stock market investment

Banks get 2yrs more to cut exposure

The government will extend the deadline by two more years for cutting banks’ investment exposure in the stock market. “Banks will get two more years for bringing down their investment exposure in the stock market. We have already drafted this,” announced finance minister AMA Muhith, while briefing reporters about the outcome of the first day’s meeting of the Bangladesh Development Forum (BDF) yesterday.  The finance minister’s announcement came after top brokers, at a meeting, recommended extending the deadline for bringing down banks’ investment exposure in the stock market to stabilise the market. Under the rules, the banks will have to bring down their stock market exposure to 25 per cent of their capital by June next year. But now, if allowed, banks will get time till July 2018 to lower their exposure to the permissible limit. Earlier, it was 10 per cent of a bank’s liabilities or deposits. Earlier, at a meeting with the Dhaka Stock Exchange, stakeholders—including brokers and merchant banks—expressed fears that if the banks have to bring down their investments to the limit set by Bangladesh Bank (BB), they would have to sell a sizeable amount of shares, which could be enough to start a crash like that of 2011. According to the BB, around 27 banks have invested 25 per cent of their capital in the stock market at present.
About the BDF meeting, Muhith said he has held discussions with Asian Infrastructure Investment Bank (AIIB) president Jin Liqun about the fast-track projects that are highly required for Bangladesh. The AIIB president informed him that the first board meeting will be held in January next year, when they will formulate a policy for financing for the projects. In the new phase of the country’s economic development, much greater importance has been assumed by transformational projects, the financing of which will pose the biggest challenge in the next few years, Muhith said.
“At present, we have nine of these programmes—namely, Padma Bridge, MRT-6, Rooppur Nuclear Power Plant, Sonadia Deep Sea Port, LNG Terminal, Matarbari Power Plant, Rampal Power Plant and Paira Port,” Muhith said.
Muhith also talked to representatives of the World Bank and the United Nations Development Programme (UNDP) and discussed future modalities of loans, as Bangladesh will graduate from a least developed country to a middle income country (MIC) by 2018.
When Bangladesh moves into MIC status, it would not get 100 per cent grant support from the development partners, he added. Speaking at the forum meeting, Muhith said the biggest problem in Bangladesh was poverty and highly underdeveloped physical infrastructure. “At the moment, the poverty rate is 24.8 per cent, while the extreme poverty rate is 12.9 per cent. The gross domestic investment rate is 28.97 per cent, in which the public share is 6.9 per cent,” he explained, adding: “Foreign direct investment has moved into the country, but it is still a paltry USD 1,833 million in 2014–15. Although the country used to get almost 8 per cent of its gross domestic product (GDP) as external assistance, at present it is merely 1.7 per cent of GDP.”
“We plan to increase the rate of our growth to 8 per cent by 2020. There are plans to bring down the poverty rate to 18.6 per cent and extreme poverty to 8.9 per cent,” the finance minister added. “For achieving these goals, we need to accelerate investments, and there our target is Tk. 31,902 billion, equivalent to about USD 400 billion,” Muhith said. “We are optimistically targeting that the private sector contribution will be 77 per cent of it. Another important target is that we expect the share of external financing to be 9.6 per cent,” Muhith said, adding “We are targeting to overcome our deficiency in investment level, and reach an investment of 34.4 per cent of GDP in 2020.” About the macroeconomic situation of Bangladesh, Muhith said the rapid growth of national savings, exports and remittances and the comfortable foreign exchange reserves have allowed Bangladesh to reduce reliance on foreign borrowings, improve debt servicing capacity, and ensure a reasonably comfortable balance of payments position. Looking forward, under the Seventh Five-Year Plan, the investment requirements will sharply increase to finance a more rapid pace of GDP growth, he added.

 

stock market investment

Banks get 2yrs more to cut exposure

The government will extend the deadline by two more years for cutting banks investment exposure in the stock market. Banks will get two more years for bringing down their investment exposure in the stock market. We have already drafted this, announced finance minister AMA Muhith, while briefing reporters about the outcome of the first days meeting of the Bangladesh Development Forum (BDF) yesterday. The finance ministers announcement came after top brokers, at a meeting, recommended extending the deadline for bringing down banks investment exposure in the stock market to stabilise the market. Under the rules, the banks will have to bring down their stock market exposure to 25 per cent of their capital by June next year. But now, if allowed, banks will get time till July 2018 to lower their exposure to the permissible limit. Earlier, it was 10 per cent of a banks liabilities or deposits. Earlier, at a meeting with the Dhaka Stock Exchange, stakeholdersincluding brokers and merchant banksexpressed fears that if the banks have to bring down their investments to the limit set by Bangladesh Bank (BB), they would have to sell a sizeable amount of shares, which could be enough to start a crash like that of 2011. According to the BB, around 27 banks have invested 25 per cent of their capital in the stock market at present. About the BDF meeting, Muhith said he has held discussions with Asian Infrastructure Investment Bank (AIIB) president Jin Liqun about the fast-track projects that are highly required for Bangladesh. The AIIB president informed him that the first board meeting will be held in January next year, when they will formulate a policy for financing for the projects. In the new phase of the countrys economic development, much greater importance has been assumed by transformational projects, the financing of which will pose the biggest challenge in the next few years, Muhith said. At present, we have nine of these programmesnamely, Padma Bridge, MRT-6, Rooppur Nuclear Power Plant, Sonadia Deep Sea Port, LNG Terminal, Matarbari Power Plant, Rampal Power Plant and Paira Port, Muhith said. Muhith also talked to representatives of the World Bank and the United Nations Development Programme (UNDP) and discussed future modalities of loans, as Bangladesh will graduate from a least developed country to a middle income country (MIC) by 2018. When Bangladesh moves into MIC status, it would not get 100 per cent grant support from the development partners, he added. Speaking at the forum meeting, Muhith said the biggest problem in Bangladesh was poverty and highly underdeveloped physical infrastructure. At the moment, the poverty rate is 24.8 per cent, while the extreme poverty rate is 12.9 per cent. The gross domestic investment rate is 28.97 per cent, in which the public share is 6.9 per cent, he explained, adding: Foreign direct investment has moved into the country, but it is still a paltry USD 1,833 million in 201415. Although the country used to get almost 8 per cent of its gross domestic product (GDP) as external assistance, at present it is merely 1.7 per cent of GDP. We plan to increase the rate of our growth to 8 per cent by 2020. There are plans to bring down the poverty rate to 18.6 per cent and extreme poverty to 8.9 per cent, the finance minister added. For achieving these goals, we need to accelerate investments, and there our target is Tk. 31,902 billion, equivalent to about USD 400 billion, Muhith said. We are optimistically targeting that the private sector contribution will be 77 per cent of it. Another important target is that we expect the share of external financing to be 9.6 per cent, Muhith said, adding We are targeting to overcome our deficiency in investment level, and reach an investment of 34.4 per cent of GDP in 2020. About the macroeconomic situation of Bangladesh, Muhith said the rapid growth of national savings, exports and remittances and the comfortable foreign exchange reserves have allowed Bangladesh to reduce reliance on foreign borrowings, improve debt servicing capacity, and ensure a reasonably comfortable balance of payments position. Looking forward, under the Seventh Five-Year Plan, the investment requirements will sharply increase to finance a more rapid pace of GDP growth, he added.