17-10-2018

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ECONOMY & BUSINESS BANGLADESHTODAY 10 THE WEdnESdAy, OCTOBER 17, 2018 ‘Calm before storm’ as Asian stocks drift higher The Presidents of Gulsan Club Showkat Aziz Russell and Sylhet Club Haseen Ahmed exchanging agreement of Affiliation between the two Eminent Clubs. Photo: Courtesy Japan unveils sales tax hike Japan on Monday announced a much anticipated sales tax hike in 2019 to address the nation's huge public debt, despite warnings it could hobble growth in the world's third-biggest economy. The point-of-sale tax will rise from eight percent to 10 percent from October next year as ageing and heavily indebted Japan battles to finance snowballing social security bills - especially medical fees. The tax rise was originally planned for October 2015 but was pushed back twice due to fears it could derail the fragile economy. The last such move - in April 2014 - was blamed for tipping Japan into a brief recession. This time, Prime Minister Shinzo Abe believes he can avoid a sharp decline in consumer spending by introducing measures to cushion the blow. The government "will do its best to avoid a negative impact on the economy by taking every possible measure," Chief Cabinet Secretary Yoshihide Suga told reporters. However, Suga added that the planned hike could still be IMF to reopen office in Argentina The International Monetary Fund said Monday it has decided to reopen an office in Argentina, six years after leaving. The decision came days after Buenos Aires reached a deal with the IMF on the money supply, interest rates and an exchange rate framework. In exchange for these measures, the Fund agreed to speed up payment of a $50 billion loan granted in June to Latin America's third-largest economy, now in another economic crisis. Economist Trevor Alleyne, an IMF staffer since 1992, will be the Fund's representative in Buenos Aires. He has overseen IMF missions in countries such as Nigeria, Zambia, Jamaica, Peru, Venezuela and Ecuador. Hong Kong stocks gain in early trade Hong Kong stocks gained ground in early trade on Tuesday, recovering some losses from recent choppy sessions caused by concerns about the global economic growth outlook. The Hang Seng Index rose 0.49 percent, or 123.78 points, to 25,568.84 in the opening minutes. The benchmark Shanghai Composite Index was flat, easing 0.34 points to 2,567.76. The Shenzhen Composite Index, which tracks stocks on China's second exchange, was also barely changed, giving up 0.26 points to 1,280.82. scrapped if there were a potentially historic recession like a global slump triggered by the 2008 collapse of Lehman Brothers. The measures will include plans to leave the sales tax on food unchanged at eight percent, Suga said. The government also plans subsidies to offset the impact of the sales tax hike on some durable goods such as houses and environmentally friendly cars. And the proceeds from the tax hike will go in part to fund free nursery places to ease the impact on families and encourage Japanese to have more babies, as the population continues to shrink at a fast pace. "I don't think the sales tax this time will create a setback in the economy," Hideo Kumano, chief economist at Dai-ichi Life Research Institute, told AFP, adding that a hoped-for rise in wages would be critical. The measures to mitigate the impact on consumption and an expected rise in salaries next year should be enough to absorb a shock from falling disposable Sensex slips 71 points on negative economic data, weak rupee The BSE benchmark Sensex after reclaiming the 35,000-mark fell 71 points to quote at 34,662.73 Monday, as the IIP slipped to a threemonth low in August and retail inflation rose marginally in September. Besides, weak Asian cues on worries over China-US trade dispute influenced sentiment. The 30-share barometer pushed lower by 70.85 points, or 0.20 per cent, to 34,662.73. It opened higher and touched a high of 35,008.65. The gauge had climbed 732.43 points in the previous session on Friday. Sectoral indices were negative across the board, with oil&gas, auto, consumer durables, PSU, bankex, capital goods, metal, infrastructure and realty falling by up to 1.25 per cent. The NSE index Nifty was trading lower by 21.85 points, or 0.21 per cent, at 10,450.65 after shuttling between 10,524.60 and 10,432. Selling activity emerged after data released by Central Statistics Office (CSO) on Friday showed that industrial production slipped to a three-month low of 4.3 per cent in August, while retail inflation up marginally to 3.77 per cent in September. Meanwhile, the rupee depreciated by 36 paise paise to 73.93 against the dollar in early trade after Brent crude again went past the USD 81 a barrel, which also dampened sentiments. Hindustan Unilever, emerged top loser in the Sensex pack, falling 3.28 per cent, followed by ICICI Bank at 2.46 per cent. Other big losers that dragged both the key indices were Maruti Suzuki, Axis Bank, L&T, Bharti Airtel, Bajaj Auto, PowerGrid, Kotak Bank, Coal India, Adani Ports, Asian Paint, HDFC Ltd, SBI, Vedanta Ltd income, he said. Kumano said further delaying the tax hike could in fact be more damaging. This would "prompt worries over the future financing of the social security system that in turn would have negative impact on consumption," Kumano said. Abe has frequently stressed that reforming the country's social security system is "the biggest challenge" facing his government and has pledged to tackle the issue. IMF chief Christine Lagarde warned earlier this month that the challenges facing the country will "only grow as Japan's population continues to age and shrink," noting that both the size of the economy and the population are on track to shrink by a quarter over the next 40 years. In addition, a loss of confidence in Tokyo's ability to pay its debts could send interest rates soaring and increase the risk of a bankruptcy. Ratings agencies have previously cut Japan's credit standing over its debt levels. and Tata Steel. However, stocks of Sun Pharma, ITC LGd, TCS, Infosys, RIL and Wipro were trading higher. Foreign portfolio investors (FPIs) gave up shares worth a net of Rs 1,322 crore, while Domestic institutional investors (DIIs) remained net buyers, picking up shares worth a net of Rs 1,287 crore on Friday, provisional data showed. Most other Asian markets too were down on trade war worries and surging crude prices following rising diplomatic tensions between Riyadh and the West. Japan's Nikkei fell 1.39 per cent, Hong Kong's Hang Seng shed 1.30 per cent, Taiwan was down 1.10 per cent in their early deals. Shanghai Composite Index, however, was flat. The US Dow Jones Industrial Average had closed 1.15 per cent higher on Friday. Spain's Cepsa postpones IPO, blames market conditions Spanish oil company Cepsa on Monday said it had postponed a market listing planned for Thursday, blaming global market conditions. The firm said in a statement that Abu Dhabibased Owner Mubadala had "decided to desist" on a planned market listing, citing "the current state of international markets." capital State inverstor Mubadala, which has since 2011 held a 100 percent stake in Cepsa, had announced a month ago it intended to sell off a 25 percent share to raise around $2.3 billion. The planned operation wuold have valued the group, which employs some 10,000 people, at 8.08 billion euros ($9.35 billion) if investors had snapped up shares for the maximum 15.10 euros. Madrid-based Cepsa delivered first half profits up 7 percent at 441 million euros on sales of of 12.4 billion euros. Its activities are concentrated on refining and distribution in Spain but it is also present in oil and gas exploration and production both in Latin America and North Africa. 13th death anniversary of M A Samad yesterday On 17th is the 13th death anniversary of M A Samad, an Insurance legend & founder of Bangladesh General Insurance Company Ltd. (BGIC). After his retirement as Managing Director of Jiban Bima Corporation, he established BGIC, the first Insurance Company in private sector after country's liberation. Moreover he was the founder Director of Bangladesh Insurance Academy and former Chairman of Bangladesh Insurance Association. M A Samad wrote two books in Bengali: one on life insurance and another on general insurance. He also wrote two textbooks in English on life insurance. Being a legend of life insurance sector, he contributed a lot for General insurance through his merits & intellects. He was an enlisted International Expert in the Technical Assistance Program on Trade and Development of the United Nations. M A Samad visited most of the insurance training institutions in UK and USA under UNDP fellowship program. M. A. Samad was born at Kulaura of Moulvibazar in a respectable Muslim family on 1st January, 1923. Asian shares drifted marginally higher on Tuesday following another volatile session on Wall Street but a perfect storm of risks hovering over the global economy curbed investors' enthusiasm. Hong Kong's benchmark Hang Seng market led the gains, rising by half a percentage point, while equities in Japan scraped into positive territory after suffering stiff losses the previous day. Chinese stocks opened essentially flat while markets in Australia and South Korea were fractionally in the green. Global markets have been rocked in recent days as traders fret about spiking oil prices, rising US long-term interest rates and an attack by US President Donald A spike in the price of fruit and vegetables pushed up China's inflation rate in September, official figures showed Tuesday. For the fourth straight month, the consumer price index (CPI) - an important barometer of retail inflation - rose, hitting its highest level since February, at 2.5 percent, the National Bureau of Statistics said. Extreme typhoon weather lashed southern China last month, bringing strong winds and heavy rain, and badly affecting agricultural production, it added. The world's biggest pork producer is also scrambling to contain an outbreak of Trump on his own central bank and its policies. After a see-saw session on Wall Street, the Dow Jones closed down 0.4 percent and the broader S&P 500 was down just more - at 0.6 percent. Investors have now entered a "stalemate period to rethink the plethora of looming market uncertainties, ambiguities and flat out worries," said Stephen Innes from OANDA trading. "But this relative calm belies the building storm clouds on the horizon." Gains in Tokyo were sparked by a "technical rebound… after a sharp fall yesterday," said analysts at Okasan Online Securities. The oil price continued to climb amid ongoing geopolitical tensions African swine fever that has spread through pig farms, with pork prices rising significantly from August. Adding to the strain on consumers, the cost of diesel and gas jumped more than 20 percent on last year. Oil is priced in US dollars, a currency that has risen against the yuan in recent months, making fuel imports pricier. The producer price index - which is used to measure the performance of the industrial sector - decelerated to a 3.6 percent on-year rise in September. That was down from 4.1 percent in August but above the 3.5 percent forecast in a Bloomberg News survey. surrounding Saudi Arabia, with accusations that journalist Jamal Khashoggi was murdered in the Kingdom's consulate in Istanbul. Trump said overnight he would send Secretary of State Mike Pompeo to find out "first-hand what happened, what they know, what's going on." Turning to foreign exchange markets, the pound suffered further falls in early Asian trade as the possibility of a "no deal" Brexit looms. EU President Donald Tusk said he remained "hopeful and determined" that Britain and the bloc could clinch an amicable divorce deal. However, he added: "We must prepare the EU for a no-deal scenario, which is more likely than ever before." China prices rise as cost of food spikes Tokyo shares closed higher on Tuesday, with investors snapping up bargains after recent losses. The Nikkei 225 index rose 1.25 percent or 277.94 points to end at 22,549.24, while the broader Topix index was higher by 0.74 percent or 12.47 points at 1,687.91. While Wall Street issues slipped overnight, the slowing speed of the fall and relative calm on the forex market comforted investors, Okasan Online Securities said in a note. Market participants were also eager to buy shares after sharp declines in recent days, it added. "The market is in rebound mode. With the forex market staying calm, selective buying came in to pick up bargains," Okasan said. While prices rose, the costs of raw materials went down, the NBS said. "Policymakers are likely to look through the latest pickup in consumer price inflation and focus instead on evidence of cooling economic momentum, including slower core inflation and weaker factory gate price pressures," said Julian Evans-Pritchard, senior China economist at Capital Economics. The rise in consumer inflation is "unlikely to prevent (the central bank) from loosening monetary policy further in the coming months in a bid to shore up economic growth," he said in a note. Bargain hunters to the fore as Tokyo shares close higher The dollar stood at 112.07 yen, up from 111.79 yen in New York on Monday afternoon. Among major shares, SoftBank jumped 3.62 percent to 9,586 yen after losing more than seven percent on Monday over its link to Saudi Arabia, which has come under international scrutiny after a journalist disappeared from the kingdom's consulate in Istanbul. Meanwhile, Toyota rose 1.11 percent to 6,522 yen and Sony was also higher by 2.21 percent to 6,356 yen. Japan's major oil refiners Idemitsu Kosan and Showa Shell Sekiyu dropped 3.20 percent to 5,740 yen and 2.58 percent to 2,378 yen respectively, after revealing the financial details of the merger between the two companies. Asian stocks extend slide on plethora of risks Asian stocks started the week on the back foot Monday, with investors still in a gloomy mood after several days of market turbulence sparked by trade rows and a spat over the US central bank. Meanwhile, European shares struggled for direction in early exchanges as traders wrestled with a cornucopia of risks, including higher oil from Saudi Arabia tensions and ongoing turmoil surrounding Brexit and Italy's budget. In Asia, Japanese equities led the way lower, with the benchmark Nikkei 225 shedding almost two percent, in anticipation of an announcement from Prime Minister Shinzo Abe of a two percentage-point hike in the sales tax. Abe also vowed a series of measures to cushion the expected blow to consumption but many analysts have warned the rise in sales tax could stymie growth in the world's third-top economy. "We have never seen a share price rise in the past after an announcement of a sales tax hike," noted Kyoko Amemiya, senior market strategist at SBI Securities. Japanese stocks also came under pressure after US Treasury Secretary Steven Mnuchin said over the weekend the US wants to include a provision to prevent currency manipulation in future trade deals with Japan. Chinese stocks, which were the worst hit in last week's global rout, also tracked lower, with the benchmark Shanghai composite off one and a half percent. Markets in Hong Kong, Australia and South Korea were also in the red, with the Hang Seng giving up more than one percent. "We can't say the shock is over," said Masayuki Kubota, chief strategist at Rakuten Securities. European markets however were steady at the open, with London's benchmark FTSE up 0.1 percent, the Paris CAC 40 completely flat and the Frankfurt open delayed for technical reasons. Last week saw a broad-based sell-off in global equities, prompted by fears of higher US interest rates, continued worries over US-China trade and attacks by President Donald Trump on the Federal Reserve, which he called "crazy". On Friday, the bulls attempted a fight-back but found it hard going in another seesaw session. Early European gains fizzled and the Dow Jones closed up 1.2 percent following late buying but it also dipped into the red for part of the session. This week, traders are expected to focus on a raft of economic data and dozens of company results. Turning to commodities, oil prices continued to soar as traders fretted over US relations with its ally and the world's top oil producer Saudi Arabia. Trump has warned of "severe punishment" if it is revealed that journalist Jamal Khashoggi was murdered inside the Kingdom's consulate in Istanbul but Riyadh hit back immediately, saying it would retaliate. Geopolitical tensions surrounding Saudi Arabia battered shares in Japanese conglomerate Softbank, which has close financial ties to the Kingdom. Softbank stock plunged more than seven percent in Tokyo, as Riyadh is heavily involved in the firm's massive technology investment fund.
MISCELLANEOUS 11 WednesdAY, OctOber 17, 2018 17. GD-1281/18 (30 x 3) GD-1282/18 (10 x 3) Ending austerity in UK 'incompatible' with budget plan The British government will have to spend an extra 19 billion pounds ($25 billion) a year on public services by the year 2022-23 if it's to deliver on Prime Minister Theresa May's promise to end austerity, a well-respected think-tank said Tuesday, reports UNB In an analysis of Britain's public finances, the Institute for Fiscal Studies said May's ambition looks incompatible with another major aspiration - to balance the books by the mid- 2020s - without substantial tax rises or much stronger economic growth. "This is going to be the toughest of circles to square," said Paul Johnson, the IFS's director. Given that the British economy is being hobbled by uncertainty surrounding Brexit, Treasury chief Philip Hammond is not expected to announce any radical changes to spending in his annual budget statement on Oct. 29. More detail is only expected next year, when Hammond carries out a broader review of spending and it becomes clearer what Britain's exit from the EU on March 29 will mean economically. "The decision over the spending review envelope will probably be the biggest non-Brexit related decision this Chancellor will make," Johnson said. The government has promised increases in health, defense and aid spending over coming years. Just keeping spending constant on other public services after accounting for inflation - a limited definition of what ending austerity means - would require an additional 19 billion pounds, according to IFS's analysis. Britain has lived under public spending cuts since 2010, when the then coalition government dominated by the Conservatives said its priority was bringing the budget under control. While spending on health and schools was protected, other spending was slashed. May told her Conservative Party faithful this month that people should know "their hard work has paid off" and that the "the end (to austerity) is in sight." Trump suggests 'rogue killers' murdered Saudi journalist President Donald Trump suggested Monday that "rogue killers" could be responsible for the mysterious disappearance of Saudi journalist Jamal Khashoggi, an explanation offering U.S. ally Saudi Arabia a possible path out of a global diplomatic firestorm. The Saudis continued to deny they killed the writer, but there were indications the story could soon change, reports UNB While Trump commented at the White House, Turkish crime scene investigators finally entered the Saudi consulate to comb the building where Khashoggi was last seen alive two weeks ago. Trump spoke after a personal 20-minute phone call with Saudi King Salman and as the president dispatched his secretary of state to Riyadh for a face-to-face discussion with the king. Late in the day, there were published reports that the Saudis were preparing to concede that Khashoggi, a U.S.-based Saudi contributor to The Washington Post, had been killed in an interrogation gone wrong. Before Monday Trump had focused less on possible explanations for Khashoggi's likely demise than on possible punishment if the Saudis were found culpable. "The king firmly denied any knowledge of it," Trump told reporters as he left the White House for a trip to survey hurricane damage in Florida and Georgia. Trump said he didn't "want to get into (Salman's) mind," but he added, "it sounded to me like maybe these could have been rogue killers. I mean, who knows? We're going to try getting to the bottom of it very soon, but his was a flat denial." Khashoggi, a critic of the Saudi government and in particular Crown Prince Mohammed bin Salman, was last seen entering the consulate on Oct. 2 to get paperwork for his upcoming marriage to a Turkish woman. Turkish officials have said he was killed and dismembered. In a sign of new cooperation between Turkey and Saudi Arabia that could shed light on the disappearance, Turkish investigators wearing coveralls and gloves entered the consulate Monday. It remained unclear what evidence they might be able to uncover. Earlier Monday, a cleaning crew with mops, trash bags and what appeared to be bottles of bleach walked in past waiting journalists. Australia considers moving embassy to Jerusalem Australia's prime minister said Tuesday that he was open to shifting the Australian Embassy from Tel Aviv to Jerusalem in line with President Donald Trump's decision to recognize the contested holy city as Israel's capital, reports UNB Prime Minister Scott Morrison said the idea was suggested to him by a former ambassador to Israel, Dave Sharma, who is a candidate for Morrison's conservative Liberal Party in a crucial by-election Saturday in a Sydney electorate with a large Jewish population. Morrison said Australia remained committed to finding a two-state solution to Israel's conflict with the Palestinians. "When sensible suggestions are put forward that are consistent with your policy positioning and in this case pursuing a two-state solution, Australia should be openminded to this and I am open-minded to this and our government is open-minded to this," Morrison told reporters. Israeli Prime Minister Benjamin Netanyahu said he had recently spoken to Morrison and welcomed the Australian policy shift. Morrison "informed me that he is considering officially recognizing Jerusalem as the capital of Israel & moving the Australian embassy to Jerusalem. I'm very thankful to him for this," Netanyahu tweeted. "We will continue to strengthen ties" between Israel and Australia. Morrison also announced that Australia would vote against a United Nations resolution this week to recognize the Palestinian Authority as the chair of the Group of 77 developing countries and would review the three-year-old Iran nuclear deal.
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17-10-2018

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