At Capital Weekly July 07

AT Capital Research
Weekly News Update
AT Capital Weekly Update

07 July 2008
Welcome to the first issue of the AT Capital Weekly. Our objective is to
discuss key issues and trends in the Bangladesh economy and capital
markets. We will also focus on developments in Global Markets that are likely
to impact Bangladesh. We hope our readers find this publication useful and we
appreciate any feedback.
Key themes in this issue are:
The escalating cost of fuel subsidies has forced sharp rises in petrol prices
Bangladeshi corporate margins to be pressured by rising energy prices

Asian Tiger Capital Partners
DSE outperformance of other Asian markets looks unsustainable
Why Bangladesh may benefit from rising Indian economic/market turmoil
Lessons from the 2008 Vietnamese stock market melt-down
Need to develop a domestic institutional client base for DSE
AKTEL-NTT Docomo deal a positive sign for BD private equity
Remittances continue to rise to a new high of $ 8 bn

EDITORS
Ifty Islam
DSE market cap crosses BDT 900 billion mark
Managing Partner
+880 171 584 0112 Bangladesh pharmaceutical sector offers significant growth potential
ifty.islam@at-capital.com
Syeed Khan
Partner
+880 173 005 8921
syeed.khan@at-capital.com
Professor Jahangir Sultan

Senior Advisor
+17818912518
jahangir.sultan@at-capital.com
Asian Tiger Capital

Partners
UTC Building, Level 16
8 Panthapath, Dhaka-1215
Bangladesh
www.at-capital.com
AT Capital Research
Bangladesh Markets
Energy price hikes pose major policy challenges
A major challenge for Bangladesh policymakers remains managing and mitigating the
impact of the sharp increases in energy and food inflation. Although this has been a global
phenomenon, in the context of many Asian economies, including Bangladesh, energy policy
has had major fiscal implications given the scale of government subsidies.
Asian governments are falling behind in their battle against record oil prices, risking public
protests, higher interest rates and slower growth. Indian Prime Minister Manmohan Singh
and his Malaysian counterpart, Abdullah Ahmad Badawi, relaxed fuel price controls, joining
Indonesia, Taiwan, Pakistan and Sri Lanka in boosting costs for business and consumers.
The moves will drive India’s inflation to a 13-year high. Malaysia’s consumer-price growth
may double to more than 7% this month. There are growing concerns that Asian central
banks in the region may also follow Pakistan in raising rates, as policy makers lose bets that
a global slowdown would temper price increases. There are also likely to be major political
ramifications for governments in the region.
Notwithstanding the unfortunate effects on poor families in Bangladesh who were already
struggling to cope, it was clear that the authorities here had little option but to reduce the
scale of subsidy given few signs of any reversal in fuel prices and the prospects for an
escalation in the budget deficit that would be unsustainable.
In the event, the government increased domestic fuel prices by 33 to 37 percent with effect
from July 1. The new price of diesel and kerosene is BDT 55 (USD 0.8) a litre, petrol is now
BDT 87 (USD 1.2) a litre, the price of octane is BDT 90 (USD 1.31) a litre and a cylinder of
liquid petroleum gas (LPG) is now BDT 1,000 (USD 14.60).
The Chief Adviser's Special Assistant for Power and Energy, Dr M Tamim also said on July
1, that there is a proposal pending with Bangladesh Energy Regulatory Commission (BERC)
on a 42 percent raise in electricity tariffs.
It was noteworthy that the rise in petrol prices was much larger than the approximately 10%
increase in Indian fuel prices that triggered significant street protests. So far the relatively
calm public response in Bangladesh to the energy price risks underlines the relative
resilience of the public to adverse shocks. Nonetheless, the sharp increase in costs for
companies in Bangladesh in an environment of weakening pricing power in the face of the
US recession and slowing economies in Asia will be a major challenge. The BGMEA chief
said that the apparel factory owners will have to incur on average an additional cost of BDT
0.5 bn (USD7.3mn) a month due to this price hike. The prospective squeeze on company
profit margins for Bangladeshi corporates suggests the strong outperformance of the
Bangladesh equities versus a majority of other Asian markets (see table below) is unlikely to
be sustained.
Bangladesh outperforms other equity markets

2005 2006 2007 2008
(YTD)
Bangladesh (DSE) -15% -4% 87% 0%
USA (S&P 500) 3% 14% 4% -14%
China (Shanghai Composite) -8% 130% 97% -49%
Japan (NIKKEI 225) 40% 7% -11% -14%
Ifty Islam India (SENSEX) 42% 47% 47% -34%
Managing Partner Pakistan (KSE 100) 54% 5% 40% -16%
+880 171 584 0112 Vietnam (VN-Index) 29% 144% 23% -53%
ifty.islam@at-capital.com Source: Bloomberg
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Worsening crisis in India and Vietnam
Vietnam equity markets an opportunity for Bangladesh
In our special focus article this week on page 7 on managing capital flows we discuss the
lessons from the 60% decline in the Vietnamese stock market for Bangladesh. But the
problems in India have also been intensifying in the past month. In the recent report
Business Week noted that:
“Just six months ago, India was looking good. Annual growth was 9%, corporate profits were
surging 20%, the stock market had risen 50% in 2007, consumer demand was huge, local
companies were making ambitious international acquisitions, and foreign investment was
growing. Nothing, it seemed, could stop the forward march of this Asian nation.
But stop it has. In the past month, India has joined the list of the wounded. The country is
reeling from 11.4% inflation, large government deficits, and rising interest rates. Foreign
investment in India's stock market is fleeing, the rupee is falling, and the stock market is
down over 40% from the year's highs. Most economic forecasts expect growth to slow to
7%—a big drop for a country that needs to accelerate growth, not reduce it. Many in India
worry that the country's hard-earned investment-grade rating will soon be lost and that the
gilded growth story has come to an end….The gravest danger is that India's messy coalition
politics will bring into power another indecisive alliance that will keep the country in policy
limbo for another five years. If so, says S&P's Gokarn, it's a meltdown scenario: growth
slipping below 6.5%, accelerating the chances of India reverting to its 1991 status when it
was plunged into a balance-of-payments crisis.” (July 1, 2008 edition of Business Week)
The article goes on to note that oil price subsidies (of up to 60% on diesel), plus an
additional $25 billion on upcoming fertilizer subsidies, is adding $100 billion a year—or 10%
of India's gross domestic product, or equivalent to the country's entire collection of income
taxes—to the national bill. This at a time when India needs urgently to spend $500 billion on
new infrastructure and more on upgrading education and health-care facilities. The
government's official debt, which dropped below 6% of gross domestic product last year, will
now be closer to 10% this year.
India’s rupee completed its biggest quarterly loss in a decade as the slide in local stocks
prompted overseas investors to reduce equity holdings and record oil prices spurred
demand for dollars. The rupee is the second worst performer of the 11 most- actively traded
Asian currencies this quarter as global funds sold shares on concern accelerating inflation
will slow economic growth. The currency fell to the lowest level since April 2007 as a
doubling in oil over the past 12 months widened the current- account deficit, a broad
measure of trade and investment flows. India’s exports grew at the slowest pace in 14
months in May as weakening global expansion hurt exports of clothes, steel and electronic
goods, widening the trade deficit to a record $10.76 billion.
We believe that while the problems from South Asia’s dominant economic player is a
warning sign for the potential risks for the Bangladesh economy, we also firmly believe now
is the time that global investors will be looking for opportunities to diversify away from Indian
exposure. Bangladesh should position itself to benefit from this potential new source of
investor interest. Forward looking economic policies and political stability should be a win-
win strategy for Bangladesh to attract foreign investment.
AKTEL-
AKTEL-NTT Docomo deal a positive
positive sign for the prospects for private equity
We think the deal by NTT Docomo to buy AK Khan's 30 % stake in AKTEL for $ 350mn is an
important positive, and possibly seminal, event for the Bangladesh economy and capital
markets on a number of fronts:
1) It shows a vote of confidence by one of Japan's largest companies in the future of the
Bangladesh economy. The premium paid by NTT underlines their expectations for
rapid growth of the domestic market of 150 mn people.
2) It illustrates the effective exit of a major business group of their minority stake at a
substantial profit - a key strategy for private equity investors. It answers one of the
major issues prospective foreign private equity investors have when considering a
frontier market like Bangladesh – namely can family-owned companies be persuaded of
the merits of working with foreign companies even as minority stakeholders in joint
ventures.
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3) It is the beginning of hopefully a series of such deals that will be part of BD's FDI rising
at the same pace as Vietnam's over the next 7-10 years. We see the significant
increase in foreign interest in Telecoms in Bangladesh spreading to other sectors such
as Pharmaceuticals, Agribusiness, Light Engineering and Infrastructure. The benefits of
FDI go beyond access to global capital to include both global best practice, market
access and management thinking.
LR Global awarded local asset management license – a positive

positive sign for the capital markets
We also believe the decision last week by LR Global, a large global EM money manager
with $ 400mn+ of assets funds under management, to establish a domestic asset
management operation in Bangladesh is a very encouraging sign for the future prospects for
the evolution of Bangladesh’s capital markets. The efforts of the Bangladeshi regulatory
authorities to attract a broader range of globally credible financial players to come to the
Bangladesh market is, we believe, an important step towards attracting greater foreign
portfolio flows to the market, bring greater finance expertise and increase the credibility of
Bangladesh as a lucrative investment destination.
Bangladesh pharmaceutical sector offers significant growth potential
Four pharmaceutical companies out of the top ten Bangladeshi companies achieved double-
digit growth in sales during the January-March period of this year, said global
pharmaceutical market intelligence agency IMS, the global provider of pharmaceutical
market intelligence, in its first quarter report. The report, published recently, noted that the
fifth largest pharmaceutical company in the country Eskayef posted the best 21.1% growth,
followed by Renata 16.2%, ACI 16.2%, and Drug International 13.8%.
At present, Bangladesh has the strongest pharmaceutical base among all the emerging
economies as the local production caters to almost 97% of the total domestic demand; only
some life saving drugs and vaccines (especially, injectables) are imported. The industry,
which is currently valued at slightly more than USD 590 million in 2007, grew at an average
annual growth rate of almost 12% during the last five years. When compared regionally, the
current growth rate of over 15% during the first half of 2008 puts Bangladesh ahead among
India, Vietnam, Pakistan and Sri Lanka.
We believe there is significant potential for Bangladesh in the contract manufacturing/export

market regardless of the 2016 agenda, as the developed nations are driven by patented
drugs and the manufacturers do not want to make investments for production of generics.
Thus, Bangladesh can be a very attractive destination for outsourcing as the costs are much
lower and many firms have started to achieve international certifications for quality
assurances.
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Global Markets
Oil price surge and stagflationary fears fuel US bear market
“It is quite possible that we are now at the most dangerous moment since the American
financial crisis began last August. Staggering increases in the prices of oil and other
commodities have brought American consumer confidence to new lows and raised serious
concerns about inflation, thereby limiting the capacity of monetary policy to respond to a
financial sector which – judging by equity values – is at its weakest point since the crisis
began. With housing values still falling and growing evidence that problems are spreading to
the construction and consumer credit sectors, there is a possibility that a faltering economy
damages the financial system, which weakens the economy further.”
- Lawrence Summers, Financial Times, June 29, 2008
There was little respite for global equities with market historians dusting off their bear record
books – it was the worst June month US stock market performance for 78 years and worst
first half since 1970. The momentum in negative sentiment was underlined by the sharp sell
off in commodity/energy stocks which, up until now, have been the lone beacon of hope
amidst the carnage. Concerns about US automakers re-surfaced with fears about a GM or
Chrysler bankruptcy.
Compared to the global equity market, the DSE20 had performed quite well in the last four
years. For example, the return on the DSE20 index in 2003 was 129%. In 2004, it went up
by a whopping 104%. For the next two years, the market turned bearish: -15% in 2005 and -
4% in 2006. But the year 2007 was another spectacular year for the Dhaka Stock
Exchange. The DSE20 went up by 87%. As of today, the DSE20 index return was less than
.5% and holding. Compared to the DSE20, the performance of global markets since the
beginning of this year has been quite disappointing. The DOW has fallen by 20% from its
peak in October last year and the S&P500 and the NASDAQ fell by as much as 19.4% and
30%, respectively, during the same period. In terms of returns measured in US dollar,
Bangladesh currently has a low correlation (-.26 (US) and -.40 (UK)) with the rest of the
world. That is good news for anyone interested in getting an exposure to the Bangladesh
market for diversifying risk. So, measured in US dollar terms, a foreign investor would have
come out as a winner by investing in Bangladesh.
Ifty Islam Source: The Wall Street Journal

Managing Partner
+880 171 584 0112 Further USD weakness likely as US downturn intensifies and sovereign wealth nerves
ifty.islam@at-capital.com increase
In a recent report, the Bank for International Settlements warned that “A disorderly decline in
the dollar remains a possibility as losses on U.S. assets pile up and the current-account
deficit triggers…a sudden rush for the exits… A plunge in the currency may happen even after
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its ‘remarkably orderly’ 14% slide against the euro in the past year…Foreign investors in U.S.
dollar assets have seen big losses measured in dollars, and still bigger ones measured in
their own currency…While unlikely, indeed highly improbable for public-sector investors, a
sudden rush for the exits cannot be ruled out completely.’”
Looking at evidence from NYMEX spot oil options, the number of financial market bets on
crude oil prices hitting $200 a barrel before the end of this year has almost doubled in the
past month, a further sign of growing concern that oil prices will continue to rise sharply in
the near term. The strong buying of these call options… comes as spot oil prices in London
yesterday hit a record high around the $146 a barrel level.”
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The Challenges
Challenges of Managing Capital Flows in EM
– Lessons for Bangladesh
While Asian economies had, at least until relatively recently, been relatively resilient to the
US slowdown, EM equity markets have been far less decoupled. Indeed, a number of Asian
stock markets, most notably Vietnam, India and China, have actually significantly
underperformed the S&P 500 in 2008.
The causes of this divergence between economic and financial market decoupling have
centred on both the effects of rapid growth in FDI, in the case of Vietnam, FX reserves in the
case of China and foreign investor participation with respect to India.
Somewhat paradoxically, Bangladesh’s relatively low levels of FDI and foreign participation
in the stock market has seen it emerge as one of Asia’s best stock market performers.
Bangladesh has not had to face the challenges seen in many other countries in Asia in
managing the consequences of capital flows. Nonetheless, given our expectations for both a
rapid increase in both FDI and foreign portfolio investment, we believe there are lessons for
Bangladesh policymakers from the challenges faced in 2008 by other economies in the
region.
The ADB Research Institute have just published a thought provoking analysis of some of
some of the key issues (see “Managing Capital Flows in Asia: Some Challenges and Policy
Issues”, Kagai and Lamberte, June 2008). In the report, they note that large capital inflows,
if not managed properly, can expose capital-recipient countries to at least three types of
risks:
1) Macroeconomic risk. Capital inflows could accelerate the growth of domestic credit,
create economic overheating including inflation, and cause the real exchange rate
to appreciate, thus affecting macroeconomic performance in a way not consistent
or compatible with domestic policy objectives such as sustainable economic growth
with price stability.
2) Financial instability. Capital inflows could create maturity and currency mismatches
in the balance sheets of private sector debtors (particularly banks and
corporations), push up equity and other asset prices, and potentially reduce the
quality of assets, thereby contributing to greater financial fragility.
3) Risk of capital flow reversal. Capital inflows could stop suddenly or even reverse
themselves within a short period, resulting in depleted reserves or sharp currency
depreciation.
Potential Tools to manage Capital Flows
Sterilized intervention. As the ADB notes, sterilization has been the favorite tool applied by
many emerging Asian economies to prevent nominal and real exchange rate appreciation
and economic overheating. Because net foreign exchange inflows from the current and
capital accounts have been sustained for quite some time now, intervention in the foreign
exchange market has been unidirectional, making sterilization an increasingly costly method
of preventing overheating of the economy. The need to allow greater exchange rate
flexibility is thus becoming more compelling.
As of end-2007, total foreign exchange reserves in the world were more than USD 5 trillion
with the emerging Asian economies accounting for half of it. However, as the ADB report
emphasizes, there is a growing consensus based on standard measures of reserve
adequacy, e.g. in terms of months of imports of goods and services, and in terms of ratios
Ifty Islam (of reserves) relative to external debt, to GDP, or to domestic money supply—that these
Managing Partner foreign exchange reserves are excessive. Even though it is difficult to come up with a
+880 171 584 0112 reliable estimate of the optimal level of reserves, the current total foreign reserves in Asia
exceed the level that is needed for mitigating abrupt capital reversals or external financing in
crisis. The countries’ apparent desire for large reserves may be reduced if there is a credible
reserve-sharing arrangement at least at the regional level.
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Financial Sector Reforms
Another important issue highlighted by the ADB report and relevant for Bangladesh was the
need to strengthen local financial markets. They noted that efforts must be intensified to (i)
improve prudential regulations such as limiting the practice of concentrating lending to a few
individuals or business entities and moving towards Basel 2 capital adequacy standards, (ii)
ensure stronger governance and risk management of financial institutions through greater
transparency and better disclosure, and (iii) enhance the capacities of regulatory bodies. At
the same time, reforms to accelerate the development and deepening of domestic capital
markets and to put in place efficient market infrastructure must be pursued to enhance the
absorptive capacity of domestic financial markets to match large capital inflows.
Vietnam 2008: A salutary reminder on the challenges of managing capital flows
Early last year, a spate of stories appeared in the international press proclaiming Vietnam as
"the New Asian Miracle" and "the Next Asian Tiger." The country joined the World Trade
Organization in January 2007, prompting a surge in annual foreign direct investment
approvals to more than USD20 billion or around 30% of GDP. The Ho Chi Minh City Stock
market (which was a similar size to the DSE at around USD 11bn) was Asia’s stellar
performer, with the index reaching a peak of 1,170 in March 2007, up 140% year on year.
Rising global commodity prices drove export revenue to nearly USD50 billion, an increase of
more than 20% over 2006. For the year as a whole, the economy grew by an impressive
8.5%, the fastest pace since 1996.
Cut to 2008. While the pace of FDI commitments in Jan-May 2008 remained strong at USD
15 bn the Vietnamese equity market has fallen 60 % with volumes down more than 90%.
The extent of the Vietnamese authorities’ shellshock was their decision in March to cancel a
major investors' conference -- marketed under the title "Sustaining Growth and Reform in
Asia's Next Tiger" -- owing to "pressing macro- and microeconomic concerns." The
government later claimed that the organizer's permits were not in order. The May inflation
rate has jumped to 25.4%; the trade gap in the first five months of 2008 was USD 14.4 bn
versus USD 4.25bn a year earlier; credit growth was running at 50% annual while the
budget deficit was 7% of GDP. The government has also just banned the import of Gold with
hoarding by locals to hedge against inflation risks adding to the trade problems.
The causes of the Vietnamese 2008 stock market crash was that while the authorities were
the champions of attracting FDI, they were ill prepared to receive the flood of foreign capital
when it arrived. The failure to sterilize the inflow by offsetting withdrawal of liquidity by the
central bank saw huge growth in bank lending which primarily found itself fuelling both
equity and property price bubbles.
In an effort to slow the market's decline, daily trading-band limits of 1% were imposed on all
stocks in March of this year. This was the wrong step by a government that knows little
about markets. Those limits were raised to 2% in April. But what has been happening? The
market opens and the price of virtually every security traded on the exchange opens down
the daily 2% limit. Trading essentially stops at that level, and the next day the market opens
limit-down again in a perfect lock-step fashion, that was repeated for 23 days in a row.
The volatility in the stock market and domestic macro environment also threatens to end the
FDI fairytale. The head of Vietnam Amcham and Ford Vietnam, noted that while “Vietnam’s
success in attracting foreign investment has largely been built on the expectation of
economic and political stability,” Hanoi now needs to take “urgent and decisive action” to
curb a speculative real estate bubble that “not only threatens the financial sector, but is also
undermining Vietnam’s long-term competitiveness as it is challenged for foreign investment
by neighbouring countries”. Rising labour costs are also “a significant concern to US
business operating in Vietnam” and labour unrest is directly related to the macro-economic
problems.
The policy response by the Vietnamese authorities has been confused at best and reflects
the complex allocation of economic policymaking responsibilities with the central bank
responsible for monetary policy but the finance ministry for inflation. The Planning Ministry is
responsible for investment spending and several State Owned Enterprises report directly to
the PM’s office.
There are concerns about whether further policy confusion and missteps might see a repeat
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of the 85% decline in Thai stocks Jan 1996-Aug1998. Or indeed the collapse in the
Bangladesh stock market in Nov 1996-Dec1997 from 3649 to 711.
Vietnam – Lessons for Bangladesh
Bangladesh and Vietnam’s stock markets differs in terms of the level of foreign participation
with 25% for the latter. By contrast in 2007 foreign portfolio flows were USD 200mn in
Bangladesh versus a market cap of USD 10bn. This explains why the DSE has been less
sensitive to moves in global markets than Vietnamese, Indian or indeed Chinese equities.
However, both Bangladesh and Vietnam have a relatively large retail investor base and an
underdeveloped domestic institutional sector. This may explain the extreme moves in the
market as household investors in a news-driven rather than fundamentally driven market are
more likely to adopt a “herd mentality” and hence Bangladesh equities might be vulnerable
to extreme moves unless the authorities can help build an institutional client base with
insurance and pension fund reforms.
The Vietnamese experience also underlines the fact that foreign investment is not a
panacea for all Bangladesh’s economic problems. But I would still maintain that in a growth
capital constrained economy like Bangladesh, FDI holds the key to a lift off in growth from
6% to 8%+. But the process needs to be managed carefully with sufficient attention spent
not only on developing a fundamentally driven professional investor base but also more
effective monetary policy tools. The ineffectiveness of curbs on trading in Vietnam and/or
government offers to buy in the market directly underlines the unsustainability of market
manipulation by the authorities.
However, the 2008 Vietnamese market meltdown will likely act as a catalyst for global
corporates and investors to seek an alternative Asian investment destination. We believe
the prospects for a move to an elected democracy in 2009 coupled with an effective Brand
Bangladesh campaign and focused “India plus one” economic vision will leave us well
positioned to benefit from the problems elsewhere in the region.
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Weekly News Update
S tock Market Weekly

Weekl y
DSE market cap crosses BDT 900 billion mark
DSE Performance:
Performance: 52 Weeks Market News
15 80
14 70
Government offloads 25% of its stake in Titas Gas
Market Cap. in USD Bln
13 through direct listing
Turnover in USD Mln

60
12
50 DSE market cap crosses BDT 900 billion mark
11
40 SEC increases the limits of brokers’ margin with the
10
30 exchanges
9
8 20 Stock trading outside Dhaka and Chittagong expands
7 10 Some investors oppose recent SEC moves to stop
6 0 mutual funds issuing bonus and right shares
5/7/07
9/8/07
18/10/07
22/11/07
27/12/07
6/3/08
19/06/08
13/9/07
31/1/08
10/4/08
15/5/08
New fund management company starts operation,

plans to float a mutual fund
Market Cap. Turnover
DSE Performance:
Performance: 30 Days Return of regional indices over this week
14.5 90
Market Cap. in USD Bln
Turnover in USD Mln
80
14.0 70
60
13.5 50
13.0 40
30
12.5 20
10
12.0 0
20-May-08
27-May-08
10-Jun-08
17-Jun-08
24-Jun-08
3-Jun-08
1-Jul-08
Market Cap. Turnover
Market Summary Valuation Snapshot

DSE General Sector P/E
Index Performance DSE 20
Index Feb-08 Mar-08 Apr-08 May-08
Opening of this week 3,024.5 2,517.6 Bank 24.8 21.9 22.2 22.6
Closing of this week 3,019.1 2,564.4 Cement 12.8 14.7 14.7 17.6
Change within a week (%) -0.18% 1.86% Ceramic 28.1 43.2 43.7 42.7
Change within a week (Point) -5.4 46.8 Engineering 30.2 33.7 38.9 41.4
Food & Allied 22.0 24.5 28.2 28.5
This Last % Fuel & Power 28.1 28.3 25.8 26.2
Capitalization and Turnover
Week Week Change
Insurance 22.1 23.0 28.1 32.4
Number of Trading Days 4 5
Investment 22.4 40.5 64.9 65.2
Market Capitalization (USD bn) 13.97 13.53 3.2%
IT 16.6 18.3 18.4 17.6
Total Turnover (USD mn) 164 155 5.7%
Jute 8.8 18.6 16.4 16.0
Daily avg. Turnover (USD mn) 41 31 32.2% Miscellaneous 20.1 22.3 23.0 25.9
Total Volume (mn) 76 60 27.3% Paper & Printing 6.9 11.0 9.2 9.5
Daily avg. Volume (mn) 19 12 59.1% Pharmaceuticals 20.2 25.0 26.7 29.8
Service & Real 8.8 10.8 20.5 19.5
Weighted Avg. P/E Ratio* This Last estate
Issues Tannery 15.3 19.9 25.1 23.1
Week Week
This Week 23.75 Textiles 11.8 14.6 14.9 14.4
Advanced 53 88
Last Week 23.83 Market P/E 23.5 23.1 23.9 22.4
Declined 184 160
% Change -0.34 Source: Dhaka Stock Exchange
Unchanged 5 4
*Weighted on Market Cap.
Not Traded 45 34
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Stock Market News
Government offloads 25% of its stake in Titas
Titas Gas through direct listing
The Daily Star, Friday 04 July, 2008
In one of the largest public issues in the country, the government offloads 25% of its stake
in Titas Gas Transmission and Distribution Company Limited, book value BDT 2.15 billion.
However, due to a wide bid-ask spread of BDT 250, no transactions took place on July 2,
the first day of listing. Trading started on July 3 with an opening price of BDT 257.50 as
the government reduced its asking price.
http://www.thedailystar.net/story.php?nid=44133
DSE market cap

cap crosses BDT 900 billion mark
The New Age, Sunday, 29 June, 2008
The market capitalization at the Dhaka Stock Exchange crossed BDT 900 billion mark
recently for the first time. The exchange also witnessed a resumption of share trading of
ICB Islamic Bank. The trading of the shares of the company (previously known as Oriental
Bank Bangladesh Limited) was suspended due to its restructuring by Bangladesh Bank.
http://www.newagebd.com/2008/jun/29/busi.html#1
SEC increases the limits of brokers’

brokers’ margin with the exchanges
The Daily Star, Wednesday, 2 July, 2008
The indices and daily turnover volume of the exchanges fell in the recent weeks.
Apparently, to bolster the trading volume, Securities and Exchange Commission (SEC)
raised the brokers’ limit of trade without depositing margins with exchanges. Previously,
the brokers needed to put margin with the DSE if the transaction volumes exceeded BDT
10 million. The limit has been raised to BDT 50 million.
Stock trading outside

outside Dhaka and Chittagong expands
The Financial Express, Wednesday, 2 July, 2008
Until recently, volume of stock trading outside of Dhaka and Chittagong has been very
thin. Some of the brokers have recently opened their offices in other major cities and
district level towns. Rajshahi, a divisional headquarter, has witnessed an increase in stock
trading activities recently. State owned Investment Corporation of Bangladesh and some
other brokers have opened offices and set up trading platform in the city recently.
http://www.thefinancialexpress-bd.info/search_index.php?page=detail_news&news_id=38353
Some investors oppose recent SEC moves to stop mutual funds issuing bonus and right
shares
The Daily Star, Sunday, 30 June, 2008
The SEC has decided that closed-end mutual funds in Bangladesh will not be allowed to
issue right shares and bonus shares in their effort to increase the fund size. The shares
prices of mutual funds surged far beyond their net asset value recently, i.e trading at
premium. The SEC decision has prompted large decline in mutual fund share prices.
New fund management company starts operation,

operation, plans to float a mutual fund
The Financial Express, Wednesday, 2 July, 2008
A new asset management company called LR Global Bangladesh Asset Management

Company Limited has started operation recently. The parent company named LR Global
is based in the US. They have received SEC license as an asset management company.
The company plans to launch a BDT 1 billion mutual fund soon.
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Turnover Leaders Best Performers* Worst Performers*

(All fig. in mn) BDT USD % Change % Change
Square Pharma 923 13.4 Prime Islami Life Insurance 19.9 Aims 1st Mutual Fund -28.2
Lanka Bangla Finance 624 9.0 Tripti Industries 15.0 3rd ICB Mutual Fund -24.8
Aims 1st M.F. 597 8.7 Popular Life 13.6 2nd ICB Mutual Fund -22.8
Fareast Islami Life 526 7.6 ACI Limited 11.5 7th ICB Mutual Fund -21.7
ACI Ltd 465 6.7 Prime Finance 10.3 ICB AMCL 1st NRB MF -20.3
Grameen Mtutual One 395 5.7 National Bank Ltd 9.9 1st BSRS -19.5
Uttara Bank 330 4.8 Sonali Paper 9.7 Rupali Insurance -18.6
Beximco Pharma 282 4.1 Maq Paper 9.2 1st ICB Mutual Fund -17.6
APEX Footwear 273 4.1 Fareast Islami Life 8.2 8th ICB Mutual Fund -17.1
AB BANK 242 3.5 Phoenix Finance 7.9 5th ICB Mutual Fund -16.9
*By closing price
Market Cap. by Sector* Correlation matrix with other indices*

Banks 55.1% S&P FTSE NIKKEI KSE
Pharmaceuticals 10.9% 500 DJIA 100 SENSEX 225 100 DSE
Fuel & Power 10.4% S&P 500 1.00
Insurance 5.9% DJIA 0.94 1.00
Cement 5.6% FTSE 100 0.65 0.63 1.00
Engineering 2.7% SENSEX -0.09 -0.13 -0.07 1.00
Miscellaneous 2.7% NIKKEI 225 -0.13 -0.12 0.07 0.53 1.00
Foods 1.9% KSE 100 0.02 0.03 0.07 0.24 0.29 1.00
Textile 1.8% DSE -0.14 -0.22 -0.12 0.17 0.12 0.16 1.00
Tannery 1.5% * Based on the last 65 monthly returns
Service & Real Estate 0.9%
IT 0.4%
Ceramics 0.1%
Paper & Printing 0.07%
Jute 0.03%
Total 100%
*As of May 31, 2008
Research Team
Professor Jahangir Sultan
Senior Advisor
jahangir.sultan@at-capital.com
Shahidul Islam
Investment Manager
shahid.islam@at-capital.com
Rashed Hasan
Research Associate
rashed.hasan@at-capital.com
Syed Najibullah
Research Assistant
syed.najibullah@at-capital.com
12
AT Capital Research
Weekly News Update
Economics
Remittances hit record USD 8 billion
Key macroeconomic indicators Economic

Economic News
Remittance close to record USD 8 billion
Key indicators ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 Octane now BDT 90, diesel BDT 55
Forex reserve hits all-time high
Real GDP
6.5 5.7 6.0 6.2 6.3 6.3
growth Trade deficit jumps by 59pc on surging
import costs
Inflation 9.1 8.6 7.4 6.1 6.6 5.7
Both local, foreign investment dips
Budget bal.
-4.4 -5.0 -4.9 -4.7 -4.7 -4.5 New Bangladesh Bank monetary policy next
(% of GDP)
week
Cur. a/c bal.
1.2 -0.3 -0.3 -0.6 -0.7 -0.7
Remittance in the last 5 years
(% of GDP)
USD-BDT
68.87 68.73 69.14 70.72 72.25 74.92
(avg.)
EUR-BDT
94.27 106.35 103.71 99.53 96.45 98.14
(avg.)
Source: Economist Intelligence Unit
Monetary and Credit Developments

Outstanding Stock
June-06 June-07 April-08
Domestic credit 25.39 29.18 33.76
Broad money 25.88 30.28 33.68
Changes in outstanding stock
Latest Treasury Yields
July-April April 2008 Tenor and Security Type Weighted Average Yield
FY2006-07
2007-08 over April 2007
28-day T-bill 7.50
3.79 4.58 5.62
Domestic credit 91-day T-bill 7.74
(+14.92) (+15.71) (+19.95)
4.40 3.40 4.71 182-day T-bill 7.97
Broad money
(+17.02) (+11.23) (+16.27) 364-day T-bill 8.47
Source: Bangladesh Bank 5-year T-bond 10.60
10-year T-bond 11.72
15-year T-bond 12.22
Crude Oil (Nymex) 20-year T-bond 13.08
Source: Bangladesh Bank
13
Source: The Wall Street Journal Source: Bangladesh Bank
AT Capital Research
Economic News
Remittance close to record USD 8 billion: Remittances have grown by an extraordinary 33
per cent in the last fiscal year taking the total amount to almost USD 8 billion. Rising overseas
employment and the extra money sent home by expatriates to their relatives, as a means to
cope with soaring prices of essentials have helped remittances reach this new record. The
figure of USD 7.94 billion is a significant rise over that of USD 5.98 billion achieved in the
previous fiscal. The foreign exchange reserves also reached USD 6.2 billion on Sunday as a
result of the strong remittance growth.
Octane now BDT 90, diesel BDT 55: The caretaker Government has increased prices of
petroleum products for the second time during its tenure within fifteen months into the last
hike. The prices went up by 33 to 37 per cent compared to the previous hike of 13 to 21 per
cent in April 2007.
The new price of diesel and kerosene is BDT 55 per litre, which is about 37.5 per cent higher
than the previous price of BDT 40 a litre. The price of octane has increased by 34 per cent to
BDT 90 from BDT 67 per litre, whereas petrol is up by 34 per cent to BDT 87 a litre. A cylinder
of liquid petroleum gas is now BDT 1,000, up from BDT 600, while a litre of furnace oil is now
BDT 30, up from BDT 20.
Professor M Tamim, Special Assistant to the Chief Adviser on Energy Ministry Affairs,
announced that the Government was left with little choice but to increase the price of
petroleum products, considering the recent surge in commodity prices world-wide that has
been putting severe inflationary pressures on different economies across the globe.
Forex reserve hits all-

all-time high: Foreign exchange reserves of Bangladesh reached an all-time
of USD 6.16 billion last Monday – a result of constant remittance inflows and recent
disbursement of soft loans from multilateral donor agencies.
Bangladesh received remittances worth USD 7.16 billion in the July–May period of the recently
concluded fiscal year, which is a significant 31.14 per cent increase from the corresponding
period in the previous year, as surging remittance numbers continue to be one of the key
drivers of economic growth.
The reserves went up as a result of soft loans worth USD 315 million from The World Bank and
USD 32 million from the Asian Development Bank, in addition to USD 50 million received from
the United Nations for participating in peacekeeping missions.
Trade deficit jumps by 59pc on surging import costs: Bangladesh’s trade deficit increased
by a staggering 59 per cent to USD 4.6 billion in the July – April period, in comparison to USD
2.9 billion in the same period earlier. According to Bangladesh Bank, imports have risen by 24
per cent to USD 15.9 billion, while exports have grown by 14.5 per cent to USD 11.24 billion.
Import bills on consumer goods were USD 2.28 billion, compared to USD 1.1 billion in the
same period last fiscal. Rice and wheat accounted for USD 1.32 billion, compared to USD 399
million. The import of capital machinery fell to USD 1.17 billion from USD 1.29 billion.
Petroleum and oil-related products increased marginally to USD 1.74 billion.
Bangladesh’s trade deficit has increased substantially in a time of growing fear and
apprehension in global markets. The only consolation from this relatively significant deficit is a
combination of soaring remittances and growing foreign exchange reserves.
http://www.newagebd.com/2008/jul/01/busi.html#3
Both local, foreign investment dips – quality of investment also slides: Both local and foreign
investment took a slide in last fiscal year, despite the Government having set a target of
creating about 10 million jobs in the next three years. A recent analysis of Government data
reveals that the downtrend in local investment has continued from the 2006-07 fiscal, as a
result of the failure to properly implement the Annual Development Program.
Besides the downtrend in investment, quality of investment also took a downward dive and it is
reflected in the incremental capital-output ratio (ICOR). Total investment in the last fiscal year
was 24.2 per cent of GDP, slightly lower than the figure of 24.5 per cent in the preceding fiscal.
New Bangladesh Bank monetary policy next week: The Governor of Bangladesh Bank, Dr.
Salehuddin Ahmed mentioned Sunday that the central bank said that a new monetary policy
for the July – December period of 2008 is scheduled to be announced on July 15. He also
mentioned that the new policy would provide incentives to sectors having better growth and
few emerging sectors such as ship-buiding.
http://www.thedailystar.net
14
AT Capital Research
Weekly News Update
Sector News
The assets and liabilities of the now dissolved Bangladesh Telegraph and Telephone
Board (BTTB) were officially transferred to the newly formed Bangladesh Telecom
Company Limited (BTCL) last week. BTCL is planning to enter the capital market by
offloading its shares in phases.
A South Korean bag manufacturing company will invest BDT3.15bn (USD 46mn) to
produce carrying cases, bags and packs. Pungkook Chittagong (Pvt) Co. Limited
(PCCL), a subsidiary of Pungkook Corporation, will set up its plant at the Karnaphuli
Export Processing Zone (EPZ) in Chittagong.
The Chittagong Power Development Board (PDB) will install 350km of new power
distribution lines and renovate 153km old electricity lines in Chittagong division this year.
The BDT 1.18bn (USD 17.22mn) project will provide new power connections to remote
areas in the Chittagong division and reduce the frequency of load shedding in the port
city.
Denmark will provide USD 100mn for a new 3-year project to improve water supply in
EDITORS Dhaka city. The project will assist in the design and construction of a new large water
treatment plant at Saidabad with capacity of 225,000 cubic meters of water per day.
Ifty Islam
Managing Partner The ministries of energy and law are at loggerheads over the adoption of the national
+880 171 584 0112
coal policy that would determine the fate of foreign investment proposals worth around
USD 5.0bn. The law ministry has advised against the clearance for the draft national coal
Syeed Khan policy, prepared by the energy ministry.
Partner
+880 173 005 8921
syeed.khan@at-capital.com After nearly 20 years of experimentation, the government’s donor driven reforms in the
state power sector may take shape next year with the creation of three distribution and
Saif Noman
several power generation companies. The new companies will be formed by demerging
Investment Advisor
+880 173 005 8924 the Power Development Board (PDB).
saif.noman@at-capital.com
A Japanese engineering company has shown keen interest in investing BDT 200bn BDT
Asian Tiger Capital 1.18bn (USD 3bn) to construct a marine drive and a riverside road in Chittagong. Nippon
Partners Engineering Consultants of Japan will conduct the overall survey of the project.
UTC Building, Level 16
8 Panthapath, Dhaka-1215 Internet Service Providers (ISPs) are queuing up to win licenses for providing broadband
Bangladesh wireless access services as the Bangladesh Telecommunication Regulatory Commission
www.at-capital.com
(BTRC) initiated the process for awarding licenses last week.
Bangladesh Medical Services and Technology (BMST) in collaboration with the UK

EDITOR
based Dominion Financials Limited will establish a 500-bed hospital at a cost of USD
Saif Noman 38mn in Dhaka to provide advanced tertiary care at international standards.
Saif NomanAdvisor
Investment
Investment Advisor
+880 173 005 8924 * USD 1 = BDT 68.50
saif.noman@at-capital.com
15
AT Capital Research
Telecommunications
Telecommunications BTCL spins off from BTTB
The Daily Independent, Wednesday 02 July, 2008
The assets and liabilities of the now dissolved Bangladesh Telegraph and Telephone
Board (BTTB) were officially transferred to the newly-formed Bangladesh Telecom
Company Limited (BTCL). BTCL and Bangladesh Submarine Cable Company were
both incorporated as public limited companies, on Tuesday 1 July, in preparation for
future listing. BTCL announced that it would offload shares in the market in phases. The
government now holds 100 percent of the company. BTCL’s net assets are valued at
BDT 15bn (USD 0.22bn), said the Telecoms Secretary.
http://www.independent-bangladesh.com/200807027055/country/btcl-spins-off-from-bttb.html
ROK firm to invest BDT 3.15bn (USD 46mn)

Textiles The Daily Star, Friday June 27, 2008
A South Korean bag manufacturing company will invest USD 46mn to produce carrying
cases, bags and packs. Pungkook Chittagong (Pvt) Co. Limited (PCCL), a subsidiary of
Pungkook Corporation, will set up its plant at the Karnaphuli Export Processing Zone
(EPZ) in Chittagong. An agreement was signed yesterday between Bangladesh Export
Processing Authority (BEPZA) and PCCL.
http://thedailystar.net/story.php?nid=43024
Foreign RMG buyers urged to follow ethical practices

The Daily Star, Sunday June 29, 2008
Local ready-made garment (RMG) exporters yesterday urged foreign buyers to follow
ethical buying practices. The RMG manufacturers and exporters made the plea to the
buyers at a two-day Multi-Stakeholders Forum-Bangladesh (MFB). At a press
conference after the first day's session, the President of Bangladesh Knitwear
Manufacturers and Exporters Association (BKMEA) Fazlul Hoque, who is also the chair
of the MFB, said the continuing cuts in selling prices is hitting profitability of
entrepreneurs.
“We want increased prices from the buyers' end, not only for our profit, but also for the
workers. If we can make profit the wages of the workers will also increase to an extent,”
Hoque said. Despite the increase in production costs of around 15 percent in the last
year intense competition in the sector meant producers had been unable to pass the
higher costs on to buyers, Hoque said. Mentioning the export data of Export Promotion
Bureau (EPB) Hoque said in fact unit garment prices have fallen by 1.5 percent in the
past 12 months.
RMG production costs to go up 15pc on fuel price hike

The Daily Star, Thursday July 3, 2008
The country's garment manufacturers yesterday expressed concern that the production
costs of their exportable apparel items will go up by at least 15 percent due to the latest
fuel price adjustment. The garment manufacturing units are largely dependent on
petroleum products due to erratic gas and power supplies to their units, said the leaders
of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) at a
hurriedly called press conference to react to the government's decision to increase fuel
prices.
The government has increased domestic fuel prices by 33 to 37 percent with effect from
July 1 to adjust prices with those in the international market. The new price of diesel
and kerosene is BDT 55 (USD 0.8) a litre, petrol is now BDT 87 (USD 1.2) a litre, the
price of octane is BDT 90 (USD 1.31) a litre and a cylinder of liquid petroleum gas
(LPG) is now BDT 1,000 (USD 14.60). The BGMEA acting chief said that the apparel
factory owners will have to incur on average an additional cost of BDT 0.5 bn
(USD7.3mn) a month due to this price hike,. The factory owners also complained they
are not getting gas and power in Savar, Mirpur, Ashulia, Gazipur and Narayanganj
16
AT Capital Research
areas to run their plants properly.
Project to ease
ease power crisis in Chit
Chitt
hittagong
Infrastructure & Power The Daily Star, Thursday July 3, 2008
Chittagong Power Development Board (PDB) will install 350 km of power distribution
lines and renovate 153 km old electricity lines in the Chittagong division this year. Once
the BDT 1.18bn (USD 17.22mn) project is implemented, remote areas in the Chittagong
division will get new power connections and the frequency of load shedding in the port
city will decline.
The Greater Chittagong Power Distribution Project (third phase), at a cost of BDT 8.7bn
(USD 127mn) has almost been completed. Under the project, three new 132/33 KV
substations at Julda and Shahmirpur on the south bank of the river at Karnaphuli and
Bakalia were installed and two 33/11 KV substations at Rampur and Muradpur in the
Dhaka were installed.
5 rental plants fail to add power

The Daily Star, Wednesday July 2, 2008
Five rental power contracts awarded to different power companies by Power Cell, of the
Power Ministry, in January 2008, have failed to add power to the national grid 46 days
after they were due to. Of the five, four are operated by Energy Prima, a shell company
of the Hosaf Group.
As per the contract, PDB would penalize each of the defaulting power companies with a
USD 500 fine against each MW of power the contractors failed to produce.
42 perc
ercent raise in power tariff proposed
The Daily Star, Wednesday July 2, 2008
The Chief Adviser's Special Assistant for Power and Energy, Dr M Tamim said on 1July,
there is a proposal pending with Bangladesh Energy Regulatory Commission (BERC)
on a 42 percent raise in electricity tariffs. After a public hearing, BERC will take the
decision about increasing the electricity tariffs.
Octane
Octane now BDT 90 (USD 1.31),
1.31), diesel BDT 55 (USD 0.8)
0.8)
The Daily Star, Tuesday July 1, 2008
The caretaker government increased prices of petroleum products for the second time
during its tenure15 months after the last increase. In the latetest hike the prices were
increased by 33 to 37 percent compared to the previous price hikes of 13 to 21 percent
in April, 2007.
The price of diesel and kerosene increased 38% to BDT 55 (USD 0.8)/litre, octane rose
by 34% to BDT 90 (USD 1.31)/litre, petrol by 34% to BDT 87 (USD 1.27), furnace oil by
50% to BDT 50 (USD 0.73)/litre; and a cylinder of liquid pertroleum gas (LPG) 67% to
BDT 1,000 (USD 14.60).
The price of a barrel of crude oil has risen dramatically to a current high of USD 143
from USD 60, 12 months ago.. Professor M Tamim, special assistant to the chief
adviser of Energy Ministry Affairs said, "We would have to spend BDT 17bn in subsidies
if we did not adjust the petroleum prices for the new fiscal. The government will still
have to spend BDT10bn in oil subsidies despite the latest price hike in the prices of
petroleum products.”
17
AT Capital Research
Rahimafrooz launches 24 hour
our CNG stations
The Financial Express, Tuesday July 1, 2008
Rahimafrooz Group, an automotive and industrial battery manufacturing company, has

launched uninterrupted refill services for CNG run vehicles. The company is offering 24-
hour service and electronic billing in stations under its 'Quick fill' logo. Four refueling
stations - at Tongi, Tejgaon, Biswaroad and Manikganj - have initially been opened
under the Quick fill logo. The group will set up 11 more stations across the country
within one year.
Kumargaon 50 MW rental plant starts supplying electricity

The Financial Express, Monday June 30, 2008
The Energy Prima consortium has started supplying electricity from its Kumargaon 50
MW rental power plant from 29th June, five months after signing a power purchase
agreement (PPA) with the Bangladesh Power Development Board (BPDB). The plant
has started supplying 15 to 20MW of electricity.
The Energy Prima consortium, consisting of local Energy Prima and Hosaf Meter,
claimed that the sixty days delay in installing the plant was caused by delay in handover
of the land by the BPDB. The plant site earmarked by the BPDB, had four warehouses
and 5,000 tonnes of scrap, which had to be removed before initiating work.
Law ministry says 'no' to draft coal policy

The Financial Express, Sunday June 29, 2008
The ministries of energy and law are at loggerheads over adoption of the national coal
policy that would determine the fate of foreign investment proposals worth around USD
5.0 billion. The law ministry has advised against the clearance for the draft national coal
policy, prepared by the energy ministry.
"The law ministry has advised the energy ministry not to adopt any policy but to draft an
act to help the process of coal extraction," energy secretary Mohammad Mohsin said.
The energy ministry spent several years preparing the national coal policy and kept
investment proposals worth several billion of dollars on hold.
Oil hits record highs

Oil prices hit record highs reaching USD 142 this week as a high-level energy summit
between consumers and producers in Jeddah, Saudi Arabia, failed to dampen the
redhot market. Prices moved higher as traders concentrated on fresh violence in
Nigeria, the weak dollar, tight energy supplies and extremely volatile world financial
markets.
More power companie

companies
mpanies in the pipeline
The Daily Star, Saturday June 28, 2008
After nearly 20 years of experimentation, the government’s vaguely perceived donor-

driven reforms in the power sector might take final shape next year with the creation of
three distribution and several power generation companies. The new companies will be
formed by demerging the Power Development Board (PDB).
The three distribution companies to be formed are the South Zone Power Distribution
Company, Central Zone Power Distribution Company, and Northwest Zone Power
Company, while the power generation companies will be based in each of PDB's power
plant zones.
18
AT Capital Research
Japanese co to build BDT 200bn
200bn (USD 3bn) marine drive, river side road in Ctg
The Financial Express, June 27, 2008
A Japanese engineering company has shown keen interest in investing BDT 200bn
(USD 3bn) to construct a marine drive and a riverside road in Chittagong. The
company will construct a 12.5-kilometre long marine drive road comprising four lanes
from Fouzdarhat to Patenga area and a 12-kilometre long river sideroad from Shah
Amanat bridge to Kalurghat bridge.
Nippon Engineering Consultants of Japan will conduct the overall survey of the project
to be financed by the Japan Bank of International Co-operation (JBIC). The survey work
is expected to commence in January 2009, with the report submission scheduled for
November 2009, after which it is anticipated that agreements for the project can be
signed by the end of 2009.
Denmark to provide USD 100mn

100mn for water supply project in city
Financial Express, July 01, 2008
Denmark will provide USD 100mn for a new 3-year project taken to ensure improved
water supply in Dhaka city, reported UNB. The project is providing help in designing
and constructing a new large water treatment plant at Saidabad with a capacity of
225,000 cubic metres of water a day, said a press release.
The project Saidabad Water Treatment Plant Project, Phase II (2008-2011), will be
implemented by the Dhaka Water Supply and Sewerage Authority (DWASA). Interest-
free loans with be provided and grants will are available for monitoring the process and
supervision during implementation of the project.
The project is to be financed by mixed credits from Denmark and is part of a partnership
agreement between the government of Bangladesh and five main development
partners, which provide assistance to urban water supply and sanitation projects in
Bangladesh.
USD 5mn
5mn Danish help for rural water schemes
The Daily Star, July 03, 2008
Denmark will provide USD 4.8 million for a new two-and-half-year project for the
improvement of rural water supply in the three northwestern districts; Rajshahi,
Chapainawabganj and Naogaon. The project will assist in designing and constructing
200 piped rural water supply schemes for around 400,000 people in the region.
The Denmark embassy and the government of Bangladesh have agreed to extend
assistance to the Barind Multi-purpose Development Authority (BMDA) to launch the
project.
The overall objective of the support to the BMDA is to contribute to the provision of safe
rural water supply combined with environmental sanitation and hygiene in the three
districts. The project will be financed through the HYSAWA Fund, which is an
autonomous company established by the government under the Companies Act 1994.
The fund has been established to provide financial support to decentralized rural water
supply and sanitation projects in direct cooperation with the union parishads (UPs) and
local partner organisations.
19
AT Capital Research
Technology HP joins hand with CSL Bangladesh

The Daily Star, June 27, 2008
Hewlett Packard (HP) has appointed Computer Source Limited (CSL), the largest
technology distributor in Bangladesh, as its authorised distributor in the country for HP
Server & Storage products. CSL with its extensive network of resellers in Dhaka,
Chittagong, Kushtia and Rajshahi will extend HP's geographical reach across the
country.
ISPs queuing up to bag broadband licenses

Financial Express, June 30, 2008
Internet Service Providers (ISPs) are queuing up to win licenses for providing
broadband wireless access services as the Bangladesh Telecommunication Regulatory
Commission (BTRC) initiated the process for awarding these last week, officials said.
The BTRC has already prepared the draft regulatory and licensing guidelines and
sought comments from stakeholders. Under the BTRC guidelines the ISPs are allowed
to compete for these licenses while the mobile phone operators are barred from taking
part in the competition.
Existing ISPs will be allowed to provide wireless internet services for next five years
from the day of awarding broadband wireless access service licenses. ISPs, however,
will be allowed to provide wired broadband internet services beyond the five-year's
timeframe, the BTRC official said.
4 pharma firms' double-

double-digit sales growth
Pharmaceuticals The Daily Star, Sunday June 29, 2008
Four pharmaceutical companies out of the top ten Bangladeshi companies achieved
double-digit growth in sales during the January-March period of this year, said global
pharmaceutical market intelligence agency IMS, the global provider of pharmaceutical
market intelligence, in its first quarter report. The report, published recently, said the fifth
largest pharmaceutical company in the country Eskayef posted the best 21.1% growth
followed by Renata 16.2%, ACI 16.2% and Drug International 13.8%.
Other key players Incepta Pharma achieved 6.8% growth while Square Pharma only
2.3%.Two other top ten companies' , Beximco experienced a 42.0% fall , while Acme
faced a 4.9% fall during the period. According to the IMS report, Square continued as the
top player of the market with 18.8% share and BDT 1.81bn (USD 26.4mn) sales in the
first quarter.
Reckitt Benckiser declares 220pc dividend

Reckitt Benckiser (Bangladesh) Ltd has declared a 220 percent dividend for its
shareholders. The dividend was announced at the 47th annual general meeting (AGM) of
the company on Thursday in Dhaka, The company had turnover of BDT 1.53bn (USD
22.34mn) in 2007 representing growth of 28 percent over the previous year.
20
AT Capital Research
Healthcare
Healthcare 500-
500-bed hospital to be set up in city at USD38m
USD38m
The Financial Express, 30 June 2008
Bangladesh Medical Services and Technology (BMST) in collaboration with UK based

Dominion Financials Limited will establish a 500-bed hospital at a cost of USD 38mn in
Dhaka, to provide advanced tertiary care at international standards at reasonable costs.
Officials said that the investment with the financial support of the UK based global
moneylender is the single largest of its kind in the country's health sector that aims to
serve patients who would normally go abroad for treatment.
The Government's Board of Investment (BoI) has already allowed BMST to tie up with
the UK based money lender for establishing the hospital. The local company will borrow
USD 23mn from Dominion Financials Ltd to establish the hospital. Officials of BMST
said it plans to establish the hospital by 2009. The proposed hospital will be the third
largest of its kind after the United and Apollo hospitals. The hospital is expected to
provide a complete range of the latest diagnostic, medical and surgical facilities for the
care of its patients.
21
AT Capital Research
AT Capital Team – Dhaka
Ifty Islam Managing Partner (880)-1730058920 ifty.islam@at-capital.com

Syeed Khan Partner (880)-1730058921 syeed.khan@at-capital.com
Masud Khan Senior Advisor (880)-1920804522 masud.khan@at-capital.com
Akther Ahmed Senior Advisor akhter.ahmed@at-capital.com
Mir Firoz Ahmad, Ph.D. Senior Investment Advisor (880)-1714134552 firoz.ahmad@at-capital.com

Junaid Khan Investment Advisor (880)-1715563100 junaid.khan@at-capital.com
Shahidul Islam, CFA Investment Manager (880)-1713032155 shahid.islam@at-capital.com
Taufique Hasan Investment Manager (880)-1819297044 taufique.hasan@at-capital.com
Saif Noman Khan Investment Advisor (880)-1715058104 saif.noman@at-capital.com
Mohammad Emran Hasan Research Associate (880)-1730058929 emran.hasan@at-capital.com
Syeda Tasnuva Akhter Research Associate (880)-1730058930 syeda.tasnuva@at-capital.com
Ahmad Sajid Research Associate (880)-1730058927 ahmad.sajid@at-capital.com
Abdullah Ibneyy Shahid Research Associate (880)-1730058926 abdullah.shahid@at-capital.com
S Adeeb Shams Research Associate (880)-1713452242 adeeb.shams@at-capital.com
A. M. A. Bari Nahid Research Associate (880)-1715954318 nahid.bari@at-capital.com
SM Rashedul Hasan Research Associate (880)-1711154744 rashed.hasan@at-capital.com
Abdullah-Al-Farooq Research Analyst (880)-1730058933 abdullah.farooq@at-capital.com

Masum Abdullah Rahman Research Analyst (880)-1730058935 masum.rahman@at-capital.com
Tami Zakaria Research Analyst (880)-1730058936 tami.zakaria@at-capital.com
Sanwar Ahmed Research Analyst (880)-1730058943 sanwar.ahmed@at-capital.com
Md. Zahidur Rahman IT Analyst (880)-1730058937 zahidur.rahman@at-capital.com
AT Capital Team – North America

Zarif Munir Senior Advisor +13124044252 zarif.munir@at-capital.com
Professor Jahangir Sultan Senior Advisor +17818912518 jahangir.sultan@at-capital.com
Nasim Ali Senior Advisor +16094772462 nasim.ali@at-capital.com
Iqbal Hossain Senior Advisor iqbal.hussain@doctors.org.uk
© Copyright 2008. Asian Tigers Capital Partners Limited, Level 16, UTC Tower, Panthapath, Dhaka –
1215, Dhaka, Bangladesh. All rights reserved. When quoting please cite “AT Capital Research”. The
above information does not constitute the provision of investment, legal or tax advice. Any views
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Asian Tigers Capital Partners or its affiliates. Opinions expressed may change without notice. Opinions
expressed may differ from views set out in other documents, including research, published by Asian
Tigers Capital Partners Limited. The above information is provided for informational purposes only and
without any obligation, whether contractual or otherwise. No warranty or representation is made as to the
correctness, completeness and accuracy of the information given or the assessments made.
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At Capital Weekly July 07

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At Capital Weekly July 07

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AT Capital Research

Weekly News Update

AT Capital Weekly Update

Key themes in this issue are:

Bangladeshi corporate margins to be pressured by rising energy prices

DSE outperformance of other Asian markets looks unsustainable

Why Bangladesh may benefit from rising Indian economic/market turmoil

Lessons from the 2008 Vietnamese stock market melt-down

Need to develop a domestic institutional client base for DSE

AKTEL-NTT Docomo deal a positive sign for BD private equity

Remittances continue to rise to a new high of $ 8 bn

Professor Jahangir Sultan

Asian Tiger Capital

Bangladesh outperforms other equity markets

LR Global awarded local asset management license – a positive

Bangladesh pharmaceutical sector offers significant growth potential

We believe there is significant potential for Bangladesh in the contract manufacturing/export

Ifty Islam Source: The Wall Street Journal

Potential Tools to manage Capital Flows

Vietnam 2008: A salutary reminder on the challenges of managing capital flows

Vietnam – Lessons for Bangladesh

S tock Market Weekly

13 through direct listing

Turnover in USD Mln

New fund management company starts operation,

Market Cap. Turnover

Turnover in USD Mln

Market Cap. Turnover

Market Summary Valuation Snapshot

DSE market cap

SEC increases the limits of brokers’

Stock trading outside

New fund management company starts operation,

A new asset management company called LR Global Bangladesh Asset Management

Turnover Leaders Best Performers* Worst Performers*

Market Cap. by Sector* Correlation matrix with other indices*

Key macroeconomic indicators Economic

Source: Economist Intelligence Unit

Monetary and Credit Developments

Forex reserve hits all-

Bangladesh Medical Services and Technology (BMST) in collaboration with the UK

ROK firm to invest BDT 3.15bn (USD 46mn)

Foreign RMG buyers urged to follow ethical practices

RMG production costs to go up 15pc on fuel price hike

5 rental plants fail to add power

Rahimafrooz Group, an automotive and industrial battery manufacturing company, has

Kumargaon 50 MW rental plant starts supplying electricity

Law ministry says 'no' to draft coal policy

Oil hits record highs

More power companie

After nearly 20 years of experimentation, the government’s vaguely perceived donor-

Denmark to provide USD 100mn

Technology HP joins hand with CSL Bangladesh

ISPs queuing up to bag broadband licenses

4 pharma firms' double-

Reckitt Benckiser declares 220pc dividend

Bangladesh Medical Services and Technology (BMST) in collaboration with UK based

AT Capital Team – Dhaka

Ifty Islam Managing Partner (880)-1730058920 ifty.islam@at-capital.com

Mir Firoz Ahmad, Ph.D. Senior Investment Advisor (880)-1714134552 firoz.ahmad@at-capital.com

Abdullah-Al-Farooq Research Analyst (880)-1730058933 abdullah.farooq@at-capital.com

AT Capital Team – North America

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