23 IPOs in 2010!

A total of 23 initial public offerings (IPOs) worth around Tk35.0 billion came in the stock market in 2010! Here is the detail.

Happy New Year 2011

Wishing you all a very happy and prosperous new year 2011!

China’s influence on the World economy

IMF’s Vivek Arora and Athanasios Vamvakidis articulately quantified (read the link, please) the implications of China’s growth for the rest of the world, albeit from the aggregate level. Some of the interesting findings are as follows:

• China’s Real GDP has grown by about 10.0% annually, implying a doubling every seven to eight years. The resulting 16-fold increase in a major economy’s national income during a single generation is unprecedented;
• China’s share in world trade has increased ten-fold over the past three decades, to about 9.0%, while its share in world GDP has risen to 13.0% from less than 3.0% (PPP basis);
• Inflows of FDI to China, for example, accounted for 7% of gross world FDI inflows in 2009, compared with just 1.0% in 1980.
• In short and medium term, the results suggest that a 1 percentage point shock to China’s GDP growth is followed by a cumulative response in other countries’ growth of 0.2 percentage point after three years and 0.4 percentage point after five years.  

Introducing Economic Theorist Avinash Dixit

Let me introduce economic theorist Avinash Dixit, his career and works.


Hope you will like the article from Finance and Development, IMF! 

Statement by the IMF Mission to Bangladesh

The statement by an International Monetary Fund (IMF) mission led by Mr. David Cowen visited Dhaka during December 6−15, 2010, conducted the 2010 Article IV consultation discussions.

Summary of economic forecasts in the statement:

Ø      Growth is expected to be slightly above 6.0% in FY2011 on the expectations that ready-made garment exports and investment demand providing a boost although they are also being accompanied by rising import growth and slowing remittance flows.

Ø      Inflation is expected to average 7.0% in FY2011, on an anticipated moderation of commodity price increases.

Ø      Following several years of a widening current account surplus, it is likely to narrow significantly to around ½% of GDP in FY2011, compared to 3¾% in FY2010. While exports should remain strong, imports are rising sharply this year due mainly to higher food, fuel, and cotton prices, with oil import volumes also growing rapidly as Bangladesh addresses its power deficit.

Ø      Remittances are expected to fall on a year-on-year basis in FY2011 mainly due to an ongoing decline in migrant worker outflows, adding pressure on the BOP.

Ø      Overall budget deficit is likely to increase by about ¾ percentage points of GDP to around 4 percent of GDP in FY2011.

China opportunity for Bangladesh!

A timely and solid analysis by Dr. Zaidi Sattar published in the Financial Express on a new window of export opportunities opened for Bangladesh because of the fast erosion in China’s global competitive advantage of abundant, cheap and productive labor.

Global recovery has fueled up huge demand for Chinese exports. However, internal developments in China such as rapid wage rises, and acute labor shortages made it impossible for it to remain as a competitive destination in terms of labor costs. Moreover, if global pressures on China to reduce its huge trade surplus against developed economies including the US through appreciating yuan from its alleged under-valuation become successful, will also make Chinese exports dearer and therefore less competitive in the world market. The erosion of Chinese cost competitiveness in labor-intensive products will drive investors for reallocating their investments to the next best location. Bangladesh may become as one of those destinations by a large improvement in ports, customs and safety and labor standards.

Impact of housing finance on Bangladesh economy

An introductory analysis, though not depth, on the development of housing finance and its impact on socio-economy of Bangladesh by Khandaker Khalidur Rahman, is here in this Bank for International Settlements (BIS) paper. Interesting one!

ADB's update on Bangladesh Economy

ADB released its regular Bangladesh Quarterly Economic Update (September 2010 issue). The highlights of the update are as follows:

• GDP growth of 5.8% in FY2010 is respectable considering the continued effects of the global recession;
• Higher growth in FY2011 is expected if the current trend of export growth is sustained and the domestic economy performs strongly;
• Infrastructure shortages need to be quickly addressed and labor productivity increased to enhance growth prospects;
• Sharp slowdown in remittance growth is a concern and could affect GDP growth by depressing domestic demand;
• Food prices are rising causing hardships for the poor, especially in rural areas;
• High growth in broad money and private sector credit is fuelling inflation;
• Revenue performance has been steadily improving;
• Export and import growth were strong during the first quarter of FY2011.

Blizzard in the stock market!

So here is the update of the market

Dhaka Stock Exchange experienced the highest pick up in its history on 5 December 2010, in terms of total trade (389310), value of total trade (Tk.32495.8 million) and also DSE general index (8918.5 points).

Within just 10 working days (on 19 December 2010), total trade fell drastically by 44.3%, value of trade went down by 54.2% and DSE general index dropped by 14.2% (or, 1264.1 points)!!!

Still, so-called experts term this situation as ‘market correction’! Market correction must be related with the demand-supply equilibrium of stocks. But as far as the market concerns, this is purely a non-competitive market, because at least 95% agents of the market are basically price takers. They don’t have any power to manipulate the prices of stocks. When 5% of agents determine the price of a good, then the change in prices of that good shouldn’t be considered as ‘market correction’. Definitely this market is manipulated, both for rising and declining of stock prices.  

Date	Total Trade	Total Volume	Total Value in Taka(mn)	Total Market Cap. in Taka(mn)	DSE General Index
19-12-2010	217012.0	91489116.0	14868.1	3449582.7	7654.4
15-12-2010	206477.0	119508057.0	12699.4	3480782.4	8206.2
14-12-2010	220981.0	107674624.0	15571.0	3499958.4	8354.8
13-12-2010	235175.0	97880041.0	17454.2	3492380.2	8329.1
12/12/2010	281001.0	147060609.0	17173.7	3579406.5	8295.4
09/12/2010	238983.0	119266463.0	16227.5	3579406.5	8580.2
08/12/2010	278260.0	92864695.0	19694.9	3524599.0	8451.6
07/12/2010	283122.0	90628718.0	20506.3	3567014.2	8585.9
06/12/2010	349534.0	114781385.0	27106.2	3632706.2	8771.4
05/12/2010	389310.0	130966772.0	32495.8	3680714.2	8918.5

Gift Books for Econ Lovers!

Well, ALLEN R. SANDERSON from Chicago wonderfully suggested categorical economics books for those who love Economics! Thanks to Mankiw for notifying that in his blog! 

Is the country able to bear this cost?

Mr. Moazzem Hossain, the Editor of the Financial Express, in this note, rightly points out the implied costs of labor unrest in the RMG sector over the last couple of years.

Is there any way out (at least, in the medium-term) from this massive loss?

Banks' exposure to stock market

This is indeed a very good editorial, I must say, on the exact reason of recent unusual stock market rise. Uncontrollable banks' exposure to stock market may bring a disaster for overall macroeconomic and financial stability, which asks for a timely and effective intervention by the relevant financial market authorities.

Is it called 'price correction?'

I don't think that it is called 'price correction' as the newspaper claims! This is very much manipulated.

Determinants of Stock Price Surge in Bangladesh

Apart from a usual stock market analysis, there is a more depth analysis based on economic theory. I hope you will all like this Flash Note from ADB.