income. The very basic understanding of economics and finance states that a very natural consequence of such devastating negative effect on income and savings must have an unavoidable impact on the consumption of the investor community. This is also confirmed from the findings given above. The level of consumption expenditure before December and after January is quite different. The consumption expenditure of the investors has been reduced by as much as 30 percent. This situation clearly reflects the long and cyclical negative impact of stock market down turn the micro-economic health of the individual investors. Another parameter for such devastating effect is the change in the average rate of return investing in the stock market before and after the crisis. Before the crisis (December, 2010) average monthly rate of return on investment was 2.96% earned by the individual investors while the situation reversed straight pulling down the return on investment to -1.81% monthly after the crisis (January, 2011). The change in ROI has been down by 161 percent red, a huge pressure certainly for the individual investor community in the stock market.
Timing
Before December, 2010 After January, 2011 % Change
Return on Investment (ROI)

2.96% -1.81% -161.05%
Financial and Economic Loss by Investor Category

Micro
-16.3% -15.3% -20.7%
Small
Medium
-13.4% -51.0% -100.0% -165.3% -38.0%
Large
-11.3% -80.6% -100.0% -128.5%
Very Large
-37.8%
-44.3%
-32.1%
-31.6%
-31.7%
-24.6% -55.4%
-92.6% -124.4% -157.9%
-91.7%
-126.1%
-400.0%
Value of Investment
Monthly Average Prot
Monthly Average Consumption
Monthly Average Saving
Monthly Average Income
A better picture can be observed from the graph shown above. Savings was largely affected for the Very Large investors. The largest profit reduction took place medium scale investors with investment size BDT1 to 1.5 million and micro-investors with investment less than 0.5 million. Investment value was down at highest level for small investors. Income went down highest by 55.4 percent for Very Large investors, and consumption fell by 80.6% for large investors. This analysis carries important understanding regarding which category of investors has been affected to what extent. Social and Behavioral Impact of the Crisis The survey collected responses on Five Parameters of Socio-Behavioral Characteristics of the individual investors. Investors were asked whether there was any negative impact during and after the crisis that created huge financial burden on them. The result has been presented below:
Negative Effect on Socio-Behavioral Parameters Socio-Behavioral Parameters
Intra-Personal Psychology Intra-Personal Physiology Behavior to Family Members Behavior to Others (Friends, Colleagues etc.) Effect on Main Profession
Yes
98.15 71.24 81.48 77.65 87.04
No
1.85 28.76 18.52 22.35 12.96
64
Experts Insight
The responses were quite expected. Almost 99 percent of the investors were shocked and suffered from emotional collapse, distress, and frustration during and after the crisis as most of them could not get any way to rid them out of the situation. This extreme psychological pressure and sudden collapse of the market have also pushed most of the investors to suffer physically with diseases originated from the psychological collapse. About 71 percent of the investors responded that they suffered from physical problems during and after the crisis. Behavior is a compulsory part of how you act and react to the members of the society including your family. About 82 percent of the investors reported that the unbearable pressure during the crisis pushed them to behave roughly and very selfishly with their family members while 78 percent said their behavior towards their friends or colleagues or any outside network members changed dramatically. Many of them became out of contact or short of adequate communication by not being able to absorb sudden shock of the market crash. This crisis period has also compelled the individual investors to have a significant negative impact in the main professional life. Around 87 percent of the investors reported they lacked adequate confidence and motivation in working in their main work place that in turn affected their job performance in terms of work effectiveness and efficiency. Therefore, on average, the investors reported that they have faced a terrible social life and for many of them it has become quite difficult to maintain their minimum standard and status of living. On average, around 68 percent of the investors reported that the extent and degree of the negative impact of the crisis on the above mentioned socio-behavioral factors was extremely high. Loss of Confidence The latest crisis of 2010-2011 has made many investors penniless and thus made a huge number of investors hopeless. The survey found that about 65 percent of the investors were not at all hoping for a sustainable future of stock market in Bangladesh. According to them stock market in Bangladesh may even never be stable due to the intervention of large scale gamblers and negative attitude of the government towards the market. Almost 92 percent of the investors had below the moderate level of expectation regarding the stability of the market. Of course 60 percent investors reported that they are still hoping on the measures taken by the SEC and the government in the expectation of recovering up.
Condence on Sustainabile Future of the Market

0 16.67 Very High 9.26 High Moderate Low very Low 9.26
64.81
End Note Impact assessment is extremely important for any such historical incidents. Because immediately after any such big crisis, it expected that there will be a large negative impact on the livelihood of the people. This is also true for the latest stock market crisis of 2010-11 in Bangladesh. Understanding the impact after rigorous assessment help the policymakers to develop appropriate post-crisis policy tools and incentives to re-stabilize the market and recover the people losing from it. Individual investors must be protected by adequate policy measures from the government or regulators. The financial impact has been huge and unbearable for the individual investors especially for the micro, small and medium scale ones that make the largest share of the number of investors. The Socio-behavioral impact may push down many of the small investor who lost everything towards illegal activities and crimes. Therefore, a further and detailed impact study may help the regulators to formulate a better policy framework to discipline the market and the investor community.
Disclaimer: Suborna Barua is an independent Financial and Economic Analyst & Lecturer, Department of Finance, Jagannath University This report is a Quick and Partial Outcome of an On-going Detailed Impact Assessment of the Crisis. The findings finally may vary from the findings reported here The opinions expressed in this article are solely of his own which neither represent the views of his associated institutions nor the views of LankaBangla Securities Limited and its affiliated organizations. To contact the author of this article. subarnobarua@gmail.com
65
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1 Mutual Fund: A proper investment vehicle for small investors

A mutual fund collects money from both individuals and institutions and invests those in various asset classes like stocks, bonds, money market instruments etc. This fund is professionally managed by an asset management company. This professional management service includes launching the fund, making investment and divestment based on both fundamental and technical analysis, ensuring proper diversification, managing risk, distributing dividend etc. Present scenario of mutual funds in Bangladesh As an investment vehicle, mutual fund is very much popular all around the world and the combined asset under management of all mutual funds were USD 24.7 trillion as of December, 2010. These funds are managed by various asset management companies including famous names like Vanguard, Fidelity, PIMCO, JPMorgan Chase, BlackRock and so on. General public invest a portion of their wealth in these funds to achieve higher return. According to their risk appetite, Individuals give weight of their asset allocation in this professionally managed investment vehicle. Participation of the mass provides liquidity to the secondary asset markets and, at the same time, help supplying capital to the real sectors. However, scenario of mutual fund is entirely different in Bangladesh. Although the first mutual fund, ICB First Mutual Fund, was launched in 1980, this industry is underdeveloped yet. In total, 37 mutual funds are listed in Dhaka Stock Exchange and Chittagong Stock Exchange with total asset under management of USD 431 million. Comparing with the GDP of Bangladesh, USD 105.56 billion, total asset under management is only 0.41%. In comparison with our neighboring country India, this ratio is much lower as total asset under management of Indian fund managers are 6.84% of their countrys GDP. Though Pakistans total asset under management to GDP ratio, 1.77%, is lower than that of India, still it is much larger than that ratio of Bangladesh. Investors lack of interest in mutual fund is, currently, the main hindrance to the development of this sector. Unlike investors of developed countries, small investors of Bangladesh prefer to invest in listed securities at their own discretion despite mutual funds are more capable of managing investments. If these small investors invest through professional fund managers, they will be able to get better risk adjusted return. Why mutual funds are not popular among small investors? Mutual funds of Bangladesh do not defame overnight. Several strong factors both psychological and stock market originated - work behind this. These factors include negative price rally after Initial Public Offering (IPO), unfamiliarity of open-end mutual fund, overestimation of their own investment skill by small investors and lack of price sensitive declaration (i.e. stock dividend, right share, news of expansion, physical asset sale etc) of mutual funds. Perception of investors about mutual fund is very negative because they suffered huge loss in several mutual funds. Say for example, EBL First Mutual Fund reached BDT 45 in the first day of trading but after just one year it declined to only BDT 17.6. Therefore, this mutual fund experienced a price loss of 61% where DSE General Index was increased by 121% in that time frame. Similarly, price of DBH Mutual Fund, Trust Bank First Mutual Fund and IFIC First Mutual Fund lose 69%, 45% and 41% respectively in first one year of trading where DSE General Index gained by 118%, 37% and 13% respectively in the same period. As these investors have very unpleasant experience with mutual funds, many of them avoid these instruments. Like secondary market demand of mutual fund, primary market demand is also very low. Because small investors mainly invest in IPOs to have a very quick return after listing on bourses and mutual funds are unable to provide this sort of abnormal return, small investors have very low interest to apply in IPOs of these funds. Moreover, little price sensitive information is another key factor of lower price hike of mutual funds. Since mutual funds do not declare right share, stock dividend etc, which are highly valued by investors, these instruments are not treated as lucrative securities.
66
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Investors overestimation of their own investment skill and unfamiliarity of open-end mutual funds are other main reasons of unpopularity of mutual fund. Most small investors have low risk aversion and like to make investment by their own. Though dividend of mutual funds may be lower than a bull market annual return, it is higher in the years of bear market. Reasons behind mutual fund investment by general investors Small investors want to make their investment manifold overnight and, therefore, they consider mutual fund as a defensive investment vehicle, which is unable to provide their desired return. But in reality, these investors can only make good return in bull market and they suffer substantial loss in bear market. Moreover, other participants of capital market, like institutional investors, corporate insiders, gamblers, high net worth investors, are well equipped to make money at the cost of small investors loss. But, mutual funds can solve this problem with their modern investment techniques and economies of scale. Moreover, these funds have sound track record to provide consistent return. Some mutual funds of Bangladesh are providing steady return after their launching of around 30 years ago. Therefore, these instruments can be considered relatively safe investment vehicle for long term. The main advantage provided by mutual fund is professional management. Research team, equipped with both fundamental analysis and technical analysis, of asset management companies can find out those investment opportunities which may not be discovered by a small investor. In addition, size of mutual fund provides scope of investing in large number of securities covering almost all sectors. This scale of diversification is surely hard to achieve by any individual investor. A large portion, at least 70%, of profit made by mutual funds has to be distributed as dividend. Therefore, investors can invest in these funds for getting regular yearly income. Return of a mutual fund is far better than those provided by that of Fixed Deposit. Moreover, mutual funds can provide dividend from their reserve fund even in the bear market. In addition, 10% shares of IPO, about which small investors are very much enthusiastic, is reserved for mutual fund and, thus, investors of mutual fund can better access IPOs through these funds. Furthermore, income of mutual funds is tax exempted. Contribution of mutual fund to stabilize market As opposed to general investors, mutual funds invest for long term and professional fund managers of these funds neither sell shares due to panic at the market bottom nor buy shares due to extra enthusiasm at the market peak. This strategy of fund manager help to reduce volatility of market, which is one of the most desired attribute of our market right at this moment. Lower volatility of a market will lead to form higher confidence and this confidence will strengthen demand side by attracting more investment and supply side by bringing IPOs of new companies. In addition, mutual funds, generally, invest in securities of operationally and financially sound companies. This will decrease the demand for companies in Z category, which is normally traded at unjustifiably higher price. This comparatively lower pricing of Z category companies will lead general investors to investment in companies with good fundamentals. Thus, mutual funds can contribute to the overall sustainability and development of our stock market. Conclusion Mutual funds provide small investors an excellent opportunity to invest in capital market. Due to better diversification and maintenance of reserve fund, mutual funds volatility of dividend is much lower than return volatility of stock market. Small investors as well as general public may invest a portion of their assets in these funds. This will allow them to get exposure to capital market efficiently and, ultimately, they can contribute to the development of our capital market. Md. Abdul Muntakim
Investment Analyst Prime Finance Asset Management Co Ltd
Disclaimer: This write-up in the external voice section is solely the independent opinion of the writer. It represents neither LankaBangla Securities Limited and its affiliated organizations nor the employing organizations of the writer. Anyone can send write-up for this section containing not more than 1000 words to ashaduzaman@lbsbd.com within 30th of every month. The reader has to mention his/her designation, name of the employing organization and contact address along with email ID and contact number. Student has to mention the name of his/her educational institution, subject/ department and contact number. December 2011, issue 59
67
World equity index in 2011

World Equity Markets' Performance During The Month of December
AMERICA
DOW JONES INDUS. AVG S&P 500 INDEX NASDAQ COMPOSITE INDEX USA USA USA
Global Summary
2011 proved an extremely volatile year, largely due to ongoing uncertainty surrounding the Euro zone sovereign debt situation.
Growth has slowed throughout the year, with the International Monetary Fund (IMF) cutting its 2011 Gross Domestic Product (GDP) economic growth forecast for developed economies from 2.5% to 1.6%. Developed economies - with the US a major exception - are engaged in austerity measures while the emerging world is looking to dampen its much stronger growth to stave off any threat of inflation. Any improvement in 2012 rests largely on the Euro zone finding an appropriate solution to its problems. Against this background, many investors have fled to what they saw as safe havens, forcing gold prices to record highs and government bonds yields to generational lows. Short-termism is rife in such volatile markets, creating opportunities in some asset classes for investors who can take a longer-term view. Equities currently look to offer the best value, with many corporates in solid financial shape after applying their own austerity measures amid the credit crunch. Strong balance sheets are allowing ongoing dividend growth. Share valuations remain low, reflecting the muted economic outlook in the developed markets. This ignores two key factors: that many developed market companies have growing emerging market earnings exposure, and the potential for emerging market equities to benefit from the regions stronger macro outlook. Core developed market government bonds represent poor value, with short-term safe haven investing forcing yields down. In some instances this asset class currently offers the prospect of negative real returns (returns after adjusting for inflation). A combination of more persistent longer term inflation and the industrialization of emerging markets favor physical assets like property and commodities. A positive supply and demand picture is also supportive for the latter. Gold has proved popular as a safe haven, but with no yield the precious metal is challenging to value, and is likely to suffer when investors want to move into more risk orientated assets.
Ending
12320 1266.91 2636.57
P/E
12.72 13.34 22.4
1 Year 30 days Div Yield change(%) volatility

2.61 2.12 1.07 4.97 -0.69 -2.42 21.77 23.57 25.33
EUROPE
FTSE 100 INDEX DAX INDEX SWISS MARKET INDEX UK German Switzerland
Ending
5621.34 6072.14 6007.37
1 Year P/E Div Yield change (%)

10.29 10.2 14.68 5.1 3.99 2.51 -7.06 -15.05 -6.64
30 days volatility
19.87 30.38 13.63
AISA/PACIFIC
DSEGEN NIKKIE 225 HANG SENG INDEX FTSE STRAITS TIMES INDEX CSI 300 INDEX KOSPI INDEX HO CHI MINH STOCK INDEX JAKARTA COMPOSITE INDEX KARACHI 100 INDEX SRI LANKA COLOMBO ALL SHARE BSE SENSEX 30 INDEX Bangladesh Japan Hong Kong Singapore China South Korea Vietnam Indonesia Pakistan Sri Lanka India
Ending
5236.76 8488.71 18813.48 2713.02 2276.39 1863.74 340.94 3906.26 11187.88 5939.75 15857.08
P/E
0.00 16.66 8.52 6.64 11.44 26.96 6.97 17.08 7.97 12.95 14.49
Div Yield
1.43 2.22 3.64 4.04 1.77 0.34 5.40 2.03 6.51 1.98 1.50
1 Year change (%)

-0.34 -11.75 -20.76 -16.67 -24.79 -12.95 -34.48 0.83 -12.57 -14.48 -33.16
30 days volatility
7.2 18.59 26.62 18.14 21.35 26.17 14.21 14.08 14.74 18.53 25.11
Best Performing 10 Markets

Venezuela Stock Mkt Index MSE Top 20 Index Lusaka Stock Exchange All Share Price Index JSE Market Index Philippine Stock Index Dow Jones Industrial Average Jakarta Composite Index Laos Composite Index NZX 50 Index S & P 500 Index
1 Yr. Change
74.84% 18.84% 9.14% 8.17% 5.38% 4.74% 4.61% 0.00% -0.04% -0.57%
Worst Performing 10 Markets

Kazakhstan KASE Index HO CHI MINH STOCK Index Autralian Traded ATX Index Budapest Stock Exchange Index Nairobi All Share ISE National 100 Index Ukrinian Equities Index EGX 30 Index Athex Composite Share Price General Market Index Cyprus
1 Yr. Change
-34.08% -35.93% -36.08% -37.76% -37.95% -39.51% -44.09% -52.09% -54.12% -73.65%
68
World equity index in 2011
12400 12200 12000 11800 11600 11400 11200
Monthly Price Chart ( Dow Jones)
14080 12080 10080 8080 6080
Yearly Price Chart (Dow Jones)
Mid Line 10 Days SMA
4080 2080 80
Mid Line 10 Days SMA 25 Days SMA
1280 1260 1240 1220 1200 1180 1160 1140 1120 1100
S & P 500 (Monthly)
1600 1400 1200 1000 800
S & P 500 (Yearly)
Last Price 10 Days SMA 25 Days SMA
Last Price 25 Days SMA
10 Days SMA
600 400 200 0
2700 2650 2600 2550 2500 2450 2400 2350 2300
NASDAQ (Monthly)
12/2/2011
12/4/2011
12/6/2011
11/22/2011
11/24/2011
11/26/2011
11/28/2011
11/30/2011
12/8/2011
12/10/2011
12/12/2011
12/14/2011
12/16/2011
12/18/2011
12/20/2011
12/22/2011
12/24/2011
8800 8700 8600 8500 8400 8300 8200 8100 8000 7900 7800
11/22/2011 11/24/2011 11/26/2011 11/28/2011
12/26/2011
3000 2800 2600 2400 2200 2000 1800 1600 1400 1200 1000
NASDAQ (Yearly)
NIKKEI 225 (Monthly )
12000 10000 8000 6000
NIKKEI 225 (Yearly)
4000 2000 0
12/2/2011
12/4/2011
12/6/2011
11/30/2011
12/8/2011
12/10/2011
12/12/2011
12/14/2011
12/16/2011
12/18/2011
12/20/2011
12/22/2011
12/24/2011
12/26/2011
Md. Tareq Ibrahim
12/28/2011
69
Commodity market in 2011

Commodity
Energy Oil (Brent) ($ per barrel) Natural Gas ($ / million BTUs) Metals Gold ($ / troy ounce) Silver ($ / troy ounce) Agriculture Corn ( / bushel) Cotton Soybeans ( / bushel) Wheat ( / bushel) Sugar Floor Electronic Floor Floor Electronic 617 1/2 87.24 1193 3/4 649 1/4 23.87 1.94% -4.04% 5.52% 5.74% 0.76% 10.47% -4.68% -8.96% -24.81% 0.46% 787.25 132.51 1,467.25 992.75 29.90 424.00 72.27 687.5 92 700 89 677.5 97 622.5 104 50 na 42.9 na 84.6 25 na 33.33 na 15.38 na 23.8 na 0 Floor Floor 109.10 3.09 -1.99% -15.32% 15.69% -41.09% 126.74 6.04 1,900.23 48.44 71.51 3.09 1,313.93 26.84
Yearly Price Price (as on Monthly Price Trading Change (Dec 30 November Change (OctPlatform 2010-Nov 2011) Nov 2011) 2011)
Yearly High
Yearly Low
Median Analysts Forecasts
Analysts Expectation
Bullish Bearish na na na na Neutral na na
Q112 105 925.00
Q2 12 110 930.50
Q3 12 112 948.50
Q4 12 115 945.00
Floor Floor
1,606.95 29.12
-5.16% -8.20%
17.91% 0.00%
1790 35
1825 34.3
1860 37.5
1937 37
45.5 na
31.82 na
22.7 na
918.00 1,265.00 1,275.00 1,260.00 1,245.00 992.75 15.74 700 24 700 22.25 710 23.7 730 23.85
Commodity market update

Last month saw a decline across the boards and sectors. Equities, commodities and gold declined simultaneously. Investors are shying away from risky assets. U.S. treasury and Federal Reserve have declared that there will be no more quantitative easing for the time being. As a result speculators are realizing their positions and commodity prices seeing declining trend. On the other hand gloomy economy situation in Europe indicating that robust demand for commodities are fading away. One of the major exporters of commodities Australia has started to feel the pinch as the major consumer of Australian commodity Chinas growth is slowing down. Analysts are expecting that major commodity price may decline further if no stimulus package is declared to recover the economic demand.
6100.00
S&P GSCI Commodity Index
3100.00
Best Performing Commodities

Gas Oil Brent Crude RBOB Gasoline Heating Oil Gold Orange Juice Corn Crude Oil
Percentage Change (1 Yr.)

19.8 17.83 17.23 16.86 15.71 15.5 12.21 5.1
Gold:
After long rally in the year 2011 gold saw deep correction during the last one month as the dollar gained significant strength against other currencies. Due to the debt crisis concerns gold rose sharply in the previous months. But as the Federal Reserve has declared that they will not increase their balance sheet size in near future, speculators and money managers are exiting from the gold. During the last one month gold price declined by 5.16 % and went below the 10 and 25 days moving average. Analysts are expecting further decline in gold price in the coming months.
Worst Performing Commodities

Soybean Meal Aluminum Copper Lead Nickel Zinc Cocoa Wheat Natural Gas
Percentage Change (1 Yr.)

-15.73 -17.98 -18.7 -23.33 -24.73 -27.42 -31.74 -33.38 -36.83
Agricultural commodities:
Most agricultural commodities except cotton showed upward trend during the month of December. Cotton continued to see correction in its price as the demand side weakens due to recession in Europe and adequate supply due to good crop yield. Soybeans are trending upward as they have good correlation with crude oil price.
70
130 112 110 108 106 104 102 100
Monthly Price Chart ( Brent)
125 120 115 110 105 100
Yearly Price Chart (Brent)
Mid Line 10 Days SMA
95 90 85 80
Mid Line 10 Days SMA 25 Days SMA
4 3.5 3 2.5 2 1.5 1 0.5 0
Monthly Price Chart ( Natural Gas)
6 5 4 3
Yearly Price Chart (Natural Gas)
2 1 0
25 Days SMA
1800 1750 1700 1650 1600 1550 1500 1450
Monthly Trend (Gold)

2000 Last Price 10 Days SMA 1800
Yearly Chart (gold)
1600 Last Price 1400 10 Days SMA
1200
1000
71
34 33 32 31 30 29 28 27 26
Monthly Price Chart ( Silver)
60 50 40 30
Yearly Price Chart (Silver)
Last Price 20 10 0 10 Days SMA 25 Days SMA
100 98 96 94 92 90 88 86 84 82 80 78
Monthly Price Chart ( Cotton)
140 120 100 80 60 Last Price
Yearly Price Chart (Corn)
10 Days SMA 25 Days SMA
40 20 0
100 98 96 94 92 90 88 86 84 82 80 78
Monthly Price Chart ( Cotton)
140 120 100 80 60

Last Price
40 20 0
10 Days SMA 25 Days SMA
72
26 25.5 25 24.5 24 23.5 23 22.5 22 21.5 21
Monthly Price Chart ( Sugar)
35 30 25 20 15
Yearly Price Chart (Sugar)
10 5 0
660 640 620 600 580 560 540

11/22/2011 11/24/2011
Monthly Price Chart ( Corn)
900 800 700 600 500 400

12/2/2011 12/4/2011 12/6/2011 11/26/2011 11/28/2011 11/30/2011 12/8/2011 12/10/2011 12/12/2011 12/14/2011 12/16/2011 12/18/2011 12/20/2011 12/22/2011
300 200 100 0
Md. Tareq Ibrahim
73

Your Investors edge is not something you get from Wall Street experts. Its something you already have. You can outperform the experts if you use your edge by investing in companies or industries you already understand Peter Lynch
Company Name
Last Record Market Number of Shares Paid Up Market Free Float Corporate Year End Date For Category outstanding Capital Capitalization Shares Declaration AGM Date
mn BDT mn BDT mn
Last AGM
Last Corporate Declaration

Cash Stock
Bank
AB Bank Limited Al-Arafah Islami Bank Bank Asia Ltd. BRAC BANK Ltd. The City Bank Ltd Dhaka Bank Dutch-Bangla Bank Eastern Bank Export Import (Exim) Bank First Security Bank Liited IFIC Bank Islami Bank Jamuna Bank Mercantile Bank Mutual Trust Bank Ltd. National Bank Limited NCC Bank Ltd. One Bank Limited Premier Bank Ltd. Prime Bank Pubali Bank Rupali Bank limited Shahjalal Islami Bank Social Investment Bank Southeast Bank Standard Bank Trust Bank Ltd. Uttara Bank United Commercial Bank Ltd. ICB Islamic Bank Limited December December December December December December December December December December December December December December December December December December December December December December December December December December December December December December A A A A A A A A A A A A A A A A A A A A A A A A A A A A A Z 368.61 589.34 525.48 321.24 505.51 359.05 200.00 452.73 922.36 340.03 276.84 1000.77 364.84 496.81 254.35 860.37 594.17 318.87 381.86 779.81 670.76 137.50 445.27 639.39 831.70 406.13 266.11 287.52 727.49 664.70 3686.11 5893.37 5254.79 3212.35 5055.11 3590.46 2000.00 4527.26 9223.56 3400.32 2768.38 10007.71 3648.40 4968.09 2543.50 8603.66 5941.65 3188.68 3818.61 7798.10 6707.61 1375.00 4452.66 6393.93 8317.01 4061.32 2661.13 2875.17 7274.88 6647.02 24,512.66 21,923.34 19,600.37 14,487.71 26,387.68 15,833.92 31,640.00 30,151.54 25,641.50 8,976.84 18,520.46 54,842.26 12,586.99 16,792.15 8,418.98 58,590.90 18,359.71 15,018.66 11,684.95 35,247.39 32,867.29 19,208.75 14,293.02 17,071.78 24,867.86 12,102.73 11,203.35 22,081.33 31,936.74 6,514.08 85.53% 52.51% 50.27% 50.00% 87.12% 51.67% 38.69% 96.57% 52.26% 50.00% 58.88% 57.41% 39.00% 48.11% 60.58% 70.79% 58.38% 52.47% 53.54% 56.75% 83.25% 7.23% 55.29% 73.50% 71.12% 58.33% 39.99% 91.81% 59.90% 40.21% 8-May-11 27-Mar-11 24-Feb-11 22-Feb-11 31-Mar-11 20-Feb-11 13-Feb-11 14-Feb-11 30-Mar-11 19-May-11 13-Jul-11 10-Apr-11 10-May-11 7-Mar-11 30-Mar-11 6-Mar-11 24-Mar-11 20-Apr-11 22-Jun-11 2-Mar-11 29-Mar-11 27-Feb-11 24-Mar-11 1-Mar-11 30-Mar-11 10-Apr-11 9-Jun-11 10% 10% 30% 5% 5% 10% 20% 15% 26% 40% 20% 30% 35% 55% 35% 12% 27% 35% 22% 22% 20% 95% 32% 55% 31% 35% 35% 10% 30% 14% 20% 28% 20% 20% 25% -
11-May-11 30-May-11 30-Jul-11 28-Apr-11 27-Mar-11 13-Mar-11 22-Feb-11 9-Feb-11 7-Feb-11 13-Mar-11 20-Feb-11 6-Mar-11 20-Feb-11 3-Mar-11 23-Mar-11 11-Apr-11 16-Mar-11 22-Feb-11 31-Mar-11 24-Mar-11 13-Mar-11 24-Apr-11 13-Apr-11 22-May-11 24-Jul-11 13-Apr-11 18-May-11 6-Apr-11 19-May-11 8-Mar-11 11-Apr-11 24-Feb-11 24-Feb-11 23-Feb-11 15-Mar-11 24-Mar-11 28-Apr-11 13-Mar-11 28-Mar-11 20-Mar-11 6-Apr-11 3-Mar-11 27-Mar-11 15-Mar-11 31-Mar-11 12-Apr-11 19-May-11 21-Apr-11 9-May-11 31-Mar-11 28-Apr-11 6-Mar-11 22-Mar-11 10-Apr-11 16-May-11 4-Apr-11 24-May-11 24-Mar-11 15-May-11 4-May-11 30-May-11 5-May-11 21-Jun-11
NBFI
Bay Leasing & Investment Limited December A A A A A A A A A 94.86 53.73 55.35 51.66 50.31 33.75 99.00 162.93 94.85 948.60 537.31 553.45 516.64 503.12 3375.00 990.00 1629.32 948.54 6,858.38 3,594.59 2,601.23 3,017.20 4,281.53 61,526.25 13,919.40 7,641.51 2,997.38 58.10% 36.52% 87.82% 36.00% 82.15% 73.00% 64.01% 31.44% 27.07% 8-May-11 10-Apr-11 18-Apr-11 31-Mar-11 20-Mar-11 19-Sep-11 27-Feb-11 15-Feb-11 26-Apr-11 18-May-11 22-Jun-11 28-Apr-11 21-Jun-11 27-Apr-11 12-May-11 18-Apr-11 16-Jun-11 29-Mar-11 21-Apr-11 28-Sep-11 22-Oct-11 10-Mar-11 31-Mar-11 2-Mar-11 30-Mar-11 5-May-11 14-Jun-11 10% 15% 35% 55% 22% 25% 15% 25% 35% 65% 60% 10% Bangladesh Finance and Investment December Co. Ltd. Bangladesh Industrial Fin. Com. December Fidelity Assets & Sec.com First Lease International Investment Corporation Bangladesh December December June
IDLC Finance Limited December International Leasing and Financial December Services Ltd. Industrial Promotion & Development December com. Of Bd.Ltd
74

Investing is fun, exciting, and dangerous if you dont Peter Lynch
Company Name
Year End
Last Record Market Number of Shares Paid Up Market Free Float Corporate Date For Category outstanding Capital Capitalization Shares Declaration AGM Date
mn BDT mn BDT mn
Last AGM

Cash Stock
NBFI
Islamic Finance & Investment Lankabangla Finance Ltd. MIDAS Financing Ltd. December December June A A A A A A A A A A A A 69.33 82.35 60.13 70.80 190.63 104.19 100.91 162.45 92.40 95.16 57.20 73.92 693.28 823.52 601.34 708.01 1906.27 1041.86 1009.13 1624.50 924.00 951.60 572.00 739.20 2,426.49 14,147.99 3,740.36 5,614.53 13,229.54 3,761.10 9,516.05 17,024.79 5,313.00 5,890.38 6,469.32 8,899.97 56.76% 56.60% 48.30% 38.26% 46.38% 59.00% 45.44% 30.74% 55.79% 40.00% 9.62% 66.25% 3-Apr-11 20-Feb-11 20-Oct-11 10-Apr-11 21-Mar-11 3-Apr-11 18-Sep-11 27-Feb-11 3-Apr-11 23-Mar-11 26-Apr-11 24-Apr-11 12-Apr-11 19-May-11 3-Mar-11 27-Mar-11 3-Nov-11 8-Dec-11 8% 10% 16% 55% 10% 35% 75% 20% 100% 80% 75% 75% 10% 40%
Phoenix Finance and Investments Ltd. December Peoples Leasing & Fin. Services Ltd. December Premier Leasing & Finance Ltd. Delta Brac Housing Fin. Corp. Ltd. Prime Finance & Invest. United Leasing Company Ltd Union Capital Ltd. National Housing Fin. And Inv. Ltd. Uttara Finance December June December December December December December
27-Apr-11 13-Jun-11 3-Apr-11 2-May-11
13-Apr-11 26-May-11 29-Sep-11 22-Nov-11 7-Mar-11 29-Mar-11 28-Apr-11 4-Apr-11 9-Jun-11 25-Apr-11
12-May-11 22-Jun-11 3-May-11 30-May-11
Engineering
Aftab Automobiles Anwar Galvanizing Atlas Bangladesh Aziz Pipes BD.Autocars Bangladesh Lamps Bd.Thai Aluminium BSRM Steels Limited Eastern Cables Golden Son Limited Kay & Que Monno Jute Stafflers Navana CNG Limited National Polymer National Tubes Olympic Industries Quasem Drycells Rangpur Foundry S. Alam Cold Rolled Steels Ltd. Singer Bangladesh August June June December June December December December June December December December March June June June June December September December A Z A Z B A A A A A B A A A A A A A A A 68.38 13.20 23.70 4.85 3.57 7.21 41.10 325.50 24.00 106.19 4.90 0.40 49.66 9.25 18.02 52.24 27.65 10.00 98.37 39.27 683.80 132.00 237.04 48.50 35.69 72.08 410.99 3255.00 240.00 1061.90 49.03 4.00 496.58 92.46 180.18 522.41 276.48 100.00 983.71 392.68 9,751.03 415.80 6,034.96 146.47 213.45 1,466.86 2,548.14 37,627.80 1,418.40 6,647.52 253.95 108.76 4,196.13 580.65 1,264.86 6,895.80 1,788.83 791.00 6,177.71 10,857.49 69.00% 61.68% 49.00% 89.14% 53.13% 38.97% 80.18% 48.60% 49.00% 56.24% 94.78% 80.61% 57.50% 77.27% 47.06% 68.53% 65.51% 50.00% 53.15% 25.00% 22-Nov-11 30-Oct-11 27-Oct-11 2-May-11 3-Nov-11 11-Apr-11 2-May-11 3-Apr-11 1-Jun-11 2-May-11 2-May-11 2-May-11 27-Jul-11 18-Oct-11 2-Nov-11 30-Oct-11 23-Oct-11 2-May-11 27-Feb-11 16-Mar-11 4-Dec-11 20-Dec-11 28-Mar-12 20% 5% 75% 35% 10% 5% 15% 18% 10% 21% 5% 20% 33% 5% 25% 20% 10% 5% 14% 15% 20% 50% 20% 10% 75%
22-Nov-11 17-Dec-11 2-Jun-11 29-Jun-11 22-Nov-11 29-Dec-11 24-Apr-11 11-May-11 11-May-11 4-Jun-11 12-Apr-11 31-May-11 9-Jun-11 28-Jun-11 10-May-11 16-Jun-11 12-May-11 23-Jun-11 11-May-11 27-Jun-11 7-Aug-11 22-Sep-11 1-Nov-11 22-Nov-11 10-Dec-11
5-Dec-11 29-Dec-11 13-Nov-11 13-Nov-11 10-May-11 23-Jun-11 8-Mar-11 30-Mar-11
28-Mar-11 27-Apr-11 600%
Food & Allied Product

AMCL (Pran) Apex Foods Bangas June June June A A A A A A 8.00 5.70 1.49 60.00 11.62 53.43 80.00 57.02 14.85 600.00 116.22 534.34 1,106.40 512.65 236.56 37,158.00 597.38 2,719.77 57.25% 49.58% 50.00% 33.45% 91.60% 87.74% 27-Oct-10 17-Aug-11 13-Nov-11 7-Mar-11 30-Oct-11 30-Oct-11 11-Apr-10 23-Dec-10 6-Sep-11 29-Sep-11 5-Dec-11 31-Dec-11 30% 14% 32% 10% 20%
British American Tobaco Cor. Bang. Ltd. December Fine Foods Limited Fu Wang Food June June
16-Mar-11 10-Apr-11 430% 20-Nov-11 23-Dec-11 20-Nov-11 24-Dec-11 -
75

Over the past three decades, the stock market has come to be dominated by a herd of professional investors. Contrary to popular belief, this makes it easier for amateur investor. You can beat the market by ignoring the herd Peter Lynch
Company Name
mn BDT mn BDT mn
Last AGM

Cash Stock

Meghna Condensed Milk Meghna Pet National Tea Rahima Food Rangpur Dairy & Food Products June June December June December Z Z A A N 16.00 12.00 6.60 20.00 40.00 160.00 120.00 66.00 200.00 400.00 364.80 130.80 3,545.52 738.01 1,568.00 50.00% 50.00% 95.67% 47.01% 74.43% 7-Nov-10 2-Nov-11 16-May-11 15-Nov-11 27-Dec-10 29-Dec-11 22-Jun-11 29-Jul-11 22-Dec-11 25% 10% -
Fuel & Power

Bd. Welding Electrodes BEDL Linde Bangladesh Limited Dhaka Electric Supply Company Eastern Lubricants Jamuna Oil Khulna Power Company Limited Meghna Petroleum Ltd. MJL Bangladesh Ltd. Padma Oil Co. Power Grid Company of Bangladesh Ltd. Summit Power Ltd. Titas Gas Transmission and D. Co. Ltd. December June December June June June December June December June June December June A A A A A A A A A Z A A A 39.47 103.20 15.22 260.28 0.99 70.20 287.86 48.51 207.37 29.40 419.01 394.36 942.12 394.68 1032 152.18 2602.77 9.94 702.00 2878.58 485.10 2073.68 294.00 4190.12 3943.60 9421.16 1,918.14 4,912.32 9,379.03 30,061.99 348.50 12,769.38 18,566.86 9,425.49 20,467.22 21,556.08 26,355.84 29,971.37 64,629.16 88.69% 23.26% 40.00% 25.00% 18.40% 30.00% 25.00% 30.00% 22.18% 49.65% 23.75% 53.78% 25.00% 10-Mar-11 30-Oct-11 15-Nov-11 11-Dec-11 2-May-11 15-Mar-11 1-Aug-11 21-Mar-11 11-Dec-11 30-Mar-11 27-Oct-11 23-Mar-11 0-Jan-00 15-Nov-11 15-Jan-12 4-Dec-11 21-Jan-12 19-Dec-11 11-Feb-12 12-May-11 12-Jun-11 28-Mar-11 7-May-11 14-Aug-11 21-Sep-11 4-Apr-11 30-Apr-11 6-Mar-11 20-Mar-11 17-Apr-11 5% 100% 10% 30% 30% 45% 15% 50% 15% 30% 10% 20% 25% 30% 20% 5% 15% 50% 30% -
26-Dec-11 18-Feb-12 10-Apr-11 26-May-11 3-Nov-11 27-Nov-11
Jute
Jute Spinners Sonali Aansh June June A A 1.70 2.71 17.00 27.12 281.69 491.69 63.79% 55.63% 27-Oct-11 7-Dec-11 13-Nov-11 15-Dec-11 29-Dec-11 20% -
Textile
Al-Haj Textile Apex Spinning. CMC Kamal The Dacca Dyeing & Manufacturing Co.ltd. Delta Spinners Desh Garments Dulamia Cotton H.R.Textile Maksons Spinning Mills Limited Metro Spinning Mithun Knitting Prime Textile Rahim Textile R.N. Spinning Mills Limited Safko Spinnings June March December June June June June September September June June December June June December Z A A A A B Z A A A A A A A A 9.23 8.40 59.13 58.46 30.58 3.37 7.56 22.00 170.43 47.61 7.19 38.20 2.00 139.14 18.56 92.30 84.00 591.25 584.64 305.75 33.70 75.57 220.00 1704.30 476.10 71.88 382.00 20.02 1391.41 185.60 505.83 1,058.40 2,530.55 3,127.82 1,106.82 228.15 145.84 1,009.80 6,425.21 1,856.79 902.75 1,436.32 445.04 11,047.81 701.57 72.57% 49.72% 43.22% 47.35% 66.90% 41.95% 50.00% 50.00% 65.42% 65.91% 50.00% 50.00% 19.83% 33.86% 68.30% 3-Nov-11 21-Jul-11 2-May-11 23-Oct-11 1-Nov-11 26-Oct-11 31-Oct-11 1-Feb-11 28-Oct-10 27-Oct-11 13-Nov-11 27-Oct-11 24-Oct-11 21-Mar-11 12-Apr-11 22-Dec-11 4-Aug-11 29-Sep-11 15-May-11 28-Jun-11 15-Nov-11 29-Dec-11 21-Nov-11 22-Dec-11 23-Nov-11 24-Dec-11 24-Feb-11 28-Mar-11 11-Nov-10 27-Dec-10 16-Nov-11 29-Dec-11 5-Dec-11 31-Dec-11 24-Dec-11 2-Nov-11 24-Nov-11 30-Mar-11 21-Apr-11 4-May-11 26-May-11 15% 10% 7% 5% 10% 5% 20% 13% 16% 10% 25% 15% 15% 10% 30% 16%
76

Behind the every stock is a company. Find out what its doing Peter Lynch
Company Name
mn BDT mn BDT mn
Last AGM

Cash Stock
Textile
Saiham Textile Sonargaon Textiles Square Textile Stylecraft Tallu Spinning Malek Spinning Mills Ltd. Zahintex Industries Limited June December December March June June June A A A A Z A N 25.00 22.92 97.41 0.55 18.61 176.00 45.00 250.00 229.15 974.06 5.50 186.09 1760.00 450.00 1,490.00 834.11 11,445.20 332.75 1,600.37 6,089.60 2,187.00 65.00% 50.00% 38.69% 54.38% 46.26% 25.00% 44.72% 5-Sep-11 5-Apr-11 20-Apr-11 1-Aug-11 13-Nov-11 30-Oct-11 14-Sep-11 9-Oct-11 15% 16% 50% 10% 20% 15% 10% 17-Apr-11 14-May-11 10-May-11 16-Jun-11 17-Aug-11 22-Sep-11 5-Dec-11 31-Dec-11 16-Nov-11 27-Dec-11
Pharmaceuticals & Chemicals

ACI Limited. ACI Formulations Limited Ambee Pharma Beximco Pharma Beximco Synthetics Glaxo SmithKline The Ibn Sina Imam Button Keya Cosmetics Kohinoor Chemicals Libra Infusions Limited Marico Bangladesh Limited Pharma Aids Reckitt Benckiser(Bd.)Ltd. Renata Ltd. Square Pharma Beacon Pharmaceuticals Limited Active Fine Chemicals Limited June December December December December December December June June June June March June December December March June December A A A A A A A Z A A A A A A A A Z A 19.71 30.00 2.00 251.77 68.55 12.05 12.96 7.70 73.99 5.00 1.25 31.50 3.12 4.73 22.59 264.83 231.00 46.00 197.15 300.00 20.00 2517.68 685.47 120.46 129.60 77.00 739.94 50.00 12.52 315.00 31.20 47.25 225.94 2648.35 2310.00 460.00 4,197.27 2,790.00 818.20 23,892.77 2,858.42 8,166.29 1,752.19 134.75 5,549.59 1,147.00 422.29 12,325.95 789.05 3,702.51 28,379.70 63,613.31 7,161.00 3,068.20 63.24% 33.98% 35.73% 87.03% 64.33% 18.02% 51.67% 61.38% 65.99% 59.00% 50.00% 10.00% 55.77% 13.27% 49.00% 45.84% 59.09% 80.90% 21-Apr-10 20-Apr-11 2-May-11 28-Apr-11 2-May-11 13-Feb-11 2-May-11 23-Oct-11 31-Oct-10 13-Nov-11 27-Oct-11 25-Apr-11 9-Oct-11 18-Apr-11 2-May-11 24-Jul-11 30-Oct-11 13-Apr-11 2-May-10 16-Jun-10 105% 4-May-11 15-Jun-11 16-May-11 30-Jun-11 11-May-11 2-Jul-11 30% 30% 20% 15% 20% 21% 25% 35% 5% 15%
11-May-11 30-Jun-11
7-Mar-11 28-Apr-11 200% 16-May-11 23-Jun-11 1-Nov-11 24-Nov-11 25-Dec-10 18-Dec-11 28-Dec-11 8-May-11 28-Jun-11 20-Oct-11 24-Nov-11 8-May-11 15-Jun-11 11-May-11 18-Jun-11 16-Aug-11 21-Sep-11 24-Nov-11 26-Dec-11 27-Apr-11 21-Jun-11 10% 40% 20% 20% 21% 50% 60% 30% -
Paper & Printing

Hakkani Pulp & Paper June B 19.00 190.00 744.80 35.86% 11-Sep-11 17-Dec-11 5% -
Travel & Leisure

United Airways (BD) Ltd. July A 441.00 4410.00 10,539.90 87.55% 17-Jul-11 18-Aug-11 20-Sep-11 10%
Service & Real Estate

Eastern Housing Ocean Containers Limited Samorita Hospital Summit Alliance Port Ltd July December June December A A A A 65.16 32.73 8.80 120.86 651.60 327.25 88.04 1208.65 4,645.88 2,264.57 931.51 7,541.94 51.66% 26.90% 49.80% 25.66% 26-Oct-11 30-Mar-11 30-Oct-11 30-Mar-11 24-Nov-11 12-Apr-11 25-May-11 12-Jan-12 12-Apr-11 25-May-11 10% 20% 5% 25% 16% 25%
Cement
Aramit Cement Confidence Cement December December A A 15.40 37.49 154.00 374.95 1,754.06 4,803.06 57.14% 77.41% 2-May-11 28-Apr-11 18-May-11 25-Jun-11 12-May-11 20-Jun-11 25% 10% 15%
77

Often there is no correlation between the success of a companys operations and the success of its stock over a few months or even a few years. In the long term, there is a 100 percent correlation between the success of the company and the success of its stock. This disparity is key to making money; it pays to be patient, and to own successful companies Peter Lynch
Company Name
mn BDT mn BDT mn
Last AGM

Cash Stock
Cement
Heidelberg Cement Bd. Lafarge Surma Cement Meghna Cement December December December A Z A 56.50 1161.37 22.50 565.04 11613.74 225.00 14,408.42 30,311.85 3,224.31 38.62% 41.13% 47.70% 20-Apr-11 6-Apr-10 23-May-11 5-May-11 13-Jun-11 27-Apr-11 24-Jun-10 5-Jun-11 15-Jun-11 43% 25% -
IT
Agni Systems Ltd. BDCOM Online Ltd. Daffodil Computers In Tech Online Ltd. Information Services Network June June June December December A B A A A 32.31 27.55 52.29 15.93 9.90 323.09 275.54 522.89 159.28 99.05 1,188.97 743.95 1,176.50 463.50 325.87 94.71% 86.68% 47.76% 97.45% 80.46% 23-Oct-11 30-Oct-11 31-Oct-11 28-Apr-11 2-May-11 15-Nov-11 22-Dec-11 22-Nov-11 22-Dec-11 20-Nov-11 29-Dec-11 18-May-11 30-Jun-11 12-May-11 26-Jun-11 5% 6% 5% 5% 4% 10% 10%
Tannery
Apex Adelchi Footwear Ltd. Apex Tannery Bata Shoe Legacy Footwear December June December December A A A A 11.25 15.24 13.68 7.98 112.50 152.40 136.80 79.75 3,394.13 1,990.34 8,242.20 319.00 90.91% 70.00% 30.00% 54.39% 27-Mar-11 14-Aug-11 21-Apr-11 11-May-11 10-Apr-11 3-May-11 24-Aug-11 29-Sep-11 40% 30% 10%
4-May-11 23-Jun-11 105% 1-Jun-11 28-Jul-11 -
Ceramics
Fu-Wang Ceramic Monno Ceramic June June A A A A B 59.90 23.93 253.08 111.13 6.46 598.95 239.28 2530.81 1111.27 64.61 2,593.45 1,531.39 20,550.17 4,700.69 259.72 82.85% 84.38% 19.35% 50.00% 52.16% 27-Oct-11 21-Aug-11 30-Jan-11 2-May-11 16-Oct-11 17-Nov-11 26-Dec-11 8-Sep-11 30-Sep-11 2-Oct-11 20-Mar-11 11-May-11 2-Jul-11 15% 5% 10% 25% 10% 15% -
RAK Ceramics (bangladesh) Limited December Shinepukur Ceramics Limited Standard Ceramic December June
25-Oct-11 27-Dec-11
Insurance
Agrani Insurance Co Ltd. Asia Insurance Limited Asia Pacific Gen Ins BGIC Central Insurance City General Insurance Co. Ltd. Continental Insurance Dhaka Insurance Limited Eastern Insurance Eastland Insurance Federal Insurance Global Insurance Co. Ltd. Green Delta Insurance December December December December December December December December December December December December December A A A A A A A A A A A A A Z Z A A A 19.97 41.25 42.35 51.45 22.47 40.66 29.13 30.00 41.06 37.82 37.70 19.97 40.82 18.00 2.56 36.92 36.98 18.90 199.65 412.50 423.50 514.55 224.67 406.56 291.31 300.00 410.57 378.20 376.98 199.65 408.24 180.00 256.13 369.20 369.80 189.00 870.47 2,545.13 1,876.11 2,629.33 1,559.22 1,736.01 1,342.93 3,075.00 2,504.49 3,729.09 1,605.95 958.32 6,250.15 820.80 824.75 1,927.21 1,708.48 1,035.72 61.77% 60.00% 55.71% 83.18% 47.99% 62.65% 65.40% 60.00% 50.00% 67.41% 55.47% 61.74% 77.48% 60.00% 48.00% 76.85% 61.36% 60.00% 2-May-11 27-Feb-11 10-Apr-11 27-Apr-11 18-Apr-11 24-Apr-11 28-Feb-11 20-Apr-11 29-Apr-10 10-Mar-11 28-Apr-11 2-May-11 17-Apr-11 28-Apr-11 16-May-11 26-Jun-11 6-Mar-11 4-May-11 5-May-11 3-Jul-11 25% 10% 5% 5% 40% 10% 25% 12% 15% 12% 7% 100% 10% 37% 12% 10% 20% 15% 20% 12% 13%
8-May-11 28-Jun-11 3-May-11 20-Jun-11 4-May-11 23-Jun-11 8-Mar-11 22-Mar-11 2-May-11 27-Jun-11 27-Jun-11 7-Jul-10
21-Mar-11 28-Apr-11 18-May-11 16-May-11 5-Jul-11 9-Jul-11
28-Apr-11 15-Jun-11 22-May-11 21-Jul-11
Islami Insurance Bangladesh Limited December Janata Insurance Karnaphuli Insurance Mercantile Insurance Nitol Insurance December December December December
15-May-11 29-May-11 26-Jul-11 28-Apr-11 17-Apr-11 26-Apr-11 11-May-11 29-Jun-11 27-Apr-11 27-Jun-11 5-May-11 23-Jun-11
78

You have to know what you own, and why you own it. This baby is a cinch to go up! Doesnt count Peter Lynch
Company Name
Year End
Last Record Market Number of Shares Paid Up Market Free Float Corporate Date For Category outstanding Capital Capitalization Shares Declaration AGM Date
mn BDT mn BDT mn
Last AGM

Cash Stock
Insurance
Northern General Insurance Company Ltd. Paramount Insurance Co. Ltd. Peoples Insurance Phoenix Insurance Pioneer Insurance Pragati Insurance Prime Insurance Provati Insurance Company Limited Purabi Gen. Insurance Reliance Insurance December December December December December December December December December December A A A A A A A A A A A A A A A A Z A A A A A A A A A 22.22 18.15 46.20 30.74 27.19 44.78 26.76 16.80 8.35 41.07 18.15 39.49 20.33 18.15 19.84 33.00 3.60 39.39 23.03 34.65 20.97 8.40 15.80 9.24 9.41 20.69 222.18 181.50 462.00 307.36 271.88 447.80 267.61 168.00 83.49 410.67 181.50 394.90 203.28 181.50 198.38 330.00 36.00 393.90 230.34 346.52 209.73 84.00 157.95 92.40 94.05 206.88 1,128.67 744.15 1,935.78 2,717.10 2,503.97 3,663.03 1,562.86 824.88 985.18 4,344.89 980.10 2,740.58 874.10 818.57 1,360.85 2,362.80 10,922.40 6,491.49 4,277.48 12,887.00 5,255.92 1,746.36 3,212.70 1,533.84 1,664.69 3,541.80 60.94% 60.00% 49.09% 57.35% 53.54% 50.00% 52.35% 60.00% 50.65% 52.19% 62.47% 36.26% 69.00% 60.00% 60.00% 50.00% 50.00% 75.02% 85.00% 51.77% 60.31% 60.00% 60.00% 57.50% 60.00% 56.12% 13-Apr-11 18-Apr-11 28-Mar-11 2-May-11 26-Apr-11 8-May-11 15-Feb-11 2-May-11 27-Apr-11 20-Jun-11 4-May-11 11-Apr-11 3-Jul-11 1-Jun-11 5% 15% 10% 30% 5% 12% 10% 5% 25% 25% 5% 30% 12% 15% 35% 10% 20% 12% 10% 15% 10% 20% 40% 40% 60% 37% 12% 35% 12% 14% 48%
15-May-11 15-Jun-11 9-May-11 30-May-11 18-May-11 20-Jun-11 1-Mar-11 18-Apr-11 26-May-11 28-Jun-11
15-May-11 25-May-11 27-Jul-11 23-Mar-11 9-May-11 2-May-11 2-May-11 28-Apr-11 25-Apr-11 3-Apr-11 0-Jan-00 19-Sep-11 30-Jun-10 2-Aug-11 24-Jun-10 20-Jun-10 30-Jun-10 23-Jun-11 27-Jul-10 30-Jun-11 4-Apr-11 30-Apr-11
Republic Insurance Company Limited December Rupali Insurance Sonar Bangla Insurance Standard Insurance Limited Takaful Islami Insurance Limited United Insurance Delta Life Insurance Fareast Islami Life Meghna Life Insurance National Life Insurance Popular Life Insurance Pragati Life Insurance Prime Islami life Insurance Progressive Life Rupali Life Insurance Company Limited Sandhani Life Insurance Telecommunication Grameenphone Ltd. December December December December December December December December December December December December December December December December
29-May-11 21-Jun-11 12-May-11 7-Jul-11
19-May-11 21-Jul-11 10-May-11 21-Jun-11 10-May-11 20-Apr-11 2-Jul-11 2-Jun-11
20-Jun-11 18-Jul-04 29-Sep-11 24-Oct-11 12-Jul-11 18-Aug-11 5-Aug-10 3-Oct-11
23-Jun-11 26-Aug-10 25-Aug-11 9-Aug-10 15-Jul-10 2-Sep-10
13-Jul-11 21-Sep-11 11-Jul-11 29-Aug-10 11-Jul-11 27-Jul-11
1350.30
13503.00
234,682.14
10.00%
7-Feb-11
20-Feb-11 19-Apr-11
85%
Miscellaneous
Aramit Berger Paints BEXIMCO BSC GQ Ball Pen Savar Refractories Sinobangla Industries Usmania Glass December December December June December June October June A A A A A Z A A 6.00 23.19 355.50 2.00 5.39 1.39 20.00 8.19 60.00 231.89 3555.02 200.00 53.91 13.93 199.97 81.90 1,677.00 13,050.74 40,847.21 1,086.50 1,017.35 109.61 919.84 1,021.29 65.06% 5.00% 86.75% 12.50% 62.16% 58.10% 72.99% 49.00% 2-May-11 7-Mar-11 28-Apr-11 8-Dec-10 5-Jun-11 30-Oct-11 17-Jan-11 23-Oct-11 16-May-11 25-Jun-11 22-Mar-11 9-May-11 11-May-11 30-Jun-11 19-Jan-11 14-Jun-11 28-Jun-11 5-Jan-12 27-Jan-11 19-Feb-11 31-Oct-11 25-Nov-11 40% 180% 5% 10% 50% 20% 20%
79
Never invest in a company without understanding its finances. The biggest losses in the stocks come from companies with poor balance sheets. Always look at the balance sheet to see if a company is solvent before you risk your money on it Peter Lynch
Key Financial (2010)

Net Profit (In Mn) Operating Income (In Mn) Total Assets (In Mn)
Capital Adequacy Indicators (2010)

Paid Up Captial (In Mn)
Growth Indicators 2010

Earnings (In %) Deposits Loans & Advances (In %) (In %)
Captial Operating Operating Adequacy Income (In %) Profit (In %) Ratio (In %)
BANK
ABBANK ALARABANK BANKASIA BRACBANK CITYBANK DHAKABANK DUTCHBANGL EBL EXIMBANK FIRSTSBANK ICBIBANK IFIC ISLAMIBANK JAMUNABANK MERCANBANK MTBL NBL NCCBANK ONEBANKLTD PREMIERBAN PRIMEBANK PUBALIBANK RUPALIBANK SHAHJABANK SIBL SOUTHEASTB STANDBANKL TRUSTBANK UCBL UTTARABANK 3989.5 1816.1 1929.6 2073.1 1870.2 1679.0 2002.3 2514.2 3458.0 548.6 -1358.2 1664.1 4485.5 1066.0 1425.3 988.4 6871.6 2371.7 1887.5 2529.7 3642.8 3233.1 600.3 2072.3 640.1 2763.9 1369.1 1294.4 2179.8 1551.9 12004.7 4388.6 6690.4 10399.5 7361.4 5556.4 7159.1 6635.4 7717.3 2085.2 506.1 6373.0 15711.9 3746.2 4775.8 3398.6 13092.5 5674.5 4467.8 4776.5 10792.6 9038.3 4789.8 4851.0 2633.1 8507.0 3669.0 3770.0 7855.7 5808.3 134003.9 74005.0 105198.1 122801.2 90898.1 90140.9 101181.6 82488.6 113047.5 63619.8 18641.6 70840.3 330785.2 71063.8 87140.1 56457.4 134748.0 83554.2 58704.9 68240.3 155532.8 128462.7 124434.5 78800.4 54665.8 131784.3 66596.0 58360.7 129774.4 81451.8 3686.1 5893.4 5254.8 3212.4 5104.9 3590.5 2000.0 4527.3 9223.6 3400.3 6647.0 2768.4 10007.7 3627.6 4968.1 2543.5 8603.7 5941.7 3188.7 7798.1 3818.6 6707.6 1375.0 4452.7 6393.9 8317.0 4061.3 2661.1 2875.2 7274.9 10.15 14.49 8.11 12.07 11.15 10.09 9.64 10.81 9.80 7.77 9.78 12.04 9.49 9.12 11.49 12.29 10.91 9.69 10.01 11.69 11.23 9.46 10.08 9.33 11.25 11.25 12.81 8.22 12.60 43.35 66.34 62.01 40.45 68.54 31.21 48.57 43.31 73.67 57.06 28.77 71.12 27.46 27.95 36.77 33.59 99.88 29.78 69.95 94.69 31.69 31.02 19.12 66.31 53.30 38.41 67.21 52.74 51.30 26.10 40.26 76.89 62.35 45.20 83.16 36.70 55.75 51.87 82.84 60.30 (5.07) 96.18 23.44 25.95 48.93 23.04 162.52 30.68 79.91 107.53 32.79 42.86 16.59 72.88 53.69 38.09 81.13 74.74 51.37 22.00 16.75 111.43 45.39 50.95 128.43 75.01 76.00 72.85 100.36 67.85 (34.14) 85.00 31.79 15.48 76.51 20.44 230.01 37.93 159.73 50.59 30.84 54.53 (64.02) 93.57 48.66 28.11 79.14 111.69 133.66 40.41 14.08 38.11 52.47 18.40 8.07 11.20 22.80 14.06 28.60 32.82 4.20 11.80 19.50 43.25 32.74 8.25 33.37 26.09 29.24 46.30 16.68 11.74 23.29 32.67 40.40 10.95 37.10 3.91 45.34 10.91 34.23 48.29 58.16 34.95 38.73 20.19 39.90 22.95 37.99 34.60 3.62 29.19 21.95 54.04 37.44 11.35 41.26 25.49 29.69 37.83 33.15 20.08 26.18 39.77 38.00 21.27 36.00 30.91 51.66 23.37
Note: Source:
N/A= Not Available N/M= Not Meaningful DSE & Companies Financial Statement
80
Avoid hot stocks in hot industries. Great companies in cold non growth industries are consistent big winners Peter Lynch
Profitability Ratio
Net Operating Net Profit Interest Profit ROE Margin Margin Margin (In %) (In %) (In %) (In %) ROA (In %)
Asset Quality Indicators
Assets Liability Management
Half-Yearly
EPS
Valuation
Adjusted Trailing PE P/B
Non Provisioning Cost of Performing Coverage Funds Loan Ratio Ratio (In %) (In %) (In %)
Loan to Operating Net Profit Deposit Profit Growth Ratio Growth (In %) (In %) (In %)
BANK
4.71 1.99 4.55 6.73 6.40 3.97 5.81 68.58 69.73 63.51 53.07 56.12 69.14 58.65 68.21 4.41 9.13 3.41 4.48 4.28 3.52 2.91 3.07 5.14 4.23 5.04 3.56 4.48 6.40 3.76 3.88 3.87 3.20 3.80 3.72 4.74 4.49 76.14 57.72 (11.68) 60.32 61.13 64.36 59.62 58.90 68.38 72.26 67.60 60.47 65.07 60.69 51.08 72.74 62.12 79.57 75.52 62.99 60.22 52.80 33.23 41.38 28.84 19.93 25.41 30.22 27.97 37.89 44.81 26.31 (268.35) 26.11 28.55 28.46 29.84 29.08 52.48 41.80 42.25 52.96 33.75 35.77 12.53 42.72 24.31 32.49 37.31 34.33 27.75 26.72 32.74 27.49 32.12 22.19 21.52 29.08 35.27 24.31 36.11 16.17 26.52 33.41 20.57 20.52 24.83 25.25 49.02 30.82 47.59 46.35 24.94 27.07 14.01 35.50 16.52 19.41 27.81 29.42 32.25 20.95 3.31 2.96 2.22 1.91 2.23 2.00 2.19 3.30 3.47 0.98 (7.22) 2.49 1.47 1.78 1.86 1.81 6.06 3.17 3.63 4.38 2.60 2.74 0.57 3.01 1.35 2.26 2.37 2.30 1.98 2.02 1.92 1.14 1.62 5.69 4.39 4.57 2.46 1.99 1.96 2.61 22.99 4.64 1.78 1.82 1.79 2.40 3.69 2.25 3.71 4.66 1.15 2.43 11.96 1.91 4.76 5.98 1.96 2.25 1.20 5.50 105.96 131.79 99.59 88.38 75.84 76.42 127.69 52.27 92.60 39.86 101.90 85.58 113.48 129.08 115.12 129.16 75.03 100.00 104.28 78.29 153.87 107.50 78.12 84.23 76.06 50.42 105.31 78.75 41.43 44.14 9.72 7.15 6.51 4.90 7.06 6.74 7.10 6.74 7.10 8.65 6.12 7.94 10.62 6.52 9.31 7.27 7.61 6.39 8.09 6.96 10.15 5.98 7.63 7.83 7.20 9.81 4.74 102.06 101.15 95.10 98.21 89.48 93.87 81.28 104.46 99.71 92.51 102.28 87.32 89.65 81.97 90.02 82.30 89.78 93.04 82.93 84.84 95.22 90.14 72.48 97.58 82.70 87.63 88.71 84.91 82.82 73.89 (58.18) 39.40 (5.78) 1.94 42.38 11.39 5.65 6.31 (38.77) 24.71 14.05 29.62 41.96 (59.89) (36.06) 48.92 (23.81) (18.37) (43.02) 6.48 (14.17) (16.66) (31.02) 162.89 82.97 (3.23) (11.88) 5.40 7.49 (46.89) 49.66 (0.92) (1.95) 15.78 7.49 12.49 24.72 (47.74) 40.78 26.55 24.16 58.82 21.19 (38.88) 59.19 13.20 8.90 2.25 23.17 (8.29) 59.25 (15.35) 88.73 11.21 (0.61) (13.03) 23.88 6.81 25.60 1.88 18.76 26.63 20.38 2.49 56.52 2.50 0.55 0.91 -1.37 23.64 35.08 1.58 12.28 11.93 3.75 1.37 26.65 2.05 0.71 2.18 49.13 1.39 0.64 15.34 7.17 21.79 2.97 1.20 11.36 10.06 8.23 8.75 9.49 8.76 8.45 7.87 7.92 8.74 10.25 24.79 7.40 22.02 8.47 9.28 8.68 14.03 13.39 3.21 2.32 1.50 2.02 1.95 3.27 1.97 3.14 1.96 2.05 2.27 1.37 2.15 4.19 1.47 2.17 2.30 4.14 2.60 6.87 10.59 9.54 7.82 11.02 8.38 14.93 11.94 8.40 13.08 1.75 2.89 2.80 1.49 2.27 2.46 4.66 2.52 2.05 2.35 ABBANK ALARABANK BANKASIA BRACBANK CITYBANK DHAKABANK DUTCHBANGL EBL EXIMBANK FIRSTSBANK ICBIBANK IFIC ISLAMIBANK JAMUNABANK MERCANBANK MTBL NBL NCCBANK ONEBANKLTD PREMIERBAN PRIMEBANK PUBALIBANK RUPALIBANK SHAHJABANK SIBL SOUTHEASTB STANDBANKL TRUSTBANK UCBL UTTARABANK
* For a December year End Company, 30th September Revenue is considered as 09M revenue and for a June year End company, 31st March revenue is considered as 09M revenue.
81
With small companies, youre better off to wait until they turn a profit before you invest Peter Lynch
Key Financial (2010)

Net Profit Operating Income
Capital Adequacy Indicators

2 years Profit Growth
Growth Indicators 2010

Operating Income Operating Profit Earnings Deposits Loans & Advances
Total Assets Paid Up Captial
NBFI
BAYLEASING BDFINANCE BIFC DBH FASFIN FLEASEINT ICB IDLC ILFSL IPDC ISLAMICFIN LANKABAFIN MIDASFIN NHFIL PHOENIXFIN PLFSL PREMIERLEA PRIMEFIN ULC UNIONCAP UTTARAFIN 615 246 206 307 79 3,057 1,327 343 133 124 1,878 171 162 233 1,031 74 1,730 378 571 846 738 444 418 273 217 5,638 3,027 978 348 302 3,160 326 326 582 1,386 197 2,265 590 1,233 666 6,667.00 4,398.73 6,347.53 22,048.79 2,857.15 38,954.92 26,929.99 16,274.00 6,422.51 4,432.82 19,322.24 4,127.16 5,264.39 11,913.23 13,917.59 5,047.46 12,911.95 8,939.76 8,373.22 11,375.18 948.60 537.31 553.45 1,009.13 516.64 503.12 3,375.00 990.00 1,629.32 948.54 693.28 823.52 546.68 572.00 708.01 1,906.27 520.93 1,624.50 924.00 951.60 739.20 36% 47% 136% 26% 146% #DIV/0! 159% 70% 270% 96% 108% 29% 81% 74% 13% 48% 124% 96% 58% 153% 17% 53% 112% 85% 31% 165% 132% -30% 150% 32% 163% 11% 101% 46% 172% 6% 61% 150% 101% 35% 65% 142% -29% 165% 37% 198% 73% 84% 61% 67% 20% -13% 152% 143% 56% 88% 190% -46% 153% 133% 250% 71% 2% 25% 17% 37% -79% 3% 46% 18% 14% 66% 7% -19% 3% 18% 12% 45% 9% 24% -9% 15% 18% 57% 11% 19% 66% 2% 21% 5% 27% 33% 282% 187% 84% 213% 45% 277% 232% 90% 65% 25% 288% 206% 66% 31% -8% -50% 20% 29% 28% 132% -1% 38% 40% 33% 78%
Company Name
Revenue (mn)
2010 09 M 11
Net Profit (mn)

2010 09 M 11
EPS (BDT)
2010 09 M 11
Revenue Growth (%)

2009 2010 09 M 11
Net Profit Growth (%)

2009 2010 09 M 11
CEMENT
ARAMITCEM CONFIDCEM HEIDELBCEM LAFSURCEML MEGHNACEM MICEMENT 917.63 1718.92 8321.77 5655.37 5715.17 4022.27 724.46 1676.96 6386.44 3584.85 4541.19 0.00 79.36 240.99 998.73 (1638.45) 50.15 435.94 40.07 158.94 589.86 (1354.80) 99.94 0.00 56.68 7.39 176.75 (28.22) 2.23 5.36 26.02 4.24 104.39 23.33 4.44 0.00 10.65 (1.27) 13.15 21.44 44.02 36.54 8.74 41.55 15.46 (24.90) 21.47 28.62 (0.81) 30.52 (0.41) (21.26) 2.44 2418.26 603.16 43.60 (8.23) 490.96 76.91 30.76 68.05 17.38 (189.89) (63.31) 31.26 (19.39) (9.29) (29.23) (13517.88) (17.72)
CERAMIC
SP CERAMICS MONNOCERA RAKCERAMIC STANCERAM FUWANGCER
Note: Source:
1926.75 813.79 4009.02 172.59 428.08
1458.35 191.42 3440.49 159.99 450.62
253.25 3.84 606.52 3.15 24.28
156.78 0.00 551.27 5.37 46.74
2.28 2.37 2.39 4.88 7.01
1.41 4.01 2.18 8.30 7.44
10.82 (19.52) 18.20 4.44 5.38
13.62 4.00 4.43 55.83 36.93
-2.49 (9.90) 13.83 27.96 35.19
(5.57) (81.48) 13.43 56.83 134.25
46.92 272.98 87.00 204.90 852.75
-35.66
8.83 37.53 151.79
N/A= Not Available N/M= Not Meaningful *= 2011 Statement DSE & Companies Financial Statement
82
Long shots almost always miss the mark Peter Lynch
Profitability Ratio 2010

Net Operating Net Profit Interest Profit Margin Margin Margin 1.5% 3.6% 2.2% 4.2% 3.5% 114% 89% 77% 290% 80% 83% 55% 49% 113% 36% ROE ROA
Asset Quality Indicators
Assets Liability Management

Loan to Deposit Ratio 306% 234% 174% 143% 363% -96% 29% n/a 319% 163% 155% 130% 709% 208% 391% 142% 121% 251% 162% 232% 167% 171% 243% 20% 32% 1% 8% -50% -55% -23% 14% -62% -65% -5% -28% -39%
Half-Yearly
Net Profit Growth Operating Profit Growth 42% -74% -21% EPS
Valuation
Adjusted Trailing P/BV PE
Non Provisioning Cost of Performing Coverage Funds Loan Ratio Ratio 5.9% 6.5% 7.0% 0.04% 0.4% 90% 35% 23% 2217% 1313% 26% 11.55% 12.05% 11.46% 10.00% 13.62%
NBFI
37% 33% 31% 26% 10% 10% 7% 4% 2% 4% 11% -70% -22% 72.26 4.58 37.26 49.00 18% 27% 17.26 27.56 114.23 -52% -23% -22% -22% -36% 134.05 21.06 14.01 18.03 20.65 31.36 -9% -44% -4% 25% -41% 23% -30% 11% 28.33 33.78 5.41 26.28 10.64 40.94 5.98 11.44 11.7 19.9 16.5 24.5 32.7 28.8 16.8 12.6 25.7 28.1 24.7 8.9 64.7 38.1 20.9 14.0 27.5 11.2 16.0 12.4 10.7 2.81 3.94 3.43 6.80 3.19 5.32 2.48 3.91 6.39 1.56 2.90 3.03 5.93 7.98 3.66 4.12 5.61 4.61 3.49 5.18 2.88 BAYLEASING BDFINANCE BIFC DBH FASFIN FLEASEINT ICB IDLC ILFSL IPDC ISLAMICFIN LANKABAFIN MIDASFIN NHFIL PHOENIXFIN PLFSL PREMIERLEA PRIMEFIN ULC UNIONCAP UTTARAFIN
6.5% 5.9% 1.8% 4.0% 4.1% 6.2% 5.1% 8.2% 2.2% 4.8% 4.3% 4.3% 7.2% 4.1% 3.7%
89% 69% 86% 66% 72% 84% 80% 84% 96% 90% 80% 93% 71% 86% 185%
54% 44% 35% 38% 41% 59% 53% 50% 40% 74% 37% 76% 64% 46% 127%
45% 44% 28% 7% 17% 54% 30% 21% 21% 45% 13% 60% 26% 48% 31%
8% 5% 2% 2% 3% 12% 5% 3% 2% 9% 2% 15% 4% 8% 8%
0.0% 3.1% 9.2% 30.0% 2.7% 7.9% 7.4% 8.0% 3.1% 3.0% 9.0% 6.2% 0.8% 9.3% 2.3% 19% 19% 39% 100% 39% 13% 6% 85% 14% 7% 20% 83% 23% 21%
10.07% 10.54% 9.91% 0.00% 11.28% 11.82% 10.20% 11.28% 9.75% 12.56% 11.15% 0.00% 11.99% 10.14%
EBITDA Margin (%)

2010
EBIT Margin (%)

2010
EBT Margin (%)

2010
Net Profit Margin(%)

2009 2010 09 M 10 09 M 11
Total Asset Financial PE Adjusted Turnover leverage ROE (%) Audited Trailing PBV (x) (x) (x) (x) PE(x)
2010 2010 2010
EV/ EBITDA (x)
Company Name
CEMENT
21.16 13.41 21.08 (9.88) 6.04 16.35 19.54 10.18 17.93 (19.73) 4.57 14.34 11.99 8.61 19.00 (33.46) 0.92 12.04 7.19 11.81 11.81 7.73 2.91 10.62 8.65 14.02 12.00 (28.97) 0.88 10.84 6.81 13.64 13.00 0.22 2.74 5.53 9.48 9.24 (37.79) 2.20 1.08 0.62 1.26 0.32 1.66 0.87 8.54 1.24 1.51 4.89 5.30 1.46 79.74 10.77 22.88 (45.52) 7.73 14 22.67 19.37 14.46 (18.85) 62.60 37.92 41.63 43.81 22.96 19.72 14.23 12.14 1.90 3.03 12.08 5.09 9.16 9.37 24.77 8.39 (70.84) 14.24 -1.43 ARAMITCEM CONFIDCEM HEIDELBCEM LAFSURCEML MEGHNACEM MICEMENT
CERAMIC
35.12 15.51 28.00 10.73 12.08 29.58 11.75 18.79 5.75 11.83 15.83 0.60 20.06 3.02 7.83 13.60 0.14 8.17 (2.71) 0.82 13.14 0.48 15.13 1.83 5.67 16.28 0.00 16.75 3.12 5.57 10.74 0.00 16.02 3.35 10.37 0.39 0.88 0.63 0.73 0.49 1.88 3.22 1.61 2.41 1.93 9.72 1.34 15.39 3.20 5.40 17.98 47.01 30.69 62.64 42.71 49.12 29.58 67.80 28.32 1.666 4.00 4.40 2.64 3.58 10.86 12.73 21.92 18.50 36.21 SP CERAMICS MONNOCERA RAKCERAMIC STANCERAM FUWANGCER
83
Owning stocks is like having children-dont get involved with more than you can handle. The part time stock picker probably has time to follow 8-12 companies, and to buy and sell shares as condition warrant. There dont have to be more than 5 companies in the portfolio at any one time Peter Lynch
Company Name
Revenue (mn)
2010 09 M 11
Net Profit (mn)

2010 09 M 11
EPS (BDT)
2010 09 M 11
Revenue Growth (%)

2009 2010 09 M 11

2009 2010 09 M 11
ENGINEERING
AFTABAUTO ANWARGALV ATLASBANG AZIZPIPES BDAUTOCA BDLAMPS BDTHAI BSRMSTEEL ECABLES GOLDENSON KAY&QUE NAVANACNG NPOLYMAR NTLTUBES OLYMPIC QSMDRYCELL RANFOUNDRY SALAMCRST SINGERBD 2334.64 38.10 5020.80 419.61 66.19 622.57 369.25 22098.00 548.47 544.44 167.18 1391.71 729.33 517.55 2457.75 935.09 613.96 1872.28 4829.02 0.00 124.26 980.82 294.74 45.68 407.70 348.78 22463.97 673.82 817.95 126.11 0.00 705.69 255.82 2689.86 800.49 518.30 0.00 3702.90 110.36 0.18 287.74 3.48 1.83 49.44 53.10 1065.00 16.36 119.31 2.07 300.88 10.82 39.86 181.39 34.10 22.26 143.45 87.45 0.00 6.82 0.00 (2.71) 1.02 32.12 79.51 1088.54 33.86 353.88 1.68 0.00 15.76 1.52 194.51 41.55 21.22 0.00 310.91 19.61 0.13 21.58 7.18 5.64 85.67 24.54 53.12 6.82 3.54 4.53 6.91 24.27 35.70 82.34 2.09 2.23 20.75 879.63 0.00 5.17 1.82 (5.59) 3.01 45.00 19.35 29.15 14.11 3.33 3.43 0.00 19.61 1.01 55.85 1.80 2.12 0.00 79.18 42.23 8.26 (4.22) 14.37 14.79 188.93 (56.69) 73.91 1.36 10.68 16.06 (6.13) 43.77 45.04 10.76 15.24 (1.01) 17.03 25.91 (21.51) 1.18 56.53 39.48 19.83 117.84 50.14 1.73 0.05 (39.87) 17.06 (3.52) 10.31 7.73 9.97 7.80 39.45 (26.63) 51.75 19.11 7.33 14.74 9.88 1171.24 (18.06) (8.42) (8.59) 7.08 24.96 42.42 131.15 100.48 (22.98) 113.77 (106.30) 5.82 5.77 93.65 (130.23) (94.84) 23.07 8.26 18.85 7.27 (8.28) 184.41 17.80 5.60 (4.44) 120.44 28.96 119.13 (101.85) 28.52 15.85 (8.51) 5.54 0.31 87.02 773.11 276.34 76.06 3.47 4.88 (40.42) 48.42 43.62 1.76 23.09 397.43 (83.68) 18.14 (93.15) 68.31 65.80 10.81 (173.24) (2.01) 5.38 16.41 80.57 1450.18 136.46 (336.62) (331.88)
FOOD & ALLIED

AMCL(PRAN) APEXFOODS BANGAS BATBC BEACHHATCH CTGVEG FINEFOODS FUWANGFOOD GEMINISEA MEGCONMILK NTC RAHIMAFOOD ZEALBANGLA 1205.16 2205.55 63.39 65986.50 180.53 65.44 63.06 539.55 516.63 363.22 767.89 374.15 224.35 286.24 0.00 0.00 53413.24 135.54 0.00 57.48 0.00 0.00 231.43 380.38 1211.53 0.00 43.59 8.55 1.64 2878.59 62.22 (0.36) 23.64 25.64 0.00 6.56 167.06 16.40 (69.41) 8.37 0.00 0.00 1795.37 55.45 0.00 22.84 0.00 0.00 3.42 21.37 13.56 0.00 54.49 15.01 18.26 47.98 2.54 21.69 3.11 1.33 36.95 0.59 265.87 8.22 (11.07) 10.47 0.00 0.00 29.92 1.96 0.00 2.16 0.00 0.00 0.22 32.38 6.78 0.00 94.88 51854.18 (1083.59) 0.00 12.84 (9.82) 33.33 160.71 3.28 (55.03) 66.00 45.62 8.60 (24.11) 40.42 (20.83) 2881.12 0.41 0.01 0.47 112.51 12.30 (203.50) (335.19) 21.27 41.06 8.90 20.86 (43.70) 19.81 9.82 10.99 (4.54) 17.80 0.11 (137.73) (0.24) 23.96 1.52 427.71 9.74 0.53 (0.40) 37.24 66.69 171.77 (26.55) (57.56) (76.22) 40.50 6.78 26.11 (38.93) 39.16 65.71 (98.39) 270.53 24.56 54.32 (10.72) 1.35 29.53
FUEL & POWER

BDWELDING BEDL BOC DESCO EASTRNLUB JAMUNAOIL KPCL 211.76 514.54 3199.38 10989.19 8.42 660.13 7945.76 0.00 0.00 2735.44 8882.47 0.00 0.00 8900.03 14.29 102.05 668.02 1788.73 4.97 564.07 539.72 12.74 0.00 507.85 1055.99 0.00 0.00 651.48 1.08 1.19 43.90 85.91 5.00 10.45 1.87 0.00 0.00 33.37 50.71 0.00 0.00 2.26 32.94 9.77 8.87 17.46 (34.55) (21.66) (1.87) 16.65 9.84 85.44 22.30 24.28 46.20 17.43 12.29 312.04 69.73 60.60 17.64 (18.01) 113.80 18.19 9.54 11.29 1.80 34.56 (7.37) 68.34 3.55 (0.27) (6.60)
Note: Source:
84
If you are thinking about investing in a troubled industry, buy the companies with staying power. Also, wait for the industry to show signs of revival Peter Lynch
EBITDA Margin (%)

2010
EBIT Margin (%)

2010
EBT Margin (%)

2010

2009 2010 09 M 10 09 M 11
2010 2010 2010
EV/ EBITDA (x)
Company Name
ENGINEERING
9.46 24.67 7.72 1.81 24.68 15.83 34.82 9.51 5.55 33.16 13.04 34.17 17.15 13.19 14.85 8.33 14.84 29.57 11.26 8.13 17.03 7.67 1.44 15.64 13.03 27.50 8.30 4.56 27.82 8.42 30.59 9.57 12.68 12.42 5.52 13.02 26.63 10.32 6.50 0.74 7.62 1.33 4.47 11.14 19.57 4.85 4.29 25.57 1.98 28.73 2.75 11.43 10.33 5.23 4.89 13.47 7.89 5.22 0.90 2.37 9.51 29.49 3.62 0.41 18.61 1.06 21.26 2.55 9.93 6.13 2.89 3.93 6.71 9.04 14.90 29.72 0.46 5.73 0.83 2.76 9.92 18.89 4.86 2.98 32.15 1.24 21.62 2.68 9.83 7.78 4.30 3.62 7.66 40.87 55.45 8.40 2.64 6.36 6.52 3.73 3.97 2.23 0.59 7.23 5.19 4.09 (30.10) 0.00 1.15 2.09 8.01 24.47 3.82 0.75 36.68 (0.43) 5.49 0.00 (0.92) 2.24 7.88 22.80 4.85 5.02 43.26 1.33 0.71 0.20 3.48 0.89 0.74 0.48 0.16 1.67 0.55 0.15 0.64 1.02 1.06 0.58 2.08 1.08 1.72 0.32 1.53 1.61 1.50 2.17 (2.57) 4.80 1.40 2.59 9.22 1.80 2.03 5.40 1.31 2.02 2.01 2.68 1.72 2.06 5.76 1.49 33.74 0.14 43.25 (1.89) 9.78 6.66 7.99 74.64 2.97 9.60 4.30 28.65 5.74 11.55 43.42 7.97 12.87 13.96 93.51 19.88 39.55 113.87 23.35 31.58 39.40 83.72 20.25 99.44 13.79 28.17 (109.76) 26.61 39.45 35.70 34.37 5.72 10.54 12.25 86.97 24.19 59.24 137.72 24.67 27.01 32.60 66.12 17.36 118.31 16.01 33.15 0 26.53 34.83 31.46 28.34 6.71 2.51 4.66 6.06 (0.83) 10.63 0.00 1.48 30.28 3.85 2.58 5.62 3.73 1.69 2.90 9.51 1.03 4.73 3.32 3.46 58.53 43.78 14.79 42.75 13.49 13.10 21.93 13.59 48.12 34.58 14.59 10.84 5.29 20.53 19.15 26.90 9.44 12.44 17.00 AFTABAUTO ANWARGALV ATLASBANG AZIZPIPES BDAUTOCA BDLAMPS BDTHAI BSRMSTEEL ECABLES GOLDENSON KAY&QUE NAVANACNG NPOLYMAR NTLTUBES OLYMPIC QSMDRYCELL RANFOUNDRY SALAMCRST SINGERBD
FOOD & ALLIED

16.78 5.13 5.65 7.45 42.95 36.14 46.30 9.82 2.15 34.84 26.61 9.00 (17.70) 13.47 3.42 2.19 6.55 38.31 33.16 41.66 6.98 1.37 20.26 25.39 6.70 (18.99) 4.45 1.55 1.61 6.20 36.34 33.16 41.66 6.64 1.37 1.81 21.31 6.05 (30.94) 19.57 15.58 29.13 30.64 4.13 0.24 3.61 0.49 1.36 3.76 22.88 3.62 0.39 2.59 4.36 34.62 33.15 41.66 4.97 0.79 2.61 22.13 4.39 29.59 4.89 18.70 23.74 1.48 5.62 1.12 54.72 39.74 4.18 38.53 3.36 40.91 2.66 2.93 1.14 2.05 0.81 5.19 0.50 0.28 0.53 0.99 2.20 0.49 0.67 1.30 0.76 2.86 2.69 5.20 2.22 1.17 0.70 1.09 0.92 18.68 N/A 2.78 1.71 (1.35) 41.33 15.46 8.16 11.80 2.15 10.90 50.31 20.33 (0.26) 24.27 9.07 0.00 38.11 31.75 76.48 44.75 19.93 64.21 (0.82) 43.12 29.73 40.35 58.31 25.34 58.54 4.44 4.20 (34.80) (0.75) 7.32 8.54 (0.12) 9.68 17.80 25.15 (7.89) 25.42 55.30 83.32 13.05 19.51 26.41 53.45 78.44 12.60 18.80 2.95 1.27 12.85 5.97 0.00 7.15 3.18 61.50 7.23 18.90 165.71 25.28 55.65 AMCL(PRAN) APEXFOODS BANGAS BATBC BEACHHATCH CTGVEG FINEFOODS FUWANGFOOD GEMINISEA MEGCONMILK NTC RAHIMAFOOD ZEALBANGLA
FUEL & POWER

53.53 32.42 27.21 108.49 127.96 10.63 45.45 25.68 13.96 (23.18) 46.25 8.11 23.87 28.23 19.67 101.01 85.45 6.79 5.60 22.23 16.07 6.75 19.83 20.88 16.28 21.05 13.39 18.57 11.89 0.23 1.19 0.44 0.05 0.05 6.36 7.32 1.09 3.14 1.41 3.08 3.14 7.46 2.56 14.54 34.85 22.25 0.00 0.00 18.94 19.98 43.14 12.40 33.49 21.50 61.95 12.90 27.24 3.32 5.52 4.36 6.27 134.22 24.62 119.59 25.41 0.28 2.54 27.98 8.43 9.78 38.25 12.92 25.86 BDWELDING BEDL BOC DESCO EASTRNLUB JAMUNAOIL KPCL
107.51 59.02 77.66 9.11 85.45 6.79
.eunever M90 sa deredisnoc si eunever hcraM ts13 ,ynapmoc dnE raey enuJ a rof dna eunever M90 sa deredisnoc si euneveR rebmetpeS ht03 ,ynapmoC dnE raey rebmeceD a roF *
85
If you invest $1,000 in a stock, all you can lose is $1,000, but you stand to gain $10,000 or even $50,000 over time if you are patient. The average person can concentrate on a few good companies, while the fund manager is forced to diversify. By owning too many stocks, you lose this advantage of concentration. It only takes a handful of big winners to make a lifetime of investing worthwhile Peter Lynch
Company Name
Revenue (mn)
2010 09 M 11
Net Profit (mn)

2010 09 M 11
EPS (BDT)
2010 09 M 11
Revenue Growth (%)

2009 2010 09 M 11

2009 2010 09 M 11
FUEL & POWER

MJLBD MPETROLEUM PADMAOIL POWERGRID SUMITPOWER TITASGAS 3847.95 773.60 1347.31 5929.64 3601.68 64557.07 4390.64 0.00 1218.49 4516.94 3510.24 48555.05 508.34 464.58 637.59 1607.01 1174.60 7333.06 745.19 0.00 598.35 837.80 1363.62 5139.53 2.45 9.58 21.69 38.35 3.08 77.84 4.77 0.00 20.35 19.99 3.46 54.55 13.32 (24.79) 19.13 5.78 63.99 18.35 18.83 32.59 37.78 3.78 26.38 22.03 96.50 4.21 27.64 2.33 51.57 (14.80) (0.08) 92.79 (8.74) 52.28 29.28 48.10 21.91 4.04 67.60 34.47 103.15 (21.59) 61.34 12.16 92.18
IT SECTOR
AGNISYSL BDCOM DAFODILCOM INTECH ISNLTD 125.02 114.43 229.88 39.92 48.91 118.42 0.00 0.00 24.29 38.69 34.65 9.40 13.12 11.80 9.50 37.47 0.00 0.00 3.33 5.74 1.73 1.16 0.58 0.96 1.05 1.07 0.00 0.00 0.21 0.58 29.35 9.07 4.91 3.94 13.90 18.47 50.42 (2.25) (14.74) 8.30 31.22 61.62 3.12 56.95 4.60 (3.88) 19.52 87.75 1.16 475.56 (1.76) (60.78) 2.68 54.78
JUTE
JUTESPINN NORTHERN SONALIANSH 656.84 80.53 706.33 683.14 0.00 0.00 6.35 (9.71) 12.68 5.95 0.00 0.00 37.33 (5.72) 56.11 34.99 0.00 0.00 10.20 3.60 (0.05) 23.74 (0.17) 0.24 46.88 (33.21) (14.42) 3.82 69.52 (36.02) 34.22 53.04
MISCELLANEOUS
ARAMIT BERGERPBL BEXIMCO BSC GQBALLPEN SAVAREFR SINOBANGLA 398.78 5483.62 18980.96 2308.99 218.16 30.24 769.76 353.14 4562.14 23779.37 0.00 139.12 39.91 0.00 52.75 690.37 6984.20 (290.08) 3.35 0.77 23.12 50.99 502.44 6124.65 0.00 45.53 0.11 0.00 9.67 30.39 40.82 66.71 6.36 5.56 2.38 8.50 21.67 17.23 0.00 8.44 6.97 0.00 (8.02) 1.94 (3.96) 84.63 (65.08) 1232.61 5.63 18.53 90.04 (12.76) 6.75 12.75 186.58 16.82 44.68 211.24 (29.90) 19.21 108.73 (230.04) (33.57) (37.10) 321.26 151.27 (62.07) 7.55 (11.87) 1.97
PHARMACEUTICALS
ACI ACIFORMULA ACTIVEFINE AMBEEPHA 14498.06 1924.40 166.41 268.49 0.00 0.00 332.07 204.20 140.39 91.61 83.02 7.37 108.70 72.92 97.12 4.11 10.97 3.05 3.12 3.68 0.00 0.00 2.11 2.05 18.94 (0.65) 5.42 17.87 (7.48) 638.62 0.06 161.00 3.09 (36.28) (21.71) 8.66 (76.38) (42.44) 1472.39 6.80 (4.78) 309.43 238.52 (1.20)
PHARMACEUTICALS
BXPHARMA BXSYNTH IBNSINA MARICO RECKITTBEN RENATA SALVOCHEM SQURPHARMA HAKKANIPUL 6490.85 1009.55 1605.17 5358.34 2047.99 5424.44 84.59 16974.71 157.09 0.00 0.00 0.00 3522.40 1694.87 0.00 0.00 9100.80 203.70 1051.65 27.47 60.07 675.11 126.22 981.89 20.15 3259.31 6.87 968.01 77.90 34.59 429.90 101.80 847.53 28.03 0.00 17.03 4.31 4.01 55.62 21.43 26.71 0.00 1.43 166.05 0.96 0.00 0.00 0.00 13.65 21.55 0.00 0.00 66.14 0.90 21.40 (15.01) 21.43 52.57 7.92 28.08 9.68 14.41 33.33 27.34 25.61 32.09 8.67 32.22 33.40 30.87 (68.23) 18.40 153.86 7.44 2.73 14.56 (17.15) 13.74 76.16 19.53 50.48 21.31 14.58 68.33 49.23 0.00 43.38 (36.24) 48.70 1.73 30.43 (51.39) 198.07 15.20 669.76 2.82 4.00 (9.84) 16.02 99.22
SERVICE & REAL ESTATE

EHL OCL
Note: Source:
1595.09 290.72
0.00 263.82
222.78 70.26
0.00 61.91
35.90 2.15
0.00 1.89
(18.15) (23.00)
82.28 (15.59) 14.70
5.94 (19.26)
96.39 (20.81) 13.16
86
In every industry and every region of the country, the observant amateur can find great growth companies long before the professional have discovered them Peter Lynch
EBITDA Margin (%)

2010
EBIT Margin (%)

2010
EBT Margin (%)

2010

2009 2010 09 M 10 09 M 11
2010 2010 2010
EV/ EBITDA (x)
Company Name
FUEL & POWER

20.64 1.15 98.98 56.99 16.72 20.69 0.55 42.38 47.76 13.61 17.72 0.96 37.56 31.87 15.27 10.60 65.31 46.17 27.03 24.59 10.31 13.21 60.05 27.10 32.61 11.36 47.50 24.65 30.73 9.66 49.11 18.55 38.85 10.58 13.39 16.97 0.98 4.06 0.10 0.29 1.38 1.65 11.77 4.01 1.94 2.48 21.29 34.39 0.00 10.60 17.83 38.97 31.74 19.63 0.00 28.51 24.18 6.94 26.20 17.68 28.97 24.10 20.63 7.80 5.15 6.38 0.00 1.37 3.48 2.39 34.97 6.62 10.70 18.64 6.67 MJLBD MPETROLEUM PADMAOIL POWERGRID SUMITPOWER TITASGAS
IT SECTOR
39.30 28.35 10.47 104.72 50.18 28.31 10.85 8.22 26.66 22.34 28.04 9.16 5.78 26.07 21.10 28.21 13.92 6.05 15.93 20.55 27.72 8.21 5.71 29.55 19.43 29.80 15.65 13.71 14.84 26.82 31.64 0.86 1.06 1.41 0.48 0.51 1.04 1.33 1.22 1.04 1.20 13.67 6.77 5.59 9.09 6.04 29.17 53.74 24.23 33.46 33.10 30.21 42.14 28.07 40.27 34.21 1.59 1.82 2.31 3.00 2.07 25.43 13.45 53.22 9.16 13.46 AGNISYSL BDCOM DAFODILCOM INTECH ISNLTD
JUTE
6.85 (8.35) 3.55 5.64 (12.52) 2.11 1.37 (12.07) 2.01 0.70 0.96 0.84 0.87 1.98 0.52 0.62 25.83 4.76 1.95 49.10 (29.88) 2.20 33.95 0.00 31.91 33.86 43.62 2.82 1.78 0.84 6.15 (8.06) 20.76 JUTESPINN NORTHERN SONALIANSH 15.71 (12.07) 1.82 1.80
MISCELLANEOUS
22.17 19.39 51.98 (5.07) 5.78 16.26 11.48 18.95 17.23 42.21 (12.56) 4.42 9.49 8.97 17.95 16.25 38.79 (12.56) 2.42 4.10 3.51 0.84 20.34 18.11 10.87 61.18 14.55 12.59 36.80 5.78 13.06 2.56 3.09 12.51 1.34 32.73 0.28 14.33 14.09 72.39 14.44 11.01 25.76 0.55 3.72 1.24 0.61 0.52 0.71 1.06 1.72 1.65 1.60 1.85 1.39 2.73 3.33 13.80 46.80 50.88 6.46 4.78 4.99 10.62 28.67 18.10 5.95 (10.81) 32.00 65.33 35.71 24.39 86.71 37.38 26.37 19.03 5.45 3.70 8.49 2.73 0.37 1.68 6.86 4.22 23.57 13.76 5.70 (32.98) 93.76 19.52 11.29 ARAMIT BERGERPBL BEXIMCO BSC GQBALLPEN SAVAREFR SINOBANGLA
PHARMACEUTICALS
15.46 11.70 41.83 9.42 7.71 9.75 31.41 7.84 3.25 6.38 52.20 3.75 4.83 7.65 23.44 2.72 0.97 4.76 49.89 2.74 22.55 2.10 29.25 2.01 1.02 0.81 0.28 0.93 3.81 1.87 1.28 5.98 3.75 7.24 18.04 15.32 18.03 29.18 121.96 114.38 19.75 29.43 22.91 111.91 0.99 1.88 4.61 16.85 4.15 16.40 46.86 37.75 ACI ACIFORMULA ACTIVEFINE AMBEEPHA
PHARMACEUTICALS
31.89 11.67 6.70 16.84 10.97 26.99 59.31 31.57 20.24 25.20 11.67 4.89 18.00 9.33 24.08 49.43 25.16 11.10 20.98 3.04 5.10 17.29 9.88 20.82 32.86 22.21 8.17 12.83 2.32 3.85 11.61 10.50 16.09 19.25 19.26 5.27 16.20 2.72 3.74 12.60 6.16 18.10 23.82 19.20 6.33 0.00 7.12 0.00 8.36 12.61 6.84 12.20 6.01 0.31 0.35 2.61 1.71 2.63 1.57 0.30 0.87 0.45 1.54 1.43 2.54 1.67 3.01 1.33 1.71 1.34 1.42 7.83 1.36 24.82 35.85 48.78 37.92 12.36 22.42 4.06 21.73 94.54 29.19 34.35 29.00 27.73 24.74 19.28 42.40 19.88 54.48 28.70 22.28 29.06 25.20 28.85 17.67 51.27 1.50 1.49 6.45 5.50 17.88 8.54 3.31 4.04 1.09 12.83 28.69 15.48 16.57 21.19 20.34 42.49 13.15 25.36 BXPHARMA BXSYNTH IBNSINA MARICO RECKITTBEN RENATA SALVOCHEM SQURPHARMA HAKKANIPUL

17.33 36.61 16.32 30.51 19.30 32.50 12.96 25.76 13.97 24.17 23.79 23.47 0.11 0.20 14.18 1.14 21.80 5.42 18.47 27.94 21.34 27.90 4.07 1.65 19.85 28.29 EHL OCL
87
A stock market decline is as routine as a January blizzard in Colorado. If you are prepared, it cant hurt you. A decline is a great opportunity to pick up the bargains left behind by investors who are fleeing the storm in panic Peter Lynch
Company Name
Revenue (mn)
2010 09 M 11
Net Profit (mn)

2010 09 M 11
EPS (BDT)
2010 09 M 11
Revenue Growth (%)

2009 2010 09 M 11

2009 2010 09 M 11

SAPL SAMORITA 283.65 193.26 543.29 154.55 1064.93 35.15 131.82 22.40 3.22 46.32 1.16 29.51 103.76 8.55 10.83 19.73 28.85 7.84 101.84 37.28 215.25 69.66 -88.36 3.83
TELECOMMUNICATION
GP 74733.08 66231.86 10705.40 12399.01 7.93 9.18 6.42 14.45 20.10 401.64 (28.48) 60.22
TRAVEL & LEISURE

UNITEDAIR 1780.95 0.00 297.15 0.00 11.82 0.00 139.50 109.35 (213.21) 402.41
TANNERY
APEXADELFT APEXTANRY BATASHOE LEGACYFOOT SAMATALETH 6961.12 2515.87 5663.09 89.70 20.50 7181.00 0.00 4856.34 89.65 19.90 228.20 142.90 542.57 8.24 (2.60) 188.00 0.00 432.04 3.61 (0.27) 202.90 93.74 39.66 1.14 (2.51) 167.11 0.00 31.58 0.50 (0.26) 3.63 6.05 805.00 1.04 40.18 19.32 45.96 10.15 14.11 (50.83) 14.92 45.02 64.93 33.69 11.43 (2.68) 38.34 38.68 86.22 7.89 (32.21) 21.04 56.36 (18.18) 5.29 58.33 (90.29) 17.43
TEXTILE
AL-HAJTEX ALLTEX ANLIMAYARN CMCKAMAL DACCADYE DELTASPINN DSHGARME DULAMIACOT HRTEX MAKSONSPIN MALEKSPIN METROSPIN MITHUNKNIT MODERNDYE PRIMETEX RAHIMTEXT RNSPIN SAFKOSPINN SAIHAMTEX SONARGAON SQUARETEXT STYLECRAFT TALLUSPIN 3.30 1268.50 221.57 434.20 824.26 942.15 255.25 240.70 1192.40 1522.60 1978.80 633.98 681.79 10.40 1506.40 378.80 2085.40 192.85 384.69 724.01 6096.63 1733.20 888.16 0.00 0.00 186.65 323.06 0.00 925.07 194.00 294.89 0.00 0.00 4541.05 937.31 0.00 0.88 1633.53 341.23 0.00 293.17 0.00 183.57 5497.44 0.00 0.00 (17.56) (85.21) 15.76 36.42 54.71 31.66 0.76 (6.29) 31.09 265.84 156.19 132.37 24.57 (0.54) 52.18 2.09 539.28 (9.57) 23.44 15.44 713.16 14.84 5.94 0.00 0.00 16.14 38.74 0.00 32.49 0.80 7.28 0.00 0.00 523.13 122.95 0.00 (2.23) 49.11 10.96 754.12 15.51 0.00 15.49 564.34 0.00 0.00 (2.28) (17.75) 8.82 1.92 1.34 10.36 2.26 (8.32) 15.55 5.07 2.73 3.84 49.13 (3.96) 13.66 11.50 5.04 (5.98) 1.88 14.15 8.79 133.63 3.51 0.00 0.00 9.03 0.99 0.00 10.63 2.37 9.64 0.00 0.00 3.11 2.97 0.00 (16.30) 12.86 60.23 0.00 8.36 0.00 2.35 5.79 0.00 0.00 (61.18) (13.51) (10.64) 27.22 2.60 (0.79) (49.53) (22.96) 10.17 (4.91) 0.43 (25.36) (5.69) 176.73 (29.37) 33.93 10.28 (98.36) (9.02) 6.51 27.19 8.95 (18.70) (96.96) (51.66) 47.00 109.25 (26.44) 12.20 78.07 15.35 (5.08) 62.96 (16.15) 24.43 9.05 (31.67) 25.95 14.88 81.74 9494.53 28.34 4.40 14.50 54.68 8.72 3.39 31.79 324.26 (91.55) 60.15 24.09 87.05 108.06 39.75 7.18 77.61 64.27 17.93 (258.70) (1068.10) 786.60 195.95 3.48 (3.51) (30.23) (305.48) 10.59 57.20 61.67 45.43 20.27 48.65 (43.10) (11.97) 45.68 3.20 (13.92) 283.33 10.66 23.73 (14.29) (46.95) (45.47) 1732.56 110.52 85.96 23.77 26.67 78.72 24.01 145.12 (15.10) 397.63 176.07 (198.18) 29.03 (77.20) 348.73 79.88 42.67 48.03 116.69 102.74 132.19 7.79 15.68 (670.08) (1.40) 508.94 132.01 (221.36) 99.45 15.95 67.53 85.61 (138.99) 1380.46 25.05
Note: Source:
88
Everyone has the brainpower to make money in stocks. Not everyone has the stomach. If you are susceptible to selling everything in a panic, you ought to avoid stocks and stock mutual funds altogether Peter Lynch
EBITDA Margin (%)

2010
EBIT Margin (%)

2010
EBT Margin (%)

2010

2009 2010 09 M 10 09 M 11
2010 2010 2010
EV/ EBITDA (x)
Company Name

34.55 30.11 27.36 22.34 207.99 21.39 59.40 198.30 24.76 268.64 12.84 18.19 15.05 14.49 0.15 1.12 1.17 1.41 34.04 28.66 6.29 28.59 32.10 2.76 5.87 41.14 14.48 SAPL SAMORITA
TELECOMMUNICATION
47.88 27.04 27.83 22.92 14.32 14.03 18.72 1.36 20.62 17.68 4.98 5.79 GP
TRAVEL & LEISURE

33.15 25.28 23.33 8.31 16.68 0.58 13.10 33.68 35.26 4.66 25.94 UNITEDAIR
TANNERY
10.18 5.94 0.90 26.04 (3.30) 8.09 4.98 (0.32) 19.91 (15.44) 3.92 3.06 12.61 11.31 (16.74) 3.63 8.29 8.74 6.70 3.28 3.85 9.66 9.19 9.71 3.69 8.90 4.03 2.98 2.62 1.71 1.86 1.95 0.32 0.05 5.59 1.52 2.37 1.97 3.07 31.24 10.92 44.53 5.84 (2.09) 14.57 18.95 15.09 38.69 (120.63) 13.96 17.72 13.75 42.31 4.61 2.15 6.23 2.13 1.41 4.89 11.02 162.84 19.23 (298.98) APEXADELFT APEXTANRY BATASHOE LEGACYFOOT SAMATALETH
(5.28) (12.66) (22.95) (1.35)
TEXTILE
(466.30) 8.70 21.54 16.76 32.08 21.50 2.40 3.29 11.85 39.20 23.50 35.91 10.80 0.35 9.78 13.69 32.50 25.46 25.26 16.08 19.80 3.70 15.44 (540.36) 2.65 13.69 13.32 23.37 6.71 1.48 (1.29) 7.54 34.52 15.37 31.05 7.06 (5.22) 9.78 12.49 26.95 15.52 21.84 11.84 14.83 2.03 12.72 (540.36) (6.18) 7.14 8.94 7.77 3.93 0.33 (2.65) 3.04 17.47 6.73 12.49 4.23 (5.22) 4.01 0.64 25.74 (4.96) 17.05 2.50 14.12 1.12 0.84 (11.00) (535.55) (2.23) 0.57 8.34 2.63 3.05 0.42 (6.72) 7.11 8.39 6.64 3.36 0.30 2.93 0.24 3.51 0.41 2.47 0.96 11.31 8.65 11.99 0.01 0.53 0.46 0.59 0.45 0.47 2.03 0.50 1.11 0.49 10.80 23.54 11.52 13.12 0.25 0.38 1.67 3.77 (254.16) 4.88 0.65 3.01 3.21 0.60 0.40 0.56 0.42 5.29 0.52 0.97 8.09 11.69 8.44 10.27 0.54 0.85 3.08 0.66 3.31 4.52 2.50 1.72 3.14 3.17 3.23 6.26 4.10 2.50 1.21 2.16 4.12 1.25 1.57 4.74 2.62 4.34 1.94 2.84 1.97 4.38 6.60 (0.15) (0.16) 0.08 0.08 0.09 0.05 0.02 (0.08) 0.12 0.22 0.02 0.17 0.25 (0.04) 0.02 0.01 0.31 (0.11) 0.27 0.03 0.20 0.12 0.03 18.00 143.69 27.64 21.76 39.41 25.23 210.29 (8.13) 29.99 22.44 20.78 20.43 32.23 (83.36) 19.56 58.68 20.48 (69.06) 18.19 26.05 19.60 22.56 91.57 24.80 75.55 15.71 0 19.53 30.43 18.25 22.93 31.42 23.00 30.61 25.05 28.89 35.53 26.05 31.13 28.66 198.96 1.90 0.68 3.22 1.30 1.81 1.83 5.82 (1.01) 3.79 4.76 1.30 1.80 6.40 5.38 0.60 2.94 6.74 9.44 4.73 0.59 3.45 2.72 7.09 (37.53) 16.16 17.90 45.37 13.79 11.83 32.26 42.93 8.88 13.97 (8.26) 11.33 11.66 1778.64 15.66 15.19 17.52 16.28 11.46 12.29 11.22 5.90 15.05 AL-HAJTEX ALLTEX ANLIMAYARN CMCKAMAL DACCADYE DELTASPINN DSHGARME DULAMIACOT HRTEX MAKSONSPIN MALEKSPIN METROSPIN MITHUNKNIT MODERNDYE PRIMETEX RAHIMTEXT RNSPIN SAFKOSPINN SAIHAMTEX SONARGAON SQUARETEXT STYLECRAFT TALLUSPIN
(14.21) (2.61) (11.25) 2.00 12.38 7.80 5.22 1.42 3.61 3.63 2.78 10.47 2.61 17.46 7.89 20.88 3.60 (5.22) 3.46 0.55 27.74
(2374.13) (4.96) (18.49) 5.43 1.90 6.71 0.65 (2.25) 14.51 2.13 11.70 0.86 0.67
89
There is always something to worry about. Avoid weekend thinking and ignore the latest dire predictions of the newscasters. Sell a stock because the companys fundamentals deteriorate, not because the sky is falling Peter Lynch
GENERAL INSURANCE
Company Underwriting Gross Premium Net Premium Net Claim Growth Profit Growth Growth (YoY) (%) Growth (YoY) (%) (YoY) (%) (YoY) (%)
2009 10.69 15.86 2.13 2.59 15.60 15.81 (16.68) 0.83 13.03 (0.67) 6.04 14.34 6.10 7.82 (7.66) 49.66 3.95 (10.05) 5.41 7.26 29.14 5.80 5.36 2.05 (5.48) 16.78 10.29 62.01 14.91 (12.13) 6.57 2010 33.65 61.76 17.20 7.32 26.43 20.74 20.63 21.34 22.41 5.97 7.30 24.95 8.80 30.32 14.17 29.80 56.33 41.89 56.70 14.06 20.07 45.72 2.55 13.03 26.34 19.20 21.71 23.06 43.91 30.44 21.11 15.22 2009 3.06 43.33 14.09 41.08 3.26 24.61 16.96 0.70 10.56 16.59 (4.02) 15.77 (13.60) 15.47 (1.20) (7.24) 52.03 9.87 94.82 5.37 19.32 21.75 3.95 (2.09) 17.05 (3.94) (5.06) 32.58 6.54 69.68 22.43 (9.81) 9.21 2010 26.30 3.14 79.85 44.38 8.81 38.29 10.55 19.54 2.40 24.90 11.30 4.08 6.00 50.76 29.69 29.94 31.15 61.19 42.44 119.04 5.67 17.20 35.07 10.62 5.95 17.83 (18.61) 43.65 9.62 27.53 39.00 51.17 26.37 8.04 2009 2010 (12.47) (10.63) 21.48 32.87 (424.44) 98.69 9.55 12.81 7.13 (0.39) 17.82 (2.23) 15.65 50.59 (59.15) 11.76 50.41 182.16 (21.11) (81.14) 48.41 (5.30) (23.60) 45.65 14.51 (12.46) 516.42 (60.85) (19.31) 97.00 (31.47) (8.93) (76.44) (443.08) 59.45 70.44 (36.61) 315.42 (710.22) (113.44) 46.89 (49.97) 18.24 9.57 29.30 30.22 89.87 19.82 (25.66) (41.08) 5.48 23.08 0.44 (35.40) 1.36 31.01 (58.84) 67.09 26.26 14.53 231.69 160.67 9.51 (29.15) (21.49) 5.39 (26.93) (11.87) 2009 27.49 38.60 7.47 (34.01) 35.16 25.71 24.27 5.98 (57.70) 51.77 113.10 344.67 9.43 96.03 230.11 21.90 61.27 (36.66) 540.61 2010 2.18 0.38 11.50 140.59 (28.43) 6.82 9.88 (11.41) 169.54 (9.13) 16.93 (38.67) 62.13 (0.39) (69.29) (15.91) (16.27) 0.37 (59.75)
PAT Growth (YoY) Total Investment (%) Growth (YoY) (%)

2009 11.87 17.39 (5.68) 45.36 25.48 31.48 324.95 40.01 27.27 40.98 28.94 (5.07) 4.35 29.29 39.78 49.06 41.40 42.62 34.42 111.54 20.24 31.15 (29.48) 119.54 27.44 432.69 10.94 29.69 25.69 32.93 15.08 25.33 (82.99) 2010 58.91 313.54 74.60 153.78 41.14 95.52 22.21 90.25 54.36 74.00 14.42 1.51 133.78 174.00 62.31 100.39 26.12 (12.74) (3.48) 18.45 15.45 69.88 172.61 29.31 69.19 89.49 133.00 81.75 25.31 196.68 47.74 39.32 56.92 181.71 2009 32.65 (3.84) 32.02 70.94 7.80 (4.62) 50.37 (14.45) (16.53) 23.72 4.58 (2.35) (36.49) (37.75) 0.00 14.81 69.28 4.47 36.08 8.18 9.86 0.00 126.71 (4.04) 1.86 23.74 91.49 0.00 45.76 11.87 2010 64.75 13.86 158.04 203.07 393.95 122.60 148.72 6.51 30.29 23.71 37.67 53.36 53.31 385.16 (14.72) 122.18 153.01 22.26 141.95 53.65 402.94 61.42 0.59 (0.50) 106.55 280.76 44.61 73.41 11.32 57.09 (14.36) 155.53 61.18 33.71
AGRANINS ASIAINS ASIAPACINS BGIC CENTRALINS CITYGENINS CONTININS DHAKAINS EASTERNINS EASTLAND FEDERALINS GLOBALINS GREENDELT ISLAMIINS JANATAINS KARNAPHULI MERCINS NITOLINS NORTHRNINS PARAMOUNT PEOPLESINS PHENIXINS PIONEERINS PRAGATIINS PRIMEINSUR PROVATIINS PURABIGEN RELIANCINS REPUBLIC RUPALIINS SONARBAINS STANDARINS TAKAFULINS UNITEDINS
(41.04) 270.29 19.99 744.44 50.99 137.80
183.55 48.24 7.47 31.97 7.41 57.79
2009 66.13 80.06 84.43 91.46 86.55 76.52 51.51 94.47 98.02 96.25 19.81 70.22 72.99 4.58 20.47 81.69 64.80 17.54 3.15 43.44 90.77 95.93 96.49 98.85 86.95 3.30 92.34 95.28 7.77 50.28 64.75 61.22 85.58 1.36
Share Investment (% of Total Investment)
2010 79.44 58.14 93.97 98.11 36.78 89.45 80.50 94.81 98.48 86.47 41.76 80.58 75.14 95.30 6.74 93.39 86.09 32.55 59.97 63.19 98.16 97.48 96.51 98.84 91.53 74.60 94.71 58.14 17.15 92.17 58.84 84.82 91.05 2.56
LIFE INSURANCE
Company Name
2007 Delta Life Insurance Fareast Islami Life Insurance Co Ltd. Meghna Life Insurance National Life Insurance Popular Life Insurance Pragati Life Insurance Prime Islami life Insurance Progressive Life Insurance Co Ltd. Rupali Life Insurance Company Ltd. Sandhani Life Insurance
Note: Source:
Life Fund (BDT mn)

2008 2009 2010 2011 (As of July 2011)
Gross Premium (BDT mn)

2007 2008 2009 2010
Investment Income (BDT mn)

2007 2008 2009 2010
3,974.85 5,899.32 9,282.16 13,529.51 14,804.87 2,388.00 2,942.30 4,159.00 5,505.70 7,439.40 8,408.40 1,842.70 9,082.08 11,404.49 14,039.24 17,630.52 18,980.14 3,537.84 3,648.38 6,080.90 9,211.71 12,634.65 14,310.95 3,019.43 794.66 848.10 492.70 744.92 1,058.86 1,511.23 2,119.11 2,208.28 1,388.20 2,258.20 3,378.88 3,760.49 868.20 1,410.70 2,001.00 2,267.42 1,080.74 1,598.15 2,242.91 2,476.35 568.36 588.40 716.36 1,714.10
3,197.84 6,311.40 6513.56 2,312.70 2,678.70 3378.80 4,069.20 4,718.36 6070.34 3,932.39 4,630.33 5403.15 736.47 833.70 902.64 1,105.30 1795.28 1,418.70 1748.65 1080.90 1260.11 1305.00 1606.91
300.24 214.00 830.89 208.86 113.53 75.50 31.40 43.79 196.20
430.44 358.40 976.69 349.36 166.97 160.90 75.10 65.99 297.20
661.64 557.30 575.75 160.61 250.40 104.90 92.98 505.60
1131.33 935.30 598.43 377.84 353.26 119.50 197.30 792.70
1,168.96 1730.30
816.40 1,011.30
2,561.30 3,671.20 5,042.60 6,554.80 7,176.53
1,904.00 2,204.50 2509.40
90
Nobody can predict interest rates, the future direction of the economy, or the stock market. Dismiss all such forecasts and concentrate on whats actually happening to the companies in which youve invested Peter Lynch
Capital Gain from Sale of Shares (BDT Mn)

2009 1.75 0.00 7.12 11.55 9.24 2.20 0.54 64.10 23.26 41.13 0.00 15.58 122.55 0.00 0.00 34.43 3.38 0.82 0.00 3.93 1.85 21.28 20.58 43.16 36.06 0.00 29.89 42.19 0.00 0.84 7.85 5.56 15.82 0.00 2010 13.36 190.99 42.54 87.28 20.63 26.58 24.29 164.16 49.10 113.83 0.09 14.82 455.77 16.22 0.58 89.89 19.92 0.00 2.14 0.00 54.67 70.94 84.96 77.29 70.28 3.47 60.88 79.64 0.12 74.22 26.46 20.27 35.02 41.12
Loss Ratio (%)

2009 13.90 N/A 13.15 11.02 19.43 15.24 7.79 11.60 8.44 9.05 6.91 8.62 8.38 20.23 7.77 19.49 3.79 13.72 4.85 (7.67) 13.18 1.32 15.15 8.92 18.91 33.09 N/A 10.09 5.28 23.69 13.18 29.75 18.69 8.02 2010 9.30 N/A 16.15 10.61 18.04 11.79 9.71 10.74 19.62 1.39 6.18 11.70 5.87 7.28 11.74 15.55 (10.02) 14.96 14.20 0.66 5.78 1.21 13.54 10.42 9.86 32.24 N/A 11.09 7.25 22.05 23.87 16.16 16.27 6.13
Claim Ratio (%)

2009 14.26 N/A 21.33 1.29 10.79 2.68 2.95 67.23 8.38 16.51 12.31 7.18 6.84 17.61 4.83 31.25 41.90 7.06 10.49 7.07 36.60 8.17 3.63 8.44 40.76 17.47 N/A 10.29 11.73 7.72 35.67 3.01 10.58 2.64 2010 9.50 N/A 19.17 6.56 14.15 2.02 2.96 61.38 14.92 13.38 12.21 8.70 4.85 22.70 4.97 27.14 59.71 4.82 10.81 2.01 28.51 8.13 4.34 8.56 27.80 17.99 N/A 11.87 19.62 8.20 15.37 19.00 5.36 3.62
EPS Combined Ratio (%) (Restated) (BDT)

2009 19.71 N/A 26.11 6.55 13.99 9.46 7.83 70.28 12.04 24.39 19.88 14.38 11.06 21.84 15.07 N/A 46.28 15.08 18.76 14.30 42.39 12.35 7.32 12.02 48.71 22.34 N/A 12.60 17.55 11.31 38.08 7.06 13.96 4.49 2010 14.41 N/A 24.81 12.55 16.80 8.59 7.47 66.51 19.40 20.16 21.43 17.86 11.99 27.58 11.42 35.54 65.89 10.18 19.15 10.90 35.27 12.32 10.07 12.93 31.05 23.96 N/A 14.51 25.07 11.93 18.30 22.84 9.52 5.13 2010 15.90 9.59 14.61 2.20 27.22 2.37 18.89 54.76 34.03 45.00 1.18 10.10 13.32 17.16 15.70 3.32 18.48 19.13 9.99 11.85 2.01 3.37 47.06 32.16 3.11 17.49 78.70 53.00 15.41 6.06 14.82 16.93 30.02 45.47
P/BV
Audited PE (X)
27.72 7.72 24.31 23.87 26.19 18.98 25.55 17.00 20.21 18.85 89.73 38.86 14.75 27.24 22.58 16.26 25.19 25.18 36.23 33.92 20.29 22.59 23.36 24.65 20.11 29.12 18.64 20.30 29.48 24.63 27.98 25.08 21.30 18.20
ROE (%)
Company
3.77 2.73 2.74 2.69 3.08 3.10 3.44 6.98 1.92 5.55 9.75 4.15 2.10 3.80 2.57 3.10 3.24 4.51 5.01 3.41 2.20 3.96 5.18 1.73 4.75 3.55 5.83 3.94 4.66 4.11 3.68 3.91 4.39 3.45
13.25 43.79 9.02 11.39 11.38 17.48 13.64 37.35 9.98 24.99 8.74 8.43 16.07 14.89 12.93 19.25 12.88 15.10 9.44 9.73 10.61 15.16 22.62 6.78 25.20 10.49 38.69 18.60 12.75 16.85 12.52 14.35 19.92 20.75
AGRANINS ASIAINS ASIAPACINS BGIC CENTRALINS CITYGENINS CONTININS DHAKAINS EASTERNINS EASTLAND FEDERALINS GLOBALINS GREENDELT ISLAMIINS JANATAINS KARNAPHULI MERCINS NITOLINS NORTHRNINS PARAMOUNT PEOPLESINS PHENIXINS PIONEERINS PRAGATIINS PRIMEINSUR PROVATIINS PURABIGEN RELIANCINS REPUBLIC RUPALIINS SONARBAINS STANDARINS TAKAFULINS UNITEDINS
Claims (BDT mn)

2007 2008 2009 2010
Total Investment (BDT mn)

2009 2010
Claims to Premium (%)

2007 2008 2009 2010
Management Expenses to Premuim (%)

2007 2008 2009 2010
Company Name
Delta Life Insurance 251.84 310.20 76.65 101.97 66.40 86.80 81.49 211.50 425.22 425.80 124.29 132.90 109.90 90.00 141.34 272.50 649.15 581.40 165.69 186.83 130.20 111.30 172.81 281.70 662.27 808.00 232.37 297.25 172.14 246.50 283.27 503.60 1198.67 1812.46 1983.34 2737.17 2920.24 3092.09 759.36 798.80 710.68 1193.42 1176.20 1022.93 1600.40 1766.85 10.55 16.83 38.3 2.54 17.94 8.13 14.75 11.38 12.34 13.3 18.41 34.05 3.16 18.05 10.87 10.8 15.66 14.31 10.29 21.7 36.64 3.58 16.9 9.18 10.3 13.71 12.78 10.17 23.91 32.09 4.30 16.33 9.84 18.88 17.63 20.07 34.52 41.36 32.53 46.92 54.30 47.57 50.29 52.11 43.92 36.98 40.78 32.17 44.71 62.64 46.29 50.63 52.57 41.00 43.93 42.88 32.53 43.34 57.1 41.66 46.74 50.43 43.47 38.79 42.65 32.66 44.25 68.99 39.94 41.25 49.96 44.63 Fareast Islami Life Insurance Co Ltd. Meghna Life Insurance National Life Insurance Popular Life Insurance Pragati Life Insurance Prime Islami life Insurance Progressive Life Insurance Co Ltd. Rupali Life Insurance Company Ltd. Sandhani Life Insurance
1354.92 1385.45 1634.28 1947.97 3785.34 5551.39
4257.90 5446.90
91
Technical Indicator
If you study 10 companies, you will find 1 for which the story is better than expected. If you study 50, you will find 5. There are always pleasant surprises to be found in the stock market companies whose achievements are being overlooked on Wall Street Peter Lynch
Company Name
Month High-Low (BDT)
Closing Price (BDT)
Holding Relative Money Period Total Strength Flow Index EMA 22 EMA 120 Return for Volume Index (RSI, (MFI, 22 the Month Traded 22 days) days) (%)
(mn)
Total Trade Value for the Month

(BDTmn)
Stock Market Liquidity Performance during December 2011
High
Low
Bank
ABBANK ALARABANK BANKASIA BRACBANK CITYBANK DHAKABANK DUTCHBANGL EBL EXIMBANK FIRSTSBANK IFIC ISLAMIBANK JAMUNABANK MERCANBANK MTBL NBL NCCBANK ONEBANKLTD PREMIERBAN PRIMEBANK PUBALIBANK RUPALIBANK SHAHJABANK SIBL SOUTHEASTB STANDBANKL TRUSTBANK UTTARABANK UCBL ICBIBANK 72.70 39.00 40.70 47.00 57.00 45.20 168.80 72.00 28.90 27.30 72.40 55.30 35.80 35.30 36.70 67.00 31.40 49.30 32.60 46.00 51.20 145.00 33.20 26.70 31.40 32.30 45.50 81.80 45.60 10.40 64.10 32.20 34.70 41.10 49.00 41.50 125.20 62.80 26.50 24.30 64.10 50.50 31.80 30.40 29.50 61.20 28.20 41.10 29.20 40.80 45.00 96.40 30.60 24.20 27.70 27.00 35.60 74.40 41.80 9.50 68.30 37.80 38.20 45.70 52.60 44.50 161.30 65.80 27.80 26.30 67.60 54.50 34.50 34.80 34.50 66.80 30.40 47.70 30.80 44.50 50.40 136.60 32.50 26.20 30.10 30.20 42.90 77.80 43.90 10.00 68.12 36.46 95.88 111.61 129.98 43.77 347.62 66.13 28.01 26.15 170.95 131.16 34.26 80.12 86.59 65.41 30.32 117.20 31.17 44.28 48.83 121.24 32.34 25.93 74.00 73.95 41.73 77.26 43.95 9.95 80.25 36.13 336.00 356.96 417.29 43.92 1094.51 62.84 30.91 27.19 572.90 398.88 34.65 238.01 289.59 67.20 46.82 386.97 34.15 45.23 49.41 131.01 35.41 26.57 234.66 237.70 43.54 77.22 53.45 11.10 45.82 55.57 18.69 16.68 21.45 52.21 20.84 54.27 47.11 50.57 20.51 12.28 51.86 22.11 20.16 57.19 52.07 21.27 45.77 53.40 52.12 62.48 47.65 54.65 19.30 21.19 50.98 51.12 48.12 43.37 46.16 65.03 41.21 58.68 49.21 63.00 79.10 45.40 48.73 60.66 50.92 71.42 58.27 59.76 45.16 80.00 59.33 60.72 44.28 65.32 60.63 84.53 58.29 73.88 56.89 53.62 62.79 50.01 54.38 45.66 -2.81 10.20 -3.17 1.22 -5.23 0.23 18.08 -2.81 -2.11 -0.38 -6.34 2.25 0.88 4.04 1.02 2.93 0.00 -1.29 -3.75 -0.22 1.00 19.48 0.00 1.55 -1.07 -0.74 3.69 -2.26 -0.90 -0.99 5.74 38.14 4.57 4.76 22.61 7.26 2.22 13.87 14.21 13.68 2.80 10.81 15.19 50.56 5.69 20.13 14.45 16.01 9.12 8.86 15.90 0.42 11.31 52.28 18.67 14.32 6.06 13.95 27.36 2.91 390.60 1413.53 175.90 212.35 1197.77 318.34 327.20 936.68 397.51 354.88 192.09 574.91 521.90 1709.50 196.31 1302.54 436.99 730.49 283.58 388.77 778.66 52.04 364.32 1347.67 558.43 430.17 253.21 1089.85 1197.66 28.80 1.55% 6.35% 0.88% 1.45% 4.50% 1.99% 1.01% 3.14% 1.55% 3.97% 1.03% 1.05% 4.15% 9.89% 2.24% 2.27% 2.42% 4.80% 2.41% 1.12% 2.30% 0.28% 2.52% 8.04% 2.23% 3.51% 2.22% 4.87% 3.75% 0.43% Underperformed Outperformed Underperformed Outperformed Outperformed Outperformed Outperformed Underperformed Underperformed Underperformed Underperformed Outperformed Outperformed Outperformed Outperformed Outperformed Outperformed Outperformed Underperformed Underperformed Outperformed Outperformed Outperformed Outperformed Outperformed Outperformed Outperformed Underperformed Underperformed Underperformed
NBFI
BAYLEASING BDFINANCE BIFC 72.80 67.00 46.20 62.00 55.20 38.20 70.10 62.80 44.00 174.08 62.81 107.92 754.90 81.51 405.74 23.12 51.93 24.45 60.42 58.52 66.22 -1.34 -4.41 -3.24 4.15 1.57 1.58 278.76 96.07 68.29 4.19% 2.85% 2.80% Outperformed Underperformed Outperformed
92
Technical Indicator
If you dont study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards Peter Lynch
Company Name
Closing Price (BDT)

6.04% 5.12% 0.11% 0.75% 3.51% 1.86% 2.98% 3.96% 1.61% 3.62% 7.18% 9.63% 1.08% 1.31% 1.58% 2.50% 0.28% 1.58% Outperformed Outperformed Underperformed Underperformed Outperformed Outperformed Outperformed Outperformed Outperformed Outperformed Underperformed Outperformed Underperformed Underperformed Underperformed Underperformed Outperformed Underperformed
NBFI
FASFIN FLEASEINT ICB IDLC ILFSL IPDC ISLAMICFIN LANKABAFIN MIDASFIN PHOENIXFIN PLFSL PREMIERLEA DBH PRIMEFIN ULC UNIONCAP NHFIL UTTARAFIN 58.50 79.60 1770.00 147.80 48.90 32.60 35.90 175.00 64.70 73.50 75.20 35.10 100.00 110.00 59.40 64.90 98.90 124.00 38.00 62.00 1553.00 118.20 39.50 25.60 30.10 136.50 46.00 56.50 61.00 29.10 79.00 93.60 47.60 54.00 80.50 102.50 57.50 77.00 1623.50 138.50 46.80 31.10 34.40 170.20 64.40 69.60 69.30 33.20 91.60 98.40 56.30 60.50 95.70 114.20 606.67 74.51 1692.06 355.30 112.32 76.69 86.78 157.13 142.48 168.62 67.77 84.05 249.51 100.26 55.31 60.16 229.28 114.80 688.43 85.69 2535.12 1434.35 603.86 277.62 330.65 180.39 675.81 664.53 95.58 430.82 1277.90 128.92 71.37 79.20 761.20 148.09 40.30 58.18 47.48 19.20 25.01 24.71 24.61 57.46 21.21 25.72 48.83 25.53 18.38 51.08 49.96 49.46 25.17 50.22 73.11 77.74 77.43 56.25 60.47 67.82 77.27 72.35 74.70 82.78 62.97 80.36 55.14 48.59 70.24 55.13 86.92 69.25 26.44 2.02 -2.86 -5.33 -2.14 -0.32 -4.84 9.24 21.74 1.53 -4.94 -4.46 -9.06 -7.43 -4.82 -4.42 4.76 -2.48 3.45 2.74 0.04 0.78 5.99 1.85 2.11 3.54 1.15 2.69 14.17 10.24 1.14 2.12 1.53 2.44 0.16 1.19 179.43 198.41 58.51 103.10 267.75 54.92 71.00 555.18 62.28 178.37 948.99 333.16 100.07 209.00 82.41 144.01 15.08 133.68
Engineering
AFTABAUTO ANWARGALV ATLASBANG AZIZPIPES BDAUTOCA BDLAMPS BDTHAI BSRMSTEEL DESHBANDHU ECABLES GOLDENSON KAY&QUE MONNOSTAF NAVANACNG NPOLYMAR NTLTUBES 202.90 31.00 264.00 29.10 56.50 200.20 62.30 120.00 38.90 59.00 62.90 45.60 276.10 86.00 64.90 72.00 131.00 20.40 227.20 23.90 32.60 132.00 49.40 94.20 32.10 51.00 52.80 33.50 162.00 75.60 50.70 59.00 141.90 30.90 250.00 28.40 56.50 200.00 62.00 118.70 38.40 57.10 61.10 42.90 261.30 83.60 62.60 65.40 149.15 60.07 251.01 66.22 107.30 176.17 140.49 105.93 36.87 56.52 58.78 93.90 521.44 81.86 150.44 174.20 210.68 221.87 307.42 250.56 354.39 176.68 501.44 119.89 51.84 60.11 66.92 278.22 1585.43 108.06 544.55 659.28 40.53 27.82 43.85 26.05 29.46 60.61 25.37 57.21 51.04 53.71 52.79 31.38 27.72 48.57 20.37 22.76 64.74 80.54 68.46 72.32 63.78 78.88 67.58 70.97 80.79 79.57 63.45 69.95 90.42 66.18 63.02 70.95 -12.77 36.73 -2.84 6.57 42.05 30.48 5.35 10.83 6.08 0.88 0.16 5.80 46.06 -1.30 6.78 -5.15 7.76 0.38 0.33 0.13 1.11 0.42 8.87 4.41 8.30 0.07 9.25 2.14 0.04 1.39 0.58 0.14 1134.22 9.74 80.85 3.60 54.19 76.22 498.70 471.21 294.08 3.69 534.53 88.36 8.82 112.09 35.56 9.13 11.69% 2.39% 1.36% 2.61% 26.87% 5.29% 19.57% 1.22% 16.65% 0.27% 8.24% 42.01% 8.44% 2.70% 6.14% 0.77% Underperformed Outperformed Underperformed Outperformed Outperformed Outperformed Outperformed Outperformed Outperformed Outperformed Outperformed Outperformed Outperformed Underperformed Outperformed Underperformed
93
Technical Indicator
Time is on your side when you own shares of superior companies. You can afford to be patient- even if you missed Wal-Mart in the first five years, it was a great stock to own in the next five years. Time is against you when you own options Peter Lynch
Company Name
Closing Price (BDT)

5.22% 9.76% 2.84% 3.94% 6.79% 2.36% Outperformed Outperformed Outperformed Outperformed Outperformed Outperformed
Engineering
OLYMPIC QSMDRYCELL RANFOUNDRY RENWICKJA SALAMCRST SINGERBD 185.00 67.90 81.00 109.30 62.00 294.00 100.50 48.90 63.20 63.50 46.50 206.00 130.50 67.40 79.60 109.30 61.40 287.40 423.22 57.81 72.90 88.16 134.25 603.66 1457.79 73.10 81.42 81.07 451.55 2174.64 21.83 53.85 56.00 71.92 26.11 19.46 64.20 77.94 65.95 76.53 71.74 69.77 6.23 19.29 9.64 58.58 11.13 22.10 2.84 3.18 0.31 0.10 7.47 1.05 356.09 181.81 22.60 8.62 410.10 266.45

AMCL(PRAN) APEXFOODS BANGAS BATBC FINEFOODS FUWANGFOOD MEGCONMILK MEGHNAPET NTC RAHIMAFOOD SHYAMPSUG 145.00 85.80 170.00 634.00 55.30 52.00 27.20 12.40 560.00 36.80 13.20 115.60 62.70 103.50 587.00 39.90 44.30 22.00 10.20 493.00 28.60 11.50 138.50 83.00 162.60 626.30 54.40 50.80 26.40 10.90 530.00 34.80 12.10 133.13 184.33 393.31 610.28 47.39 49.42 25.28 11.27 1244.82 88.09 12.40 141.07 633.56 1224.71 606.79 57.34 54.02 35.33 14.70 3795.18 309.20 14.57 53.53 24.39 24.10 55.40 53.27 51.26 40.45 42.38 13.84 27.16 48.76 76.23 75.21 81.65 77.64 68.61 58.49 59.69 54.46 63.21 76.39 67.35 8.03 14.05 37.65 3.54 15.01 -0.78 3.94 -9.92 6.41 -1.63 0.00 0.16 0.28 0.46 0.16 2.49 20.25 3.13 0.20 0.08 2.36 0.04 21.80 21.56 66.63 98.18 116.41 991.18 78.85 2.23 42.82 80.11 0.48 1.97% 4.55% 27.59% 0.26% 18.41% 36.52% 18.67% 1.71% 1.22% 11.51% 0.79% Outperformed Outperformed Outperformed Outperformed Outperformed Outperformed Outperformed Underperformed Outperformed Outperformed Outperformed
Fuel & Power

BDWELDING BEDL LINDEBD DESCO EASTRNLUB JAMUNAOIL KPCL MPETROLEUM MJLBD PADMAOIL POWERGRID SUMITPOWER TITASGAS 49.00 48.60 649.80 121.80 346.80 259.00 66.00 194.70 102.60 0.00 72.00 80.00 77.30 40.70 38.60 600.00 99.50 241.00 178.10 58.90 149.00 88.70 0.00 54.00 72.70 67.10 48.40 47.60 612.20 113.50 319.70 179.20 62.80 187.90 99.90 63.00 74.40 67.60 45.09 43.83 0.00 299.63 312.71 204.40 62.90 171.00 96.44 723.02 180.08 75.36 181.01 54.86 56.52 0.00 1131.12 404.71 238.80 68.76 172.01 130.77 782.82 573.26 83.69 586.65 54.51 53.33 0.00 16.56 55.21 36.22 51.84 66.95 47.65 54.97 18.65 48.14 15.65 65.89 68.08 0.00 62.48 63.38 45.27 66.39 89.45 64.73 100.00 49.52 59.77 39.51 3.64 9.93 -4.06 -2.03 7.86 1.42 -1.72 19.38 0.00 -12.23 -5.58 -11.49 4.93 3.83 0.05 1.61 0.05 6.66 4.22 3.66 6.31 0.00 2.02 7.49 11.60 219.32 163.63 30.91 180.78 16.28 1484.84 264.95 632.93 599.91 0.00 131.95 560.71 820.07 11.48% 3.33% 0.33% 0.61% 5.12% 11.80% 1.47% 6.94% 2.90% 0.00% 0.50% 1.91% 1.29% Underperformed Underperformed Underperformed Outperformed Outperformed Underperformed Underperformed Outperformed Outperformed Underperformed Outperformed Outperformed
Jute
JUTESPINN SONALIANSH 168.00 176.80 99.60 115.90 165.40 176.80 362.47 396.22 1131.32 1283.13 21.34 24.90 83.35 77.57 56.04 27.88 0.05 0.69 7.80 108.54 2.77% 22.64% Outperformed Outperformed
94
Technical Indicator
If you have stomach for stocks, but neither the time nor the inclination to do the homework, invest in equity mutual funds. Here, its a good idea to diversify. You should own a few different kinds of funds, with managers who pursue different styles of investing: growth, value, small companies, large companies, etc. Investing in six of the same kind of fund is not diversification Peter Lynch
Company Name
Closing Price (BDT)

5.12% 8.70% 19.76% 2.75% 25.75% 9.06% 13.83% 14.29% 7.32% 9.33% 9.60% 5.79% 12.52% 5.08% 3.78% 8.29% 23.54% 15.29% 10.19% 1.11% 0.80% 16.23% 6.60% 0.18% Outperformed Outperformed Outperformed Outperformed Underperformed Outperformed Outperformed Outperformed Underperformed Outperformed Outperformed Underperformed Outperformed Underperformed Outperformed Outperformed Outperformed Outperformed Outperformed Underperformed Outperformed Outperformed Underperformed Underperformed
Textile
AL-HAJTEX ALLTEX ANLIMAYARN APEXSPINN CMCKAMAL DACCADYE DELTASPINN DSHGARME DULAMIACOT HRTEX MAKSONSPIN METROSPIN MITHUNKNIT PRIMETEX RAHIMTEXT RNSPIN SAFKOSPINN SAIHAMTEX SONARGAON SQUARETEXT STYLECRAFT TALLUSPIN MALEKSPIN MODERNDYE 54.80 16.90 33.10 112.30 42.30 55.30 35.80 68.90 17.40 43.70 35.50 39.50 131.80 37.00 243.80 80.60 37.80 68.20 37.40 120.00 680.50 94.20 36.70 53.50 41.90 13.80 24.90 72.00 35.50 36.70 29.50 47.20 15.10 36.20 29.80 33.00 70.20 30.40 106.00 58.00 28.50 45.20 27.70 105.10 480.00 61.80 30.70 45.10 54.30 14.80 32.20 111.60 40.10 54.70 34.90 65.40 16.30 42.40 35.00 37.30 129.20 35.50 224.30 79.40 35.60 60.20 35.10 113.70 608.70 89.10 32.50 53.10 49.63 14.98 76.92 230.56 39.30 45.69 87.22 140.07 44.10 94.42 33.46 37.61 261.92 92.15 440.51 72.49 84.01 55.67 83.25 113.07 2060.43 193.54 33.79 205.88 54.14 18.59 281.79 870.83 50.43 51.62 330.97 418.30 200.90 341.06 38.45 50.72 962.52 361.98 1621.67 78.80 308.44 63.21 345.58 128.59 4465.32 501.12 48.51 389.47 55.92 45.67 25.16 26.85 54.44 59.94 23.81 22.40 26.91 27.58 58.82 47.54 26.65 23.38 24.89 55.68 26.99 54.31 26.06 51.67 17.40 25.52 44.79 26.73 73.95 53.93 65.31 84.44 62.93 68.55 78.42 88.61 62.33 80.04 73.00 62.28 74.00 65.07 69.95 72.47 78.25 49.49 68.48 79.71 65.08 61.63 52.85 51.29 17.53 -13.07 7.78 32.86 -1.72 26.62 -2.10 28.42 -4.12 14.06 2.64 -4.36 51.96 -3.14 69.28 9.37 5.17 13.58 3.39 -2.90 24.22 25.10 -9.22 6.84 0.54 4.12 3.75 0.26 15.90 6.20 4.48 0.53 0.56 2.16 17.42 2.80 1.12 2.00 0.09 12.90 4.59 3.92 2.42 1.09 0.00 3.31 11.59 0.00 25.65 61.83 113.70 25.78 610.51 289.66 147.53 31.49 9.02 87.04 572.90 102.78 116.29 68.92 16.98 915.80 155.56 230.17 81.97 122.43 2.68 269.04 377.80 0.13

ACI ACIFORMULA AMBEEPHA BXPHARMA BXSYNTH GLAXOSMITH IBNSINA IMAMBUTTON KEYACOSMET KOHINOOR 223.50 90.00 425.00 101.00 40.70 680.00 139.90 19.00 71.90 227.00 196.00 80.00 300.00 92.30 34.60 582.00 108.50 15.50 55.60 161.00 206.60 89.00 420.90 93.60 37.90 664.50 135.30 17.80 71.30 211.00 209.43 87.89 374.83 94.05 38.78 653.90 318.18 49.36 65.08 747.27 239.84 105.42 401.80 96.65 43.16 768.38 983.18 237.67 77.70 1950.12 48.01 51.84 55.55 51.04 53.03 50.49 17.77 23.85 58.26 19.58 66.00 81.89 74.18 61.39 67.23 72.71 75.09 48.77 86.34 58.74 -4.48 -0.34 23.68 -5.84 -6.01 -0.81 14.18 -4.43 10.89 14.05 0.15 0.33 0.22 10.51 6.65 0.01 0.12 0.59 9.74 0.02 31.02 28.59 84.02 996.94 250.52 8.94 14.79 10.39 623.92 3.05 0.76% 1.07% 9.98% 4.23% 9.64% 0.11% 0.84% 7.58% 11.83% 0.29% Underperformed Underperformed Outperformed Underperformed Underperformed Outperformed Outperformed Outperformed Outperformed Outperformed
95
Technical Indicator
The capital gain Tax penalizes investors who do too much switching from one Mutual Fund to another. If youve invested in one fund or several funds that have done well, dont abandon them capriciously. Stick with them Peter Lynch
Company Name
Closing Price (BDT)

1.84% 0.35% 29.47% 0.13% 0.11% 5.05% 0.86% 4.00% 12.93% 22.70% Outperformed Underperformed Outperformed Underperformed Underperformed Underperformed Underperformed Outperformed Outperformed Outperformed

LIBRAINFU MARICO PHARMAID RECKITTBEN RENATA SALVOCHEM SQURPHARMA BEACONPHAR ACTIVEFINE ORIONINFU 370.00 406.00 265.40 817.90 1310.00 36.50 245.90 32.30 63.00 57.00 255.50 360.00 148.20 732.30 1160.10 29.40 225.60 25.00 53.20 41.50 343.50 389.50 265.40 774.50 1205.00 33.70 237.10 31.00 62.20 56.40 997.40 386.60 467.03 802.57 999.12 33.23 594.52 28.38 60.50 132.71 2979.79 437.26 1791.98 967.25 1155.01 43.30 2099.16 33.80 67.07 481.26 21.47 49.05 26.01 41.34 57.35 52.09 13.88 55.49 56.91 25.56 78.30 54.85 76.86 34.61 50.85 73.45 56.70 71.38 76.69 72.55 15.66 -0.38 62.77 -5.29 -5.09 -5.07 -3.26 15.67 0.48 5.62 0.02 0.11 1.20 0.01 0.02 2.23 2.28 10.41 6.25 5.14 7.91 43.37 244.01 4.75 30.58 71.59 537.19 286.72 370.08 260.72
Paper & Printing

HAKKANIPUL 41.50 28.00 40.70 35.78 40.51 55.97 74.12 29.21 0.38 13.93 1.80% Outperformed
Travel & Leisure

UNITEDAIR Service & Real Estate EHL OCL SAMORITA SAPORTL 74.00 73.90 95.50 62.80 61.90 59.20 68.00 53.00 71.10 65.90 93.50 57.90 67.19 66.10 261.89 58.45 78.34 77.52 838.71 73.73 52.23 50.90 23.87 52.20 66.51 57.72 73.53 62.76 6.08 -5.32 12.48 -5.24 9.49 0.59 0.05 1.91 631.54 38.31 4.02 108.92 13.63% 1.78% 0.49% 1.56% Outperformed Underperformed Outperformed Underperformed 25.00 21.90 23.90 23.79 30.85 47.47 55.37 -1.65 76.52 1814.38 17.21% Underperformed
Cement
ARAMITCEM CONFIDCEM HEIDELBCEM LAFSURCEML MEGHNACEM MICEMENT 117.20 126.50 270.00 32.50 142.30 115.00 82.20 107.80 218.00 25.00 110.50 97.50 116.80 124.50 255.90 26.60 139.60 110.50 234.96 117.77 248.65 75.96 126.59 108.15 823.39 143.48 277.07 325.21 163.04 144.34 22.14 55.55 49.78 21.40 56.09 44.16 78.92 66.60 64.25 38.88 63.16 69.16 34.14 2.13 1.20 -15.22 7.55 -1.34 0.90 2.28 0.13 20.68 1.01 8.07 93.15 267.12 32.53 560.98 126.16 844.17 5.18% 5.72% 0.22% 1.82% 4.02% 5.66% Outperformed Outperformed Outperformed Underperformed Outperformed Underperformed
IT
AGNISYSL BDCOM DAFODILCOM INTECH ISNLTD 39.00 30.50 23.50 32.70 33.30 32.60 25.70 20.30 26.50 25.90 35.00 26.10 21.90 29.20 31.60 35.43 26.94 21.73 28.80 29.86 39.42 31.13 24.23 26.64 30.92 52.08 48.92 51.88 55.13 58.98 61.69 41.38 55.49 58.34 72.41 -6.91 -12.42 -2.23 -4.58 7.85 7.69 4.16 3.05 6.24 1.13 274.34 113.92 65.75 186.30 33.84 24.26% 15.84% 5.74% 40.06% 10.81% Underperformed Underperformed Underperformed Underperformed Outperformed
Tannery
APEXADELFT APEXTANRY 312.80 128.80 276.50 108.00 295.60 120.40 725.86 119.27 2296.71 126.39 15.36 57.67 70.90 75.75 -2.52 -5.22 0.38 1.34 110.65 159.26 3.33% 8.68% Underperformed Underperformed
96
Technical Indicator
Among the major stock markets of the world, the US market ranks eighth in total return over the past decade. You can take advantage of the faster-growing economies by investing some portion of your assets in an overseas fund with a good record Peter Lynch
Company Name
Closing Price (BDT)

0.49% 23.44% 1.15% Underperformed Outperformed Outperformed
Tannery
BATASHOE LEGACYFOOT SAMATALETH 624.80 42.00 17.40 589.00 29.20 14.20 598.50 40.10 15.20 601.60 35.82 45.37 609.34 38.52 143.60 49.39 57.61 28.30 48.88 68.30 50.58 -3.72 18.64 -6.17 0.07 2.07 0.12 40.03 74.95 1.81
Ceramics
FUWANGCER MONNOCERA RAKCERAMIC SPCERAMICS STANCERAM 45.50 64.80 81.10 42.40 39.80 39.00 48.00 70.20 35.70 28.30 41.70 61.80 78.40 40.90 38.90 41.18 137.43 77.04 40.74 83.25 40.26 503.29 90.46 48.68 318.81 55.35 26.35 52.69 51.39 25.09 60.25 83.30 58.41 71.48 72.54 -7.44 9.19 -1.75 0.00 22.52 29.84 2.17 3.44 9.32 0.62 1250.11 128.55 261.26 377.40 21.70 50.05% 8.69% 1.32% 8.30% 8.64% Underperformed Outperformed Underperformed Outperformed Outperformed
Insurance
AGRANINS ASIAINS ASIAPACINS BGIC CENTRALINS CITYGENINS CONTININS DHAKAINS EASTERNINS EASTLAND FEDERALINS GLOBALINS GREENDELT ISLAMIINS JANATAINS KARNAPHULI MERCINS NITOLINS NORTHRNINS PARAMOUNT PEOPLESINS PHENIXINS PIONEERINS PRAGATIINS 43.80 58.90 45.00 52.80 72.10 42.50 46.00 98.70 56.70 95.00 43.80 47.00 160.50 47.00 384.75 53.20 46.80 53.70 48.30 41.00 42.40 84.40 89.80 81.00 34.10 51.20 35.00 43.70 51.80 35.30 35.00 79.60 45.20 71.50 36.30 37.10 139.00 38.30 304.00 45.80 35.00 43.00 39.00 30.70 34.50 66.10 66.00 61.40 41.30 57.70 42.30 49.30 68.20 39.70 43.30 95.40 55.70 91.70 39.90 46.00 152.40 44.10 365.50 50.30 44.80 51.80 46.60 38.50 39.00 82.00 86.70 78.80 40.36 56.36 97.77 48.92 153.11 39.64 100.48 237.38 136.78 85.17 40.11 113.20 152.48 101.53 355.87 49.96 101.73 123.27 114.71 90.20 39.10 78.24 195.91 177.70 46.17 65.30 357.85 50.04 527.07 47.55 375.41 943.78 564.46 88.44 69.94 429.38 169.21 362.34 553.84 54.72 395.25 452.11 433.18 331.31 44.11 86.18 728.76 648.64 55.08 55.23 27.40 54.53 23.04 54.15 27.39 22.53 23.66 64.11 49.19 25.34 49.55 27.01 40.65 53.46 27.75 24.28 24.65 26.72 54.86 58.54 22.21 20.57 81.12 72.36 76.69 67.39 77.20 63.82 78.38 79.51 81.36 87.24 69.44 72.37 43.27 71.12 48.90 62.14 73.04 74.07 72.83 68.50 75.15 73.10 91.16 76.09 3.19 0.17 3.80 -1.40 12.22 -2.93 7.44 1.98 4.36 13.95 -6.78 -0.43 -2.06 3.40 -3.05 -2.90 8.74 3.08 0.11 5.41 -1.27 5.94 13.85 11.38 1.31 3.25 4.05 4.34 0.26 3.31 4.07 0.66 1.01 2.68 3.05 1.53 0.33 0.90 0.11 3.43 4.87 0.56 1.55 1.87 2.77 1.79 0.47 0.32 53.08 180.05 161.89 214.57 16.55 130.72 168.26 59.34 53.06 232.12 121.27 67.23 50.44 38.67 40.87 172.42 206.54 28.19 69.05 68.54 108.09 136.88 37.86 23.63 6.44% 7.56% 9.04% 8.46% 1.08% 8.10% 13.34% 2.07% 2.32% 6.69% 8.06% 7.32% 0.81% 4.87% 4.37% 9.28% 12.47% 2.88% 6.67% 9.81% 6.00% 5.43% 1.61% 0.67% Outperformed Outperformed Outperformed Underperformed Outperformed Underperformed Outperformed Outperformed Outperformed Outperformed Underperformed Outperformed Underperformed Outperformed Outperformed Underperformed Outperformed Outperformed Outperformed Outperformed Underperformed Outperformed Outperformed Outperformed
97
Technical Indicator
In the long run, a portfolio of well chosen stocks and/or equity mutual funds will always outperform a portfolio of bonds or a money market account. In the long run, a portfolio of poorly chosen stocks wont outperform the money left under the mattress Peter Lynch
Company Name
Closing Price (BDT)

2.12% 5.57% 3.98% 0.13% 4.35% 6.83% 9.46% 3.10% 8.85% 0.39% 0.35% 3.24% 12.89% 0.84% 1.40% 2.36% 1.72% 0.80% 5.42% 2.46% Outperformed Underperformed Outperformed Underperformed Outperformed Outperformed Outperformed Outperformed Underperformed Underperformed Outperformed Outperformed Outperformed Outperformed Underperformed Outperformed Outperformed Outperformed Underperformed
Insurance
PRIMEINSUR PROVATIINS PURABIGEN RELIANCINS REPUBLIC RUPALIINS SONARBAINS STANDARINS TAKAFULINS UNITEDINS DELTALIFE FAREASTLIF MEGHNALIFE NATLIFEINS POPULARLIF PRAGATILIF PRIMELIFE PROGRESLIF RUPALILIFE SANDHANINS 57.80 49.00 129.00 109.70 52.00 120.30 42.30 44.80 66.30 68.50 3075.50 166.30 196.70 382.80 259.00 210.50 217.10 174.40 183.00 172.60 47.40 37.80 78.70 91.20 41.30 64.00 32.80 37.60 43.80 56.60 2495.00 139.00 164.40 302.10 222.10 155.60 185.10 122.10 117.00 147.00 53.90 47.60 122.80 102.10 50.50 65.90 40.40 42.70 65.70 65.70 3075.10 162.00 186.80 364.30 246.70 205.90 212.50 166.20 175.30 165.50 53.57 107.46 238.29 290.18 48.64 85.91 94.46 106.51 133.62 64.88 7839.62 155.43 184.99 894.70 249.74 509.61 202.50 436.91 384.05 163.72 63.71 374.66 904.81 886.17 55.85 114.35 346.63 366.68 500.96 79.59 24540.66 222.35 222.29 3633.44 314.12 2036.32 253.97 1602.31 1523.71 213.87 54.64 24.21 25.41 17.69 55.85 35.77 27.39 20.37 26.25 55.26 11.53 49.30 48.49 15.41 46.45 16.55 45.13 20.86 20.20 50.49 67.91 75.30 67.45 53.92 78.62 46.96 79.62 68.49 77.38 81.98 34.13 68.58 56.94 78.76 76.52 70.64 73.50 62.43 84.36 64.82 -3.58 10.57 36.79 0.10 4.61 12.55 2.15 -1.10 25.38 -1.79 4.58 2.21 -2.86 1.90 -2.84 5.58 2.81 10.84 20.03 -1.37 0.58 0.99 0.40 0.05 0.84 1.97 2.00 0.57 2.02 0.13 0.01 1.35 3.03 0.30 0.30 0.22 0.29 0.08 0.58 0.52 30.51 44.57 40.86 5.29 39.88 177.74 77.71 24.01 115.35 8.35 39.12 206.55 554.80 106.59 72.66 40.88 57.83 12.32 89.35 84.39
Telecommunication
GP 166.20 153.30 163.50 161.91 164.48 59.97 76.34 -0.43 8.37 1337.96 0.61% Underperformed
Miscellaneous
ARAMIT BERGERPBL BEXIMCO BSC GQBALLPEN SAVAREFR SINOBANGLA USMANIAGL ZEALBANGLA 284.00 570.00 126.90 704.00 173.00 76.50 43.20 142.00 15.00 234.00 482.00 111.80 548.00 145.50 48.70 33.00 96.40 13.50 277.20 550.00 113.00 554.50 169.60 76.50 42.50 132.60 14.50 266.78 544.61 115.92 674.49 167.81 170.83 39.32 122.78 14.33 321.79 621.37 147.47 1538.15 189.61 506.66 43.09 132.16 16.70 50.78 50.57 44.59 22.57 57.25 26.59 61.33 50.58 48.20 80.97 82.07 42.50 27.77 77.31 66.96 86.14 75.12 60.03 7.19 -1.77 -8.94 -20.93 -1.74 38.71 11.26 8.11 -3.33 0.10 0.01 13.91 1.00 0.89 0.03 5.06 0.08 0.05 25.89 5.74 1603.31 585.46 144.43 2.04 194.40 10.74 0.67 1.56% 0.04% 3.99% 52.79% 15.80% 1.92% 22.87% 0.99% 0.77% Outperformed Outperformed Underperformed Underperformed Underperformed Outperformed Outperformed Outperformed Underperformed
98
Forthcoming IPO
GSP Finance Ltd. Issue Price Face Value Market Lot (Shares) Credit Rating (Short Term) Credit Rating (Long Term) Market Category Corporate Profile
GSP Finance Limited (GSPBL) is a private is a Non-Banking finance company established in October 29, 1995, generates major portion of its revenue from lease finance and, merchant banking operation. The Company offers lease finance of all types of plant, machinery, equipment and vehicles both for industrial and commercial use and also allows term loans for industrial, housing and other purposes. The Company received its Certificate for Commencement of Business on January 14, 1996 and its license on March 4, 1996 as required under section 4 (1) of the Financial Institution Act, 1993. The Company also obtained Merchant Banking license from the Securities and Exchange Commission on August 24, 1999. Board of directors of the company comes from heterogeneous background. Ex-military official, business entrepreneur, foreign banker constitutes the board of directors of the company.
: BDT 25 : BDT 10 : 500 : ST-4 : BBB3 :N
Manager to the Issue Public Offer Subscription (Open) Subscription (Close) NRB Subscription (Close) Free Float
: ICB Capital Management : 20.0 Mn Shares : January 08, 2012 : January 12, 2012 : January 21, 2012 : 40.20%
Business Model
GSP Finance Company (Bangladesh) Ltd. generates its revenue from lease finance, term finance and merchant banking mainly. The Company carries out the following types of business:
Lease Financing Term Finance Acceptance of Term Deposit Factoring Term Lending Money Market Operation Merchant Banking
Data from 2010 financial statement shows that investment income contributes to the total operating income was 78%. Rest of the other segments contributes 22% of the total operating income.
Industry Dynamics
The Non-Bank financial institutions (NBFIs) constitute a rapidly growing segment of the financial system in Bangladesh. The NBFIs have been contributing toward increasing both the quality and quantity of financial services and thus mitigating the lapses of existing financial intermediation to meet the growing needs of different types of investment in the country. At present, 29 NBFIs are operating their business across the country of which one is government owned, 15 are privately owned local companies, and the remaining 13 are established under joint venture with foreign participation.
99
Forthcoming IPO
NBFIs are mainly dependent upon three sources of income. They are
interest income, investment income and Income from brokerage.
According to data from FY 2010 shows that most of the earnings of NBFIs came from investment and brokerage income. It shows heavy dependence on capital market for revenue generation. On average overall industry generated 64% of its operating revenue (41% from investment income and 23% from commission, exchange and brokerage income) directly from capital market sources. Balance sheet data of FY 2010 shows that 71% of total assets of NBFIs are invested in loans, advances and leases. Only 11% of the total assets are used in proprietary investment. Generation of 41% of income from 11% asset will not be sustainable. We perceive direct income generated from the capital market to be more volatile and unsustainable (at the current rate) than the usual sources like interest income. Other revenue sources like lease income, term finance are on the declining trend. Banks are penetrating into the segments held by NBFIs. In the coming days banks will be strong competitors against the NBFIs and business growth will be competitive.
Shareholding Pattern
Exhibit: Pre-IPO and Post-IPO Shareholding Pattern
Shareholding Categories
Mr. Feroz U. Haider Colonel M. Nurul Islam, Psc (Retd.) Mr. Moin U. Haider S. F. Haider Foundation Ltd. Air Vice Marshl Altaf H. Choudhury Ms. Ishmam Raidah Rahman Ms. Silwat Haider Mrs. Shahin Haider Amber Hill Global resources Ltd. Mr. Siraj U. Haider Tai Ping Asian Investment Ltd. Mr. Aziz Al Kaiser Karnafuli Industries Ltd. Mrs. Tabassum Kaiser Mr. Wolf Peter Berthold Interfox Holdings Ltd. General Shareholders Total 27,646,080 100.00%
Pre-Issue No. of Shares

4,227,917 81,408 650,496 378918 172403 296320 325248 325248 3644416 782822 4962535 2764608 4322048 2764608 1708608 238477
Post-Issue % Holding
15.29% 0.29% 2.35% 1.37% 0.62% 1.07% 1.18% 1.18% 13.18% 2.83% 17.95% 10.00% 15.63% 10.00% 6.18% 0.86%
No. of Shares
4,227,917 81,408 650,496 378,918 172,403 296,320 325,248 325,248 3,644,416 782,822 4,962,535 2,764,608 4,322,048 2,764,608 1,708,608 238,477 20000000 47,646,080
% Holding
8.87% 0.17% 1.37% 0.80% 0.36% 0.62% 0.68% 0.68% 7.65% 1.64% 10.42% 5.80% 9.07% 5.80% 3.59% 0.50% 41.98% 100.00%
Source: Prospectus of GSPFBL & LBSL Research The lock in period is 3 years of GBB Limited and sponsors, while the lock in period of private placement participants is 1 year. So the free float share of GSPBL is 41.98%.
100
Forthcoming IPO
Financial Structure
Exhibit: Financial Structure
Particulars
Authorized Capital: Ordinary Share Capital Pre-IPO Paid Up Capital To be Issued as IPO Post IPO Paid Up Capital Source: Prospectus of GSPBL 27,646,080 27,646,080 20,000,000 47,646,080 276.46 276.46 200.00 476.46
No of Shares
BDT Mn
Utilization of IPO Proceeds

The public issue is the compliance of statutory requirement of the Company. The proceeds will strengthen the capital base and liquidity of the Company. Besides, it will augment business expansion as such proceeds of the present issue of 20,000,000 ordinary share of Tk.10.00 each at an issue price of Tk.25.00 per share including a premium of Tk. 15.00 per share totaling Tk. 500,000,000.00 would be utilized in the normal business operations such as investment, industrial development, leasing, lending, refinancing etc and refund of high cost borrowings of the Company within 1 (one) year of receiving proceeds from IPO.
Analyst Observation
The company has wrongly calculated the return on equity. Actual ROAE for 2010 according to financial statement data was 14.49%. Though the company has good net asset value, the company was never successful in generating good return on its capital. The company is highly capital market dependent on revenue generation. 70% of its revenue comes from merchant banking operation. Too many directors and sponsors in the board. Corporate governance compliance will be uncertain.
Md. Tareq Ibrahim
101

Statistical Review
Unit National Economy
GDP at current market price GDP growth rate (in percent) Annual per capita GDP at current price Total Consumption as percentage of GDP Gross Domestic Saving as percentage of GDP National saving as percentage of GDP Total investment as percentage of GDP BDT mn % US$ % % % % 472477 6.43 487 79.65 20.35 28.66 24.46 545822 6.21 559 79.69 20.31 30.21 24.21 614,795 5.74 621.00 79.91 20.09 29.57 24.37 6,905,710 6.07 684.00 79.90 20.1 30.02 24.41 7874950 6.66 755 80.41 19.59 28.4 24.73 -
2006-2007
2007-2008
2008-2009
2009-2010
2010-11
Stock market Unit

Market capitalization Market capitalization to GDP ratio Million US$ %
2006 (December)
4506 10.18
2007 (December)
10914.00 17.18
2008 (December)
15,127.00 20.19
2009 (December)
27,188 43
2010 (December)
50,114 50.80
Oct-11
30,796.91 32%
Nov-11
32,001.12 33.33%
Dec-11
31,911.35 33.32%
Money and Credit Unit

Toatl liquidity (broad money-M2) M2 Growth Bank Deposit Grwth in credit (Net) to Government (Percentage change over end of the last june) Growth in credit to Other Public Sector(Percentage change over end of the last june) Growth in credit to Private Sector(Percentage change over end of the last june) Growth in total Domestic credit (Percentage change over end of the last june) Million Tk. % BDT mn % 13.94
2006-2007
2115042 17.02
2007-2008
2487950 17.59 2159981 30.41
2008-2009
2,964,999.00 19.17 2,603,095 24.04
2009-2010
3630311 22.24 3,166,646 -6.52
2010-2011 July 2011-2012

4,405,200 21.34 3,855,251 34.89 4425400
October 2011-2012
4613042
October 2010-2011
3852313 6.12 3364260 -0.3
0.46(over the end 4.72(over the end of of last June) last June) 3870078 2.8 4015610 19.57
15.05
-32.17
6.55
20.77
28.72
-1.52
-9.87
6.24
15.12
25.15
14.62
24.24
27.41
-0.02
4.76
8.53
14.9
21.18
16.02
17.89
27.41
0.39
6.61
7.02
Public Finance Unit

Size of total Budget Total Revenue Earnings NBR Tax Revenue Non NBR Tax Revenue Non Tax revenue Public Expenditure Non Development Program Annual Development Program (ADP) ADP Utilization Rate Budget Deficit Bedget Deficit as% of GDP Budget Deficit Financing Through Domestic sources Bank Borrowing Non Bank Borrowing Budget Deficit Financing Through External sources Foreign borrowing Foreign grant Million Tk. Million Tk. Million Tk. Million Tk. Million Tk. Million Tk. Million Tk. Million Tk. % Million Tk. % Million Tk. Million Tk. Million Tk. Million Tk. Million Tk. Million Tk.
2006-2007
697400 525420 410550 18600 96270 697400 432590 264810 75 171980 3.6 88340 54340 34000 83640 58560 25080
2007-2008
796150 573010 438500 19880 114630 796150 526510 269640 75.8 223140 3.6 117530 72530 45000 105610 63060 42550
2008-2009
999620 693820 545000 22890.00 125930.00 999620 725840.00 273780.00 80.42 305800 4.5 169980.00 134,980 35,000 135,820 72,360 63,460
2009-2010
1138190 794610 610000 29550.00 155060.00 1138190 821800.00 316390.00 88.00 343580 4.97 205550.00 167,550 38,000 138030.00 86,730 51,300
2010-2011
1321700 928470 725900 34520 168050 1321700 924770 396930 89 393230 4.4 236,800 156,800 80,000 156400 108,300 48,100
2011-2012
1635890 1183850 918700 39150 226000 1635890 1175890 460000 4(July) 452,040 5 272080 189570 82510 179960 130580 49380
Status till Status till November 2011 November 2010

-
316843
270354
68920 (Oct 2011) 15 -
54240 (Oct 2011) 14 -
160,000 (Dec 2011) 31035
24202.5
Note: All data used herein secondary level and from different sources especially from Bangladesh Bank monthly economic update. Source: Bangladesh Bureau of Statistics, Dhaka Stock Exchange & Bangladesh Bank Web Sites
102
Monetary tools Unit

Bank rate CRR SLR Repo rate Reverse repo rate Repo bid Acceptance (BDT Crore) % of acceptance % % % % % % 8.5 6.5 2.5 51536.5 100.00
2006-2007 (latest rates)

5

5

5

5 5.5 18.5 4.5 2.5 18084 97.00

5 6 19 6.75 244435.5395 13.30
October 2011-2012
5 6 19 7.25 5.25 7677.76 1.96
November 2011-2012
5 6 19 7.25 5.25 2088.95 0.72
December 2011-2012
5 6 19 7.75 (Jan 2012) 5.75 (Jan 2012) Nil Nil
Other Major Indicators Unit

Import Growth Export Growth Balance of trade Workers remittance Current account balance Current account balance as percentage of GDP Foreign ecxhange reserves US$in mn % US$in mn % US$in mn US$in mn US$in mn % US$in mn (3443.00) 5998.47 936 1.40% 5077.2 12053
2006-2007
15496
2007-2008
19524 25.99% 13945 15.70% (5579.00) 7914.48 672 1.04% 6149
2008-2009
19939 2.13% 15565.19 11.62% (4626.00) 9689.26 2618 2.44% 7470.96
2009-2010
21140 6.02% 16204.65 4.11% 4936.00 10987.40 3734 3.42% 10749.74
2010-2011
29,807.00 41.00% 22924.38 41.47% (6959.00) 11650.31 (JulyJun 2010-11) 1168 1.07% 10911.6
July -October July- October 2011-12 2010-11

11283 31.78% 8180 21.42% (3103.00) 4012 (372.00) (1814.00) 3583 1117 6737 8562
9285.2(till November)
10700.2(till November)
Inflation CPI Classification(Point to Point)

General Infaltion Food Inflation Non-food Inflation
Unit
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
For the month July 2011-2012
November 2011-2012
November 2010-11
% % %
7.22 8.12 5.9
9.93 12.28 6.32
6.66 7.18 5.91
7.31 8.53 5.45
8.8 11.34 4.15
10.96 13.4 6.46
11.58 12.47 10.19
7.54 9.8 3.33
Rural
General Infaltion Food Inflation Non-food Inflation % % % 7.3 7.96 6.1 9.99 11.94 6.41 6.83 7.09 6.33 7.16 7.96 5.62 9.4 12.03 4.18 11.09 13.53 6.14 11.37 11.8 10.46 8.1 10.53 3.25
Urban
General Infaltion Food Inflation Non-food Inflation % % % 7.03 8.54 5.34 9.8 13.05 6.06 6.24 7.43 4.8 7.69 9.85 4.99 7.3 9.76 4.07 10.65 13.12 7.32 12.11 14.04 9.47 6.14 8.12 3.55
Call money rate (monthly weighted average) Commercial lending rate ( weighted average) Deposit rate (weighted average three months to less than six months) Average exchange rate Taka/US$ GDP Deflator
% % % Taka/US$ %
7.37 12.28 6.51 69.02 5.6
10.24 12.63 7.23 68.51 5
4.39 13.36 7.97 69.29 6.4
8.06 12.75 7.34 69.45 6.4
11.35 12.46 7.63 74.15 6.4
11.21 13.74 9.09 74.71 -
12.7 14 6.21 76.48
11.38 11.78 4.53 70.37
Note: All data used herein secondary level and from different sources especially from Bangladesh Bank monthly economic update. Source: Bangladesh Bureau of Statistics, Dhaka Stock Exchange & Bangladesh Bank Web Sites
103
Quotes in Paradox
It is not my order [to float shares]. It is an order from the prime minister. If they ignore it, they should leave the government institutions -7 February 2011
- Finance Minister AMA Muhith
It was dangerous that many investors still considered the capital market as a gamblers den. I heard that brawling broke out there today -7 February 2011
It is not fair to behave well when the market is up and behave badly when the market is down -9 February 2011 Both gaining and falling of indices by 500 points in a single day is not "a healthy sign for any capital market" -16 February 2011 "I don't understand their behaviour. do they come for speculations?" -1 March 2011 The ministry has taken the responsibility to look into the whole report, as it does not needlessly want to play any part in humiliating anybody -11 April 2011
"I think there is nothing to do according to the existing laws. But I dislike most forced selling of shares by the merchant banks. They have no moral right to do this" -16 February 2011
"The Companies Act will be amended to include the policy of buy-back" -8 March 2011
"The government does not want the genuine 'culprits' to evade the laws of the land." -1 May 2011
Existing investors are shifting money from one pocket to another but no new investment has so far been made in the market. -15 July 2011 PEOPLE WHO INDULGE IN VANDALISM WITH THE HOPE THAT THEIR ACTIONS WILL LEAD TO SHARE PRICES CORRECTIONS ARE NOT REAL INVESTORS, RATHER THEY ARE 'FATKABAZARIS'," -8 August 2011 "They are not real investors. They better leave the market -8 August 2011
"THERE IS NO INVESTOR IN THE DEMONSTRATION. THEY (DEMONSTRATORS) ARE FATKABAJ. REAL INVESTORS NEVER DEMONSTRATE" -8 August 2011
The behavior in the secondary market is illogical and inappropriate. -28 October 2011
It makes no sense to make hue and cry or get panicked for the planned action of the government against the capital market manipulators -8 August 2011 "Our market won't be dictated by World Bank, IMF. They will run as per our own rules. -30 October 2011
Our stock market is unique in world. -28 October 2011
High inflation is not simply induced by global inflation but also because of certain domestic policies. -20 December 2011
104
Quotes in Paradox
'a group of people' was 'playing foul' in the share market while stating that acts of vandalism by some 'unruly investors' for the reason of falling stock prices, are largely "motivated" -11 February 2011 "We have decided not to offload the shares of SoEs for the time being to help stabilize the market as some investors are now active in pulling down the share prices artificially" -15 February 2011 "This is not a foolproof report. The committee told me to be sure about the individuals" -9 April 2011 "Our government is determined to ensure growth and stability of the capital market -10 June 2011 "Some old players were sitting idle and now they are investing money in the market to raise the prices -15 July 2011 "It (capital market) isn't yet, but it is turning into an investment center. -10 August 2011 "A slew of measures have been put in place to make the market steady. Still, it's not returning to its normal self. I don't know how it (stock Market) will be set right. -18 October 2011
All these incidents are rubbish --11 February 2011
The 'buy-back' system would be introduced in the capital market soon. -8 March 2011
"This is a very risky area. Here both profits and losses can occur. For this, it needs right and prudent decisions" -1 May 2011 "This surge in prices of shares is not welcome. It is not a good sign," -15 July 2011 "There is no valid reason behind the current instability of the share market. Some bad people are playing with the market -9 August 2011
"It's a SEC (Security and Exchange Commission) business, not mine. --31 October 2011 "I am not worried about subsidy on power. -20 December 2011 Achieving the projected 7 percent economic growth might not be possible in the current fiscal year due to high import cost, spiraling inflation, downward investment flow and excessive subsidies in public spending. -22 December 2011
The banks themselves invested in the share market and made huge profit in the last two years. I have heard that now their exposure is much less. The SEC told me that as the banks have made profit they can make some investment in the bad days now. -20 October 2011 It is difficult to disclose the next course of action. If I speak here, it may have an impact on the market. It's better not to disclose any further measure. -28 October 2011
Commodity price is totally upset. We're in a very difficult situation with inflation. The inflation has already crossed double digit." -22 December 2011 "Earlier I said about the difficulty of achieving 7.0 per cent gross domestic product growth, considering the current economic scenario. But I did not say that it is not achievable. -29 December 2011
Source: www.thefinancialexpressbd.com, www.thedailystar.net Collected and Compiled by
Rajib Kumar Das

105
Quotes of Year 2011!!!

Most of the brokerage houses are pro-BNP. The stock market started collapsing when the main opposition party declared movements. There might have some games behind the crisis - Prime Minister Sheikh Hasina Share market is not an economic indicator. Revenue earning depends on export diversification and domestic production - Basir Uddin Ahmed, tax administration and monitoring member Be an investor, not a daily trader -DSE President Shakil Rizvi Stock market index should be around 3500 mark - AHM Mostafa Kamal, Chairman of parliamentary standing committee on Finance Ministry You have created a system of capital market and financial intermediation, which is really not a capital market. What we have in Bangladesh is a casino in the name of capital markets. -Rehman Sobhan, Chairman, CPD The book building is a good system for companies listed on the stockmarket, but neither our market nor the stakeholders are mature enough to implement the method. - Salman F Rahman, president of BAPLC Listing with compensation package is not a good idea. It will create more complexities. The issuer company may appoint some dealers who will always give buy order at certain prices so that the price cannot come down - Salahuddin Ahmed Khan, a professor of finance at Dhaka University The system of distribution of private placement shares has polluted the society - Khandaker Ibrahim Khaled, the chief of the probe committee Its not easy to fast-track such trials. There are courts, and the court is always in favour of the accused. Only martial law can fast-track such trials. - Khandaker Ibrahim Khaled, the chief of the probe committee In practice, there is no real institutional investor in our country. All we have here are merchant banks, who only give margin loans and operate as brokerage firms - Prof Mahmud Osman Imam, Department of Finance, Dhaka University Bangali is driven by rumor. The investors must have knowledge about the market. So I request them to invest in the stock market after inquiring enough information to avoid such crash - Prime Minister Sheikh Hasina The proposal of the CSE is not logical, because always a big company proposes a smaller one to be merged -Shakil Rizvi, DSE president The proposed merger is not possible because the amounts of assets of both the stock exchanges are not equal. -Md Fayekuzzaman, managing director of the Investment Corporation of Bangladesh (ICB) A section of people want the discontinuation of the placement shares distribution system. But we do not think so, as I cannot cut off my head to get rid of a headache. I must have to concentrate on the healing of my headache -a top SEC official The countrys economic health is sound and well. However, it is not reflected in the bourses. All we need now is to boost confidence of investors in the stock market - Salman F Rahman, President of BAPLC Its very interesting that some sponsor-directors suddenly have started showing their extreme love for their dear ones through gifting their shares in the panicky situation of the market. - An SEC official We have a plan to move forward a proposal to the Dhaka Stock Exchange (DSE) for investing 30 per cent of Tk 150 billion life fund in stock market. - Sheikh Kabir Hossain, Chairman of BIA
106
Quotes of Year 2011!!!

The market stabilisation fund will inject new liquidity in the market by trading shares. I hope it will help steer the market to a new growth path. - Nazrul Islam Mazumdar, chairman of BAB The main objective of Market Stabilisation Fund is to help offset the financial losses of the retail investors, especially those who trade on credit. - Salman F Rahman, president of the Association of Publicly Listed Companies The bankers are buying shares slowly, and it will put a long-term impact on the market. Banks, both public and private, have a total of Tk 45,000 crore in hands, 10 percent of which is not a small amount. - Nazrul Islam Mazumdar, chairman of BAB The BAB and ABB should have kept their promises. They made big statements about making new investment but did not walk the talk. - Faruk Ahmed Siddiqi, ex-chairman of Securities and Exchange Commission (SEC) No promise should been made that cannot be implemented. I have doubts whether BAB has the right to make such an announcement. Does it have the authority? I am sure a lot of investors also have similar doubts. - Faruk Ahmed Siddiqi, ex-chairman of Securities and Exchange Commission (SEC) The Prime Minister is very much concerned over the present market situation. Thats why she has ordered me to take necessary measures to bring stability to the market. - Prof. M Khairul Hossain, chairman, Securities & Exchange Commission No good person will be there in the SEC if they arent appreciated. - Prof. M Khairul Hossain, chairman, Securities & Exchange Commission We have stopped selling shares and we are on the buying side. But we cannot invest as much as we want or in line with the market demand due to the liquidity crisis. - K Mahmud Sattar, President, Association of Bankers Bangladesh (ABB) There is no liquidity crisis in the country now. - Sheikh Hasina, Honorable Prime Minister, Peoples Republic of Bangladesh The new provision might help some people to manipulate the market, as it would force the sponsors/directors to purchase the required volume of shares. - Prof. Osman Imam, Department of Finance, University of Dhaka The SEC package is not motivational; it is a plan to change the structural format of the market. - Prof Salahuddin Ahmed Khan, Department of Finance, University of Dhaka It will be an illogical expectation if the investors want a stimulus package every day. Thats why they will have to make investment considering the companies fundamentals. - AB Mirza Azizul Islam, former adviser to a caretaker government A game has been on at the stock market. The present crisis will not be over unless the game comes to an end. - Khondkar Ibrahim Khaled, Chief of the Probe Committee The market policies should be re-written. - Mohammad Fazlul Azim, Independent lawmaker Lack of transparency and lack of confidence are also visible in the market, and it is presently suffering from fund shortage. So injecting fund to stabilise the market is a faulty approach. - Dr Khondaker Golam Moazzem, Senior Research fellow of CPD I think the 7.0 per cent economic growth will be achievedthe overall economic determinants indicate that. - Dr Atiur Rahman, Governor, Bangladesh Bank
Source: www.thefinancialexpressbd.com, www.thedailystar.net Collected and Compiled by
Rajib Kumar Das

107
Financial Horoscope
Aries (21 March 20 April) If youve decided to go in and tell your boss just what you think in no uncertain terms on the 1st or 2nd, you might want to take a moment to consider whether or not a gentler approach might not be more effective. After all, youve got some great energy circulating right now, and theres no need to gum it up with negativity. But dont give up on your basic idea: The first month of the New Year is a great one for making change, as long as youre committed and serious about it. On the 8th, focus on networking, networking and more networking. (And yes, that means making a few phone calls, even if youre feeling sleepy.) On the 13th, youll get a couple of indications of how well your efforts are working and if they arent working, maybe you need to change something about the way youre doing things. Change is almost always good, after all. On the 18th, some news at work clarifies a whole lot of things and makes your next move breathtakingly obvious. How are your coworkers getting along? Why not check in with them on the 21st? Then check back in with yourself on the 23rd. On the 28th, things are going great. On the 31st, youve got to communicate.
Taurus (21 April 21 May) The 1st and 2nd are days for really thinking hard about your hopes, dreams and goals career-wise. What do you want from the New Year? What do you expect to give in return? On the highly productive 3rd, you might want to try working from home if you can. You could find you really get a lot done far from the distractions of the water cooler. Plus, it can be nice to spend the whole day in your pajamas, especially in the winter. If you find you work well on your own, you might want to consider trying to make telecommuting a more permanent part of your work life. Or, on the other hand, you might decide your current work situation is optimal. On the 8th, make whatever it is you want to happen, happen. Thats right: The power is in your hands. Make even more happen on the 11th, when a busy day is no match for a busy bee like you. You discover just how well-connected you already are when you start activating your networks on the 16th. By the 20th, you have to think about making a decision, but chances are you still have some time to deliberate. On the 25th, work hard for what you want. Slow way down on the 30th. End the month with some seriously good news on the 31st!
Gemini (22 May 21 June) On the 1st, dont forget to make a resolution or two about what you really, really, really, really with a cherry-on-top want this year. After all, your career is not so unlike an ice cream sundae. If you dont know what you want, you might get something you arent that crazy about (like a banana split!). As this year gets off to a brand new start, you really want to do some looking at what you really, really, really do want (fudge sauce? Whipped cream?). On the 5th, its time to get goal-oriented, if you havent already done so. By the 8th, you want to have made a move in the right direction. The 10th and 11th are good days to communicate, but dont forget to be politic when you air any grievances. Youre more than ready for a long leisurely lunch on the 15th, and a long leisurely lunch is more than ready for you! Get something off your chest on the 20th everybody will benefit. Eliminate a negative influence in your life on the 25th (yes, that include potato chips!). Express yourself on the 28th. By the 31st, you are totally ready for that shoulder massage!
Cancer (22 June - 22 July) The 1st and 2nd are days that are absolutely, positively made for thinking long, hard and deeply about your future. If you want something at work, you are way, way more likely to get it if you know that you want it in the first place. If youre kind of stumbling around in the dark, its going to be harder to find your way. Which isnt to say that stumbling isnt a good thing. It can be, for a while, at least until you get your bearings. But at a certain point, you need to figure out where you are and where you want to go, if youre going to make full use of your talents. On the 6th, if you want to implement something new, whats stopping you? On the 11th, keep pushing for the change you want, no matter how much resistance there seems to be. By the 15th, give yourself a chance to relax a little bit. Are you ready to let your projects run on their own? On the 20th, dont forget to eat breakfast, lunch and dinner, no matter how much is going on at work. On the 25th, your friends and family are great resources for emotional support. By the 30th, things are looking interesting. Wrap up the month with a plan on the 31st.
Leo (23 July 23 August) No way you are going to let a few slow days at work get you down on the 1st and 2nd. No way. You are not one to be bored. You might rearrange the office supplies in a more artistic configuration. You might Xerox things, just for the heck of it. You might institute a new staple art project on the sides of cubicles. Whatever you do, youll have a good time doing it. On the 6th, wait to hear what they have to say before you respond yay or nay. Sounds simple, but it isnt! On the 11th, dont hesitate unduly when it comes to making a decision. Youre in management mode on the 18th, and thats working out pretty well, at least from your perspective. Tap into your creative impulses on the 22nd, and youll feeling extremely satisfied. Problem solving? Youre there on the 28th! Actually, you kind of enjoy resolving problems. And youre good at it, too. On the 30th, rest on your laurels. It might be time, on the 31st, to work on that resume (in a good way). If youve got it all polished up and ready to go, youll be first in line if any fabulous job openings arise!
Virgo (24 August 23 September) Boundaries, boundaries, boundaries. What do you think of when you hear that word? A white picket fence? Somebody overstepping yours? Something else, entirely? Well on the 1st or 2nd, you need to be very crystal clear about just where your boundaries are to be found and how high and strong they are. Otherwise, youre going to end up staying late and finishing up everybody elses work again. On the 6th, if somebody comes to you at work with a list of unsolvable problems, chances are youve got the solutions. But are you letting your boundaries down? Yes, youre a problem solver, but that doesnt mean you need to solve everyones problems, all the time. On the 12th you might have to be tough on your colleagues. An appropriate criticism now will lead to better performances next time. On the 17th, start wrapping a project up. Spend some time beautifying your workspace on the 20th. Itll totally pay off in increased productivity. On the 24th, own your accomplishments. Keep the channels of communication open on the 28th. Youre oh-so-due a fun, frivolous lunch on the 31st. Go for it!
108
Financial Horoscope
Libra (24 September 23 October) As this year gets started on the 1st and 2nd, youre thinking pretty hard about all the relationships in your life. This, of course, includes the relationships you have at work. How are they? Happy? Frustrating? Unfulfilling? Inspiring? A combination of all those things? Well, plenty of people could relate to that. What could you improve? How? On the 7th, spend your time carefully considering any obstacles that might stand in the way of your fabulous plans of world dominion (or that plan you had to phase out PowerPoint), and then get to work. On the 11th, if the majority of signs say go, then go for it! You are forceful, not to mention ever-soslightly flirty in a very appropriate way that is only going to enhance your interaction with the clients calling up your phone center and asking you questions about their software on the 15th. Focus on the future on the 19th. Tuckered out on the 21st? Give yourself a break. Are you eating right? See a dietician on the 26th. On the 31st, you end the month at a terrific turning point.
Scorpio (24 October 22 November) Whats on your mind when it comes to your career as the year starts? On the 1st, take a little time out from all the celebrations (and various, celebration-related irritations) to draw up a concise, detailed business strategy for the coming year. This kind of targeted, strategic approach will really help guide you in the days and months to come. On the 6th, youll already recognize a couple of turning points that you can turn your way. By the 11th, youll be in a good position to start executing at least step one of your aforementioned detailed business strategy. Woo-hoo! On the 17th, youre unbeatable, and youre looking really good, too! By the 21st, its time to say goodbye to old habits that arent helping you any more (that daily donut might come to mind, here). On the 23rd, make important phone calls instead of putting them off. By the 28th, youre really in the thick of things. Keep your cool! And dont get crotchety. Take a risk on the 31st. Your nerves are totally steady enough for this.
Sagittarius (23 November 21 December) Well, if work isnt the last thing on your mind on the 1st and 2nd! Dearie! It sure looks like you are having lots of fun (and lots of romance!) as the month gets started. Well, well, good for you! Dont you dare think about work, while youre in this magical sort of space. Therell be plenty of time for that, oh, say, on the 4th, when youre back at your desk and back to wondering what it is thats going to make you happiest when it comes to your work. Devote a little time and lots of energy thinking about this question after all, theres no time for change like the New Year! On the 8th, you see something clearly for the first time. Say something! Firmly. On the 15th, your performance is totally great. Could it have something to do with how well youve been sticking up for yourself this year? By the 20th, you are ready for an easy, laid back kind of day. You may or may not get one. No matter what happens, though, get some exercise! On the 26th, dont knock yourself out, but do everything you can to make this project sing. End the month with a great big smile.
Capricorn (22 December 20 January) No matter how boring you think your current task might be as the New Year begins, youre going to discover an upside to feeling a little underwhelmed. Thats right, theres a silver lining to that very dull filing task. It gives you a chance to get nice and thoughtful! Contemplate, oh, all of it on the 1st and 2nd. You could be pleasantly surprised by what you come up with! On the 5th, breathe deep and observe carefully. By the 11th, things could be starting to change in your vicinity. Do your best to try to get in on whats happening. You dont want your needs to be ignored! On the 15th, spend the weekend thinking hard about what you really, really need in order to feel good about your day-to-day work routine. Write down what you come up with. By the 18th, youll definitely have some great ideas, and youll need to find a couple of great opportunities to implement them. On the 22nd, dont hold a grudge, unless something is still really, really bothering you, in which case you should say something. On the 28th, every word you utter sounds very intelligent. So talk a lot! Especially if you are talking to your boss! End the month with a thoughtful act.
Aquarius (21 January 18 February) Discovery is your keyword on the 1st and 2nd. Theres electricity in the air and your brain is working overtime! You need to keep your eyes open for whatever it is that the universe wants to show you this month, then be alert to ways in which you can use that information! If you think about it and decide that what you really want in your career is the opportunity to help people, then get to work on that on the 6th. Approach your boss with your thoughts on the 11th. Youll really make some progress on the 13th, and that will make you feel good! Get in a jog on the 18th. Think it over carefully on the 20th: Whats your biggest goal? Why not focus a bit on the bread-and-butter of your career on the 24th? Is it time to think about taking a special class? Learning another language? Gaining a new skill? Sounds good! On the 30th, youre feeling pretty charitable, again. Go ahead and think way, way out of the box on the 31st. That unexplored territory is where youll find everything you need to make a real go of your wackiest, most out-there ideas.
Pisces (19 February 20 March) On the 1st, you might have to duck out of the party in order to run off and jot down a few of the work-related inspirations you have had over the course of the evening. Yep, the New Year is a great time to get started on whatever it is you want to do in the next twelve months. By the 3rd, youre totally in the swing of things. Youre writing up a storm, painting a masterpiece, or singing like an angel (depending on your job). It feels really, really good. On the 8th, your work takes on a momentum of its own. By the 12th, its time to review and reflect. How is everything going, really? Youre in for a teensy weensy obstacle on the 16th, but welcome it! It will help you find a better way of getting things done. By the 21st, work-related issues are going better than you could have reasonably hoped, and youre feeling pretty good about it. On the 26th, your work feels a bit lighter. On the 29th, spend the day making things happen and the evening letting things go. On the 31st, get to yoga, and take the day off, if you can.
Disclaimer: The contents of the Financial Horoscope have been quoted from www.astrology.com. Any sort of decision making based on financial horoscope is strongly discouraged. Lanka Bangla Securities Limited will not be liable for any sort of activities and decision making based on financial horoscope.
109
Exchange In Focus (CSE)

Exchange Snapshot
(As of 6 January 2012)
C S E
COLOMBO STOCK EXCHANGE
No. of Listed Scripts 2011 Average Index (ASPI) Current Index (ASPI) Market Capitalization (Current) 2011 Average P/E (ASPI) Current P/E (ASPI) Current Div Yield Types of Securities Traded
241 6807 5930.52 USD 17.34 (Bn) 16.52 12.92 1.98% Equity and Debt securities 2
s
110
No. of Indices
Looking Into the Past: A Quick Historical Review

Share trading in Sri Lanka commenced in the 19th century, when British Planters needed funds to set up Tea Plantations in Sri Lanka. The Colombo Share Brokers Association commenced trading of shares in limited liability companies in 1896, involved in setting up plantations in the country. The Colombo Share Market continued operations for almost a century, experiencing several vicissitudes due to political and economic factors during the period. A landmark event in the history of share trading in Sri Lanka was the formalization of the market with the establishment of the "Colombo Securities Exchange (GTE) Limited" in 1985, which took over the operations of stock market from the Colombo Share Brokers' Association. It was renamed Colombo Stock Exchange (CSE) in 1990. The CSE is a company limited by guarantee, established under the Companies Act No. 17 of 1982 and is licensed by the Securities & Exchange Commission of Sri Lanka (SEC). The CSE is a mutual exchange and has 15 full members and 13 Trading Members licensed to trade both equity and debt securities, while one member is licensed to trade in debt securities only. All members are licensed by the SEC to operate as stockbrokers. All members are corporate entities and some are subsidiaries of large financial institutions. At present, the CSE offers advanced facilities for the secondary trading of equity and debt instruments. DEX provides investors an opportunity to diversify their portfolio and thereby reduce risk. The Exchange calculates two main Price Indices, namely, the All Share Price Index (ASPI) and the Milanka Price Index (MPI). Price indices are calculated for each of the 20 Business sectors. Total Return Indices (TRI) are also calculated to track the market performance on a Total Returns basis. The TRI exceeds the scope of existing price indices (ASPI, MPI) and incorporates returns from dividends into its computation. CSE publishes TRI based on the ASPI, MPI, and the 20 Sector Price Indices. 241 companies are currently listed on the CSE, representing twenty (20) business sectors with a market capitalization of Rs.2,466.61 billion (approx. US $ 22 billion) as at 31st August 2011. The equity and debt securities of a public company can be listed on either the Main or Diri Savi Board of the CSE; a Main Board for larger companies and a Diri Savi Board for medium to small companies and for start up companies. The CSE has initiated activities to improve the market infrastructure and the regulatory framework to integrate and strengthen the securities market in Sri Lanka.
The CSE Milestones

1987 1991 1997 1998 This was one of the first Securities and Exchange Commission to be set up in the South Asian region. It was one of the first Exchanges in the region to successfully automate its clearing and settlement functions Installation of a Central Depository and an electronic clearing and settlement system for share transactions, and an Automated Trading System (ATS) It was admitted to the World Federation of Exchanges (WFE) 2000 2003 2007 2009 It became a founding member of the South Asian Federation of Exchanges (SAFE) The Debt Securities Trading System (DEX) was implemented The new CSE website www.cse.lk was launched A dedicated website for the CDS was launched
Exchange In Focus (CSE) Key Indices & How They Are Calculated
The Exchange calculates two main Price Indices, namely, the All Share Price Index (ASPI) and the Milanka Price Index (MPI). Price indices are calculated for each of the 20 Business sectors. Total Return Indices (TRI) are also calculated to track the market performance on a Total Returns basis. The TRI exceeds the scope of existing price indices (ASPI, MPI) and incorporates returns from dividends into its computation. CSE publishes TRI based on the ASPI, MPI, and the 20 Sector Price Indices.
Facilities
Foreign institutions and individuals, including non-resident Sri Lankans are permitted to buy and/or sell shares in a listed company up to 100% of the issued capital except in the case of a few companies, where certain restrictions have been imposed. Investment in shares in Sri Lanka and repatriation of proceeds should take place through a Securities Investment Account(SIA) opened with a licensed commercial bank. Income from investments such as interest, dividends and profit realized from such investments are not subject to Exchange Control Regulations. Live market information is presently being disseminated through member firms, information vendors, CSE branches, print & electronic media and through a special local TV telecast. International financial press such as Reuters and Bloomberg also provide daily online trading information to investors worldwide. The new website is designed to function as the primary communication channel of the CSE and most information on the website is downloadable in Excel, CSV and XTML formats. The CSE website also facilitates fast access to individual listed company profiles, as well as links to Online Trading platforms offered by stock broker firms.
Index Level
8000 7500 7000 6500 6000 5500 5000 4500 4000
Figure 1: ASPI during 2011

7,000.00
What Extras They Do Provide

They provide up to date financial statements in their websites. Also, they provide listing rules, member regulations, CDS rules, and annual reports of the firms listed in exchange of some stated regular fees. Moreover, they have some other fee-based services in terms of exchange publications which include factbooks; daily, weekly, monthly, and quarterly market summaries; and data library CDs with the latest data files.
Value
6,500.00 6,000.00 5,500.00 Year 2012
Figure 2: MPI during 2011
Sectoral Equity Decomposition

Sector Bank Finance and Insurance Beverage Food and Tobacco Chemicals and Pharmaceuticals Construction and Engineering Diversified Holdings Footwear and Textile Health Care Hotels and Travels Power & Energy Services No. of Scripts 43 18 10 3 14 3 7 33 6 6 Sector IT Investment Trusts Land and Property Manufacturing Motors Oil Palms Plantations Stores Supplies Telecommunications Trading No. of Scripts 1 8 19 34 6 5 18 4 2 8
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LANKABANGLA SECURITIES LIMITED

December 2011, issue 59

Md Ashaduzaman Riadh Research in Charge LankaBangla Securities Limited

Market 59 ISSUE Bloomberg LANB <GO> Pulse December 2011 www.lbsbd.com

Monthly Market Observation

Basic Company Information

Sector Ins and Outs

What the Leader Says

Sector Review & Outlook

Economic Overview of Bangladesh

- Prof. M. Muzahidul Islam

Quotes of Year 2011 Financial Horoscope

65 Exchange In Focus (CSE) 110

World Equity Index in 2011

Commodity Market in 2011

December 2011, issue 59

LBSLs Yearly Market Observation

Senior Research Analyst & In Charge ashaduzaman@lbsbd.com

December 2011, issue 59

Market at a Glance 2011

7.Expectations regarding BangladeshFund

11.Expectation ofpositive budgetary support 9.Publicationof sharemarket scamreport

2.636 pointsfall inasingle day 4.Tradingwashalted forthreeconsecutive daysandtradingkept closefortwodays.

Source : LBSL Research, Amibroker

December 2011, issue 59

Market at a Glance 2011

December 2011, issue 59

Market at a Glance 2011

December 2011, issue 59

Market at a Glance 2011

Chronicle of DGEN July to December 2011

Half yearly earnings

4.Action against manipulators

5. AIT reduction, extension of adjustment time, declaration of bank

6.Uncertainty over stabilization fund.

7.Prime ministers interference

December 2011, issue 59

Market at a Glance 2011

Technical Indicators (DSE GEN)

* Adjusted Trailing P/E

December 2011, issue 59

Market at a Glance 2011

TOP GAINERS/LEAST LOSERS

Top Companies by Market Capitalization

Source : DSE, LBSL Research

December 2011, issue 59

Market at a Glance 2011

Proposed No of Shares Issued

Issue Price (BDT)

Fund Raised Through Right Issue(mn) (BDT)

December 2011, issue 59

Market at a Glance 2011

Fund Size/ Post IPO Paid up Capital (BDT mn)

Public Offer (BDT mn)

Offer Price Trade Debut (BDT)

Closing Price on Debut date (BDT)

0.907 6.1 1.98

18.59 16.01 Source : DSE, LBSL Research

December 2011, issue 59