6 Stocks Sunday, July 30, 2017 DT OPINION 7 DT Sunday, July 30, 2017 W E E K L Y M a r k e t O v e r v i e w SUMMARY Points Change (%) Turnover (BDTmn) Volume (mn) Advanced issues Declined issues Unchanged Issues DSEX 5,815.1 DSEX 5,815.1 0.56% 31,174 961 186 118 28 (+) 0.56% CSE ASI 18,039.3 0.57% 1,846 63 146 120 23 Stocks advance as companies post earnings results • Tribune <strong>Business</strong> Desk Stocks witnessed moderate gains last week as investors eyed release of companies’ earnings results. A total of 47 scrips announced earnings this week, according to news portal of DSE’s website. Companies’ earnings, especially of the banks, have largely met investors expectation, suggested traders at several stock brokerage firms. The market closed its weekly operations with its indices in green territory in spite of declining turnover. Participation in the Dhaka Stock Exchange declined sharply by 38.6% to amount an average daily turnover of Tk624cr from previous week’s Tk1,016cr. The benchmark index, DSEX Most Traded Price Weekly change LankaBangla 56.5 1.25% closed at 5,815.1 points on Thursday with a weekly gain of 32.6 points or 0.56% over the week while CSE ASI advanced 103.0 points or 0.57% to end at 18,039.3 points. Banking equities contributed Dhaka Tribune 20.6% of the week’s total turnover, said the weekly market report of UCB Capital Management Ltd. Jute Spinning secured the highest weekly gain of 19.6% while ICB AMCL 2nd MF turned out the worst loser with its price declining by -6.7%. LankaBangla Finance secured leadership position on the weekly top turnover chart with a turnover of Tk109cr over the week with its share price advancing 1.3% by the end of week. DS30, the blue-chip index gained 7.31 points or 0.34% to end at 2,129.1 points, while DSE Shariah based index advanced 3.95 points or 0.30% to close at 1,317.7 points. Among the traded issues 186 gained, 118 declined and 28 remained unchanged during the week. The Dhaka Stock Exchange currently has a market capitalisation of BDT 393,147cr with the benchmark index, DSEX up by 15.5% since beginning of this year. • DSE NEWS LINDEBD: The Board of Directors has recommended 200% interim cash dividend for the year ending on December 31, 2017. Record date: 13.08.2017. Q2 Un-audited – EPS was Tk. 12.10 for April-June, 2017 as against Tk. 15.14 for April-June, 2016; EPS was Tk. 28.27 for January-June, 2017 as against Tk. 31.88 for January-June, 2016. NOCFPS was Tk. 39.04 for January-June, 2017 as against Tk. 25.66 for January-June, 2016. NAV per share was Tk. 227.20 as of June 30, 2017 and Tk. 203.00 as of June 30, 2016. HEIDELBCEM: Q2 Un-audited – EPS was Tk. 6.40 for April-June, 2017 as against Tk. 8.99 for April-June, 2016; EPS was Tk. 12.71 for January-June, 2017 as against Tk. 19.29 for January-June, 2016. NOCFPS was Tk. 14.74 for January-June, 2017 as against Tk. 28.76 for January-June, 2016. NAV per share was Tk. 81.67 as of June 30, 2017 and Tk. 91.57 as of June 30, 2016. Sugar, price, and everything not nice We can become richer by not doing things IFAD Autos 150.2 0.40% Mercantile Bank 22.7 -2.19% City Bank 38.2 6.11% Grameenphone 379.1 3.47% SPCL 149.7 0.40% Fu Wang Food 23.1 5.48% IDLC Finance 76.1 4.25% Simtex Industries 34.4 7.84% One Bank 23.0 1.77% Dhaka Tribune has accumulated the stock market related data primarily from Dhaka Stock Exchange website. The basis of information collected was primarily from daily stock quotations and audited/unaudited reports of publicly listed companies. High level of caution has been taken to collect and present the above information and data. The publisher will not take any responsibility if any body uses this information and data for his/her investment decision. For any query please email to news@dhakatribune.com. Global stocks hit skids as corporate results disappoint • AFP, New York World stock markets fell Friday as a rash of disappointing company results triggered profit-taking ahead of the weekend, although the Dow managed to hold on for its third straight record close. Wall Street recovered from early losses, but still felt the impact of downbeat results at the end of the week. “It was a pretty good week, obviously ending on a sour note,” Chris Low of FTN Financial told AFP. “We started the week with better than expected earnings form the big banks. At the end of the week, we had Amazon.” The online retail behemoth fell 2.5% after the company reported a dip in profits despite a big boost in sales. Meanwhile, the oil supermajors were split, with ExxonMobil falling 1.5% as second quarter profits surged but missed expectations as output fell, while Chevron rose 1.8% after it reported better-than-expected profit. Investors also were digesting the better but below-expectation GDP growth of 2.6% in the second quarter, as well as the political uncertainty after another failed attempt at healthcare reform in the US. “The result has thrown cold water on the hopes for a progrowth agenda,” economist Diane Swonk said in a research note. “In fact, policy uncertainty, which places a drag on growth, is measurably on the rise.” The dollar took a hit from US GDP data which cast further doubt on any early interest rate increase from the Federal Reserve. Oil got a lift from the weaker dollar, this week’s US stockpile data and lingering expectations of more production cuts, or at least more discipline in implementing the current ones. Tobacco stocks plunged after the US Food and Drug Administration said it will look at ways for companies to cut nicotine levels in cigarettes to make them less addictive and reduce tobacco-related diseases and deaths. This will “blow a hole in their earnings,” said Neil Wilson, senior market analyst at ETX Capital in London. Shares in Altria, which markets brands such as Marlboro and Chesterfield, fell nearly 10% in New York, while in London British American Tobacco fell more than seven percent, and Imperial Brands dropped nearly five percent. Mike van Dulken, at Accendo Markets, however, said that the reaction may have been overdone. “It might not sound great, but it doesn’t read like the industry is destined to go up in smoke,” he said. The mood also soured in Europe, where shares in Renault tumbled on a weak outlook for the French carmaker despite surging sales and record profits in the first half of 2017. • SOUTHEASTB: Q2 Un-audited – Consolidated EPS was Tk. 0.34 for April-June, 2017 as against Tk. 0.83 for April-June, 2016; Consolidated EPS was Tk. 1.29 for January-June, 2017 as against Tk. 1.42 for January-June, 2016. Consolidated NOCFPS was Tk. (4.53) for January-June, 2017 as against Tk. 5.66 for January-June, 2016. Consolidated NAV per share was Tk. 28.11 as of June 30, 2017 and Tk. 28.73 as of December 31, 2016. SINGERBD: Q2 Un-audited – EPS was Tk. 3.24 for April-June, 2017 as against Tk. 2.65 for April-June, 2016; EPS was Tk. 4.23 for January-June, 2017 as against Tk. 3.45 for January-June, 2016. NOCFPS was Tk. (4.19) for January-June, 2017 as against Tk. (15.08) for January-June, 2016. NAV per share was Tk. 22.63 as of June 30, 2017 and Tk. 25.39 as of December 31, 2016. BATBC: Q2 Un-audited – EPS was Tk. 31.46 for April-June, 2017 as against Tk. 33.08 for April-June, 2016; EPS was Tk. 68.02 for January-June, 2017 as against Tk. 64.24 for January-June, 2016. NOCFPS was Tk. 21.77 for January-June, 2017 as against Tk. (21.09) for January-June, 2016. NAV per share was Tk. 322.74 as of June 30, 2017 and Tk. 252.73 as of June 30, 2016. UCB: Q2 Un-audited – Consolidated EPS was Tk. 1.15 for April-June, 2017 as against Tk. 0.81 for April-June, 2016; Consolidated EPS was Tk. 1.25 for January-June, 2017 as against Tk. 1.23 for January-June, 2016. Consolidated NOCFPS was Tk. 2.55 for January-June, 2017 as against Tk. (6.63) for January-June, 2016. Consolidated NAV per share was Tk. 24.14 as of June 30, 2017 and Tk. 23.46 as of June 30, 2016. • THE lAST WORD • Tim Worstall On July 18, this newspaper pointed out that Bangladesh should just stop trying to produce sugar and instead go and buy it on the international market. That’s not quite the way it was said of course, but it is indeed what was meant – or possibly not even meant but that is the lesson we should take from it. The first level of problem is that all of the government owned sugar mills, the places that process the sugar cane, lose money. The sugar sells for Tk60 per kg and their production prices are anything from Tk150 to Tk300 or so per kg. This is also making us all poorer as the taxpayer has to cover these losses. The essential problem is that all the mills have fixed costs – it does cost something to have a building with machines in it and those costs happen right around the year. There isn’t enough sugar cane being produced for the mills to run at full pelt for long enough to cover those costs. At which point someone is going to suggest that we just get more farmers to grow more sugar cane. Losses from opportunity costs are real losses, they make us poorer than we need to be But the farmers also make a loss growing the cane. It costs Tk20,000 to grow an acre of it and they’ll get paid Tk60,000 – that’s a loss. No, really, that’s a loss and to explain that we need to know about opportunity costs. There’s a great game that can be played called “The Two Things About Everything.” The art is to boil down some complex area of knowledge into just the two things we need to know about it. Civil Engineering becomes “mud. And there is always mud.” Boxing is “hit. don’t get hit.” Economics is “incentives matter. Opportunity costs.” If you can get your mind around those two points then you’ll be doing better than all too many professional economists. The first is obvious, people react to what they’ll get from doing or not doing something. The second is rather more subtle and it’s something that economists really do insist upon. The cost of doing something is whatever you give up to do that thing. The cost of making love to your mistress is not making love to your wife that afternoon, not unless your lifestyle is very much more exciting than that of most of us. Being slightly more serious one of the costs of going into business making mobile phones is not being able to use the capital, the buildings, the land, to make cars. We’ve had to give up our ambitions to be Henry Ford in order to be one of the Ambani brothers (preferably the one making money). There are always opportunity costs because we can always be doing something else other than what we actually are doing. The cost of whatever it is is whatever it is we give up to do it. At which point the farmers making a loss when growing sugar cane makes sense. Bangladesh is blessed with up to three growing seasons a year, sugar takes a full 12 months to be ready to harvest. Thus that acre which earns Tk40,000 under cane can in fact make Tk80,000 profit under a triple crop mix. The loss to the farmers of growing cane is that Tk40,000 profit they give up by not triple cropping. To complete the example of the jargon, the opportunity cost of sugar cane growing is that Tk40,000 per acre of lost profit. Yes, it does indeed sound arcane, it even is arcane, but economists adamantly insist that we just have to think about the world this way. Losses from opportunity costs are real losses, they make us poorer than we need to be. The way to avoid such opportunity costs is that great remedy for all economic ills – trade. As David Ricardo’s idea of comparative advantage points out, we should do what we’re best at. Or in the way I like to explain it, we should do what we’re least bad at, the reason I say it that way being that we do all grasp that there’s something we’re least bad at. But this is really just the same statement as we should do whatever it is that has the least opportunity costs. That mistress might only be available this afternoon while wifey’s at home all week. Or if we can make more profit triple cropping then we should do that instead of growing cane for sugar. Trade comes in where we sell off to the foreigners those more expensive farm products creating that greater profit, some of which we use to buy the sugar from those poor unfortunates who only get that one growing season a year. That Bangladesh’s sugar mills are all making a loss is put down to their having high fixed costs and not the volume of production running through them to offset them. But we don’t want Bangladeshi farmers growing more cane to be processed because, in proper economic terms, they make a loss from doing so rather than triple cropping. The answer to this is just to close down that industry altogether, do what we’ve that comparative advantage in and use the extra money we’ve earned to buy sugar from the global market. It is an odd idea, yes, but also a true one, we can become richer by not doing things. • Tim Worstall is a Senior Fellow at the Adam Smith Institute in London.