Daily News Flash: 30th April 2020

Contents
GLOBAL NEWS......................................................................................................................................... 1
CORONAVIRUS: US ECONOMY SHRINKS AT FASTEST RATE SINCE 2008 .................................................. 1
STOCKS RALLY ON TREATMENT HOPES, CURRENCIES AWAIT ECB ........................................................... 1
OIL PRICES RISE AMID EARLY SIGNS OF FUEL DEMAND PICKING UP ....................................................... 1
GERMANY EXPECTS RECORD RECESSION IN 2020 DUE TO CORONAVIRUS PANDEMIC ........................... 1
SAUDI FOREIGN RESERVES FALL AT FASTEST IN AT LEAST TWO DECADES .............................................. 1
MACRO ECONOMY ................................................................................................................................. 2
BANGLADESH TO FACE ONE OF THE HIGHEST DECLINE IN WORKING HOURS: ILO ................................. 2
BUSINESSES IN DEMURRAGE CONUNDRUM ............................................................................................ 2
GROWTH IN ADP ALLOCATION LOWEST IN NEARLY A DECADE ............................................................... 2
GOVT'S BANK BORROWING INCREASES TO TK58,000C ............................................................................ 2
SWEDEN WON'T CANCEL RMG ORDERS ................................................................................................... 3
BANK ........................................................................................................................................................... 3
BANKS’ NEW HEADACHE? LOOMING BULK CREDIT CARD CHARGE-OFFS. ............................................... 3
FINANCIAL INSTITUTIONS .................................................................................................................. 3
IDLC PROFITS POUNDED BY TOPSY-TURVY FINANCIAL MARKETS ............................................................ 3
PHARMACEUTICALS & CHEMICALS ............................................................................................... 3
MARICO BD'S NET PROFIT JUMPS 31 PER CENT ....................................................................................... 3
TEXTILE ..................................................................................................................................................... 4
RMG WORKERS TO GET 60PC OF APRIL WAGES ....................................................................................... 4
CAPITAL MARKET SPECIFIC .............................................................................................................. 4
LISTED BANKS ENDURE UP TO 72PC PRICE EROSION IN ONE YEAR ......................................................... 4
STOCK BROKERS CRY OUT FOR SUPPORT ................................................................................................. 4
GLOBAL NEWS

CORONAVIRUS: US ECONOMY SHRINKS AT FASTEST RATE SINCE 2008

 The US economy suffered its most severe contraction in more than a decade in the first quarter
of the year, as the country introduced lockdowns to slow the spread of coronavirus.
 The world's largest economy sank at an annual rate of 4.8%, according to official figures
released on Wednesday.
 It marked the first contraction since 2014, ending a record expansion.
Source: https://www.bbc.com/news/business-52466864

STOCKS RALLY ON TREATMENT HOPES, CURRENCIES AWAIT ECB

 Asian stocks rose to a seven-week high on Thursday, boosted by encouraging early results from
a COVID-19 treatment trial, though bonds and currencies stuck to cautious ranges ahead of a
European Central Bank meeting later in the day.
 U.S. and European stock futures gained throughout the session, with EuroSTOXX futures STXEc1
and FTSE futures FFIc1 last up more than 1% and S&P 500 futures ESc1 up about 0.7%.
 A 1.4% rise in MSCI’s broadest index of Asia-Pacific shares, excluding Japan, .MIAPJ0000PUS has
it tracking toward a weekly gain of more than 5%, its best in three weeks.
Source: https://www.reuters.com/article/us-global-markets/stocks-rally-on-treatment-hopes-currencies-await-ecb-
idUSKBN22B3HI

OIL PRICES RISE AMID EARLY SIGNS OF FUEL DEMAND PICKING UP

 Oil prices jumped on Thursday, buoyed by signs that the U.S. crude glut is not growing as quickly
as expected and that fuel demand battered by COVID-19 restrictions is starting to pick up.
 West Texas Intermediate (WTI) crude futures CLc1 climbed to a high of $17.75 a barrel and were
up 9.2%, or $1.39, at $16.45 at 0640 GMT. The U.S. benchmark surged 22% on Wednesday.
 Brent LCOc1 was up 5.6%, or $1.27 at $23.81 a barrel in light trading, with the June contract
expiring on Thursday. The contract hit a high of $25 earlier in the session, having posted a 10%
gain on Wednesday.
Source: https://www.reuters.com/article/us-global-oil/oil-prices-rise-amid-early-signs-of-fuel-demand-picking-up-
idUSKBN22C088

GERMANY EXPECTS RECORD RECESSION IN 2020 DUE TO CORONAVIRUS PANDEMIC

 The coronavirus pandemic will plunge Germany's economy into its deepest recession since
World War Two, Economy Minister Peter Altmaier said on Wednesday as the government cut its
economic growth forecast for this year.
 Berlin cut its estimate for gross domestic product (GDP) growth in 2020 to -6.3% from +1.1%
predicted in January. It expects the recession to bottom out in the second quarter and economic
activity to pick up again after that, provided a second wave of infections can be avoided.
 For 2021, the government expects the economy to rebound with an expansion rate of +5.2%.
The forecasts are based on the assumption that authorities can gradually unwind lockdown
measures imposed to contain the spread of the coronavirus.
Source: https://tbsnews.net/world/global-economy/germany-expects-record-recession-2020-due-coronavirus-pandemic-
75301

SAUDI FOREIGN RESERVES FALL AT FASTEST IN AT LEAST TWO DECADES

 Saudi Arabia's central bank foreign reserves fell in March at their fastest rate in at least 20 years
and to their lowest since 2011, while the kingdom slipped into a $9 billion budget deficit in the
first quarter as oil revenues collapsed.

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  The Saudi Arabian Monetary Authority said on Tuesday its net foreign assets, which include
securities such as US Treasuries and foreign deposits, fell in March to $464 billion, their lowest
since 2011.
 The nearly $27 billion decline - the biggest monthly drawdown in at least 20 years - signals the
kingdom's urgent need to tap into its vast reserves to offset the economic damage following
lower oil prices and a severe coronavirus-driven slowdown of entire sectors of its non-oil
economy.
Source: https://tbsnews.net/world/global-economy/saudi-foreign-reserves-fall-fastest-least-two-decades-75247

MACRO ECONOMY

BANGLADESH TO FACE ONE OF THE HIGHEST DECLINE IN WORKING HOURS: ILO

 Bangladesh is among the countries that are forecast to face the highest decline in working hours
in the first half of 2019 as the raging novel coronavirus continues to put economies on lockdown
and factories closed, the International Labour Organisation (ILO) said yesterday.
 The estimated hours lost for the lower-middle-income countries, which include Bangladesh,
were 1.9 per cent in the first quarter of 2020 compared with the pre-crisis baseline.
 The loss rose to 12.5 per cent in the second quarter, according to the 'ILO Monitor third edition:
COVID-19 and the world of work', which was released yesterday.
Source: https://www.thedailystar.net/business/news/bangladesh-face-one-the-highest-decline-working-hours-ilo-1898095

BUSINESSES IN DEMURRAGE CONUNDRUM

 Businessmen now have to face greater problems by having to pay extra demurrage charges for
vessels that overstay at port with their cargo of raw material and imported products
 The limited operation of the customs department and the closure of all government offices due
to the coronavirus outbreak have been blamed for this "unprecedented" crisis.
 Moreover, businessmen need to pay higher tariffs for shipping cargo to seaports as the ships
face an unusual delay. They fear that the increased cost of demurrage and shipping charges will
affect their future business operations and production.
Source: https://tbsnews.net/economy/trade/businesses-demurrage-conundrum-75436

GROWTH IN ADP ALLOCATION LOWEST IN NEARLY A DECADE

 The Covid-19 pandemic is going to take a toll on Bangladesh's development activities for the
next fiscal year, as the government has proposed just 1 percent higher outlay than the original
allocation for the outgoing year.
 The government has proposed an allocation of Tk205,145 crore for the Annual Development
Programme (ADP) for fiscal year 2020-21, which includes strategies for dealing with the
coronavirus pandemic.
 The growth in allocation for next ADP is the lowest in nearly a decade. The allocation for fiscal
year 2019-20 was 14.66 percent higher than a year ago. The outlay for fiscal 2017-18 was 29
percent higher than in 2016-17.
Source: https://tbsnews.net/economy/growth-adp-allocation-lowest-nearly-decade-75259

GOVT'S BANK BORROWING INCREASES TO TK58,000C

 The government's borrowing from the banking system to meet the budget deficit has increased
to Tk57,929 crore till April 29 this year since July 1 last year amid dismal revenue collection.
 In the budget for the fiscal year 2019-2020, the government projected it would borrow Tk47,364
crore from the banking system.

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  However, the latest figure shows that the government's bank borrowing has already exceeded
the projected amount by Tk10,565.3 crore – with another critical two months of the fiscal year
to spare.
Source: https://tbsnews.net/economy/banking/govts-bank-borrowing-increases-tk58000cr-75421

SWEDEN WON'T CANCEL RMG ORDERS

 Swedish Prime Minister Stefan Lofven on Wednesday pledged that his country would not cancel
any garment product order from Bangladesh, reports UNB.
 "We'll continue importing RMG products from Bangladesh," he said while talking to Bangladesh
Prime Minister Sheikh Hasina over telephone.
 In reply, Prime Minister Sheikh Hasina expressed her firm optimism that Bangladesh could fulfil
the orders for the readymade garment (RMG) products of global buyers despite the coronavirus
outbreak.
Source: https://today.thefinancialexpress.com.bd/first-page/sweden-wont-cancel-rmg-orders-1588181656

BANK

BANKS’ NEW HEADACHE? LOOMING BULK CREDIT CARD CHARGE-OFFS.

 Credit cards were slowly but surely finding a place in consumers' hearts in recent years, thanks
to a combination of banks' aggressive push, a growing aspirational middle-class population and
increasing awareness of the convenience the payment tool provides.
 Banks too were all too willing to issue credit cards, which carry one of the highest interest rates.
But the global coronavirus pandemic has now left them on pins and needles.
 They are now bracing for a double hit: transaction volumes diving and delinquencies rising as
unemployed and underemployed consumers lose the ability to pay back revolving debt taken on
during better times.
Source: https://www.thedailystar.net/business/news/banks-new-headache-looming-bulk-credit-card-charge-offs-1898110

FINANCIAL INSTITUTIONS

IDLC PROFITS POUNDED BY TOPSY-TURVY FINANCIAL MARKETS

 IDLC Finance, a listed non-bank financial institution, took another hit to its profit last year thanks
to the bearish stock market and volatile money market.
 In 2019, its profit dropped 21.65 per cent, or Tk 47 crore, to stand at about Tk 170 crore in.
 "Growth in revenues from our core lending business was not sufficient to counter the fall in
capital market returns, so profits fell," said Arif Khan, chief executive officer of IDLC Finance.
Source: https://www.thedailystar.net/business/news/idlc-profits-pounded-topsy-turvy-financial-markets-1898098

PHARMACEUTICALS & CHEMICALS

MARICO BD'S NET PROFIT JUMPS 31 PER CENT

 The board of directors of Marico Bangladesh Ltd has recommended a final 200 per cent cash
dividend for the year ended on March 31, 2020.
 The board recommended the dividend and approved the audited financial statements for the
year ended on March 31, 2020 at a meeting held on Tuesday through digital platform, according
to an official disclosure Wednesday.

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  The fast-moving consumer goods multinational company declared a total of 950 per cent cash
dividend for the year under review, including a 750 per cent interim cash dividend, which has
already been paid.
Source: https://today.thefinancialexpress.com.bd/stock-corporate/marico-bds-net-profit-jumps-31-per-cent-1588174508

TEXTILE

RMG WORKERS TO GET 60PC OF APRIL WAGES

 Garment factories that remained closed during the public holidays would pay 60 per cent of
workers' gross monthly wages for April, sparking protests from labour leaders, a senior official
said.
 They said the workers would get the full payment for the days they worked during the public
holidays and there would be no layoffs in the garment sector, they added.
 The decisions were taken at a tripartite meeting with leaders of textiles and garment factory
owners' and unions held on Tuesday and Wednesday.
Source: https://today.thefinancialexpress.com.bd/first-page/rmg-workers-to-get-60pc-of-april-wages-1588181731

CAPITAL MARKET SPECIFIC

LISTED BANKS ENDURE UP TO 72PC PRICE EROSION IN ONE YEAR

 Share prices of all listed banks tumbled up to 72 per cent in the past one year until March 25,
2020 amid prolonged bearish trend in the country's capital market.
 All the 30 banks listed on the Dhaka Stock Exchange witnessed price erosion between 4.0 per
cent and 72 per cent during the period under review, according to available data with the DSE.
 The banking sector, once a bellwether for the whole stock market, also lost its dominance in
market-cap for the first time due to the massive sales of banking issues amid Covid-19 pandemic
and pressure on banks to implement single-digit lending rate.
Source: https://today.thefinancialexpress.com.bd/stock-corporate/listed-banks-endure-up-to-72pc-price-erosion-in-one-year-
1588174478

STOCK BROKERS CRY OUT FOR SUPPORT

 Abdul Mannan, a stock investor who maintains two beneficiary owner's accounts, has been
incurring losses on all counts for the last six months as the stock indices were plumbing new
depths every day amid a fund crisis and a confidence deficit in the market.
 On top of the heap of his woes, Mannan did not win a single lottery in the initial public offerings
(IPO) in the last two years. "My patience has exhausted," he said.
 Mannan is one of the 10 lakh stock investors in the country who think at least a waiver of the BO
account maintenance charge may bring them some respite at this crucial moment.
Source: https://www.thedailystar.net/business/news/stock-brokers-cry-out-support-1898086

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