The New Nation - Internet Edition

Oil price falls 3 pc on recession fears

Reuters, Singapore

Oil fell for a third day on Thursday, plumbing a 13- month low near $72 as commodity investors again rushed for the exit on fears of a collapse in demand growth, with the world economy tilting toward recession. Bleak US economic data and warnings from the Fed that tough times are not over led Wall Street and Japan's Nikkei to their worst day since the 1987 stock market crash, wiping out earlier optimism fed by government steps to avert a financial meltdown.

US crude for November delivery fell $2.44, or 3.3 percent, to $72.10 a barrel by 2:15 a.m. EDT. The front-month contract has lost nearly a third in value in three weeks, the steepest such decline since it began trading in 1983. London Brent crude fell $2.31 to $68.49.

"The oil markets are now highly correlated to the stock markets. Everyone now uses the stock markets to gauge the health of the economy," said Clarence Chu at U.S.-based options trader Hudson Capital Energy. Crude now stands more than 50 percent off its July peak above $147, and analysts have scaled back global demand growth estimates after a recent slew of gloomy data that has overshadowed OPEC's talk of possible production cuts and a hurricane that is disrupting Caribbean refining operations.

Japan's crude oil inventories hit a 14-month high last week as crude runs stayed low, in part due to slack domestic demand, industry data showed on Thursday.

JP Morgan cut its average oil price forecast for 2009 to $74.75 a barrel, and the Organization of the Petroleum Exporting Countries also reduced its forecasts for world demand for crude next year in its latest monthly report.

The cartel meets in November in Vienna to assess the global financial crisis's effect on the oil market, with growing expectations it will want to lend support to a market that has been swept up in the deleveraging across commodity markets.

The Reuters-Jefferies CRB index tumbled 4.5 percent on Wednesday to its lowest in three-and-a-half years.

"Sentiment is just so bearish. I would think $70 is a pretty strong support, but the way the market is selling down, we just don't know," Chu said.

Venezuelan President Hugo Chavez said oil prices would probably keep falling as the US economy headed south.

"The price of oil is falling? Yes. The price will carry on falling? Probably. But Venezuela will not drown," he said. Venezuela is one of the United States' biggest oil suppliers, with about half its government revenue derived from oil.

US weekly oil inventory data due later in the day is expected to show that crude oil stocks probably rose for the third straight week, gaining 1.9 million barrels, while distillate and gasoline stocks also increased amid weak demand, an expanded Reuters poll showed.

The data is to be announced at 11 a.m. EDT, a day later than usual due to Columbus Day on Monday.

Hurricane Omar, which disrupted shipments from Venezuela this week, strengthened into a major Category 3 storm on Thursday as it headed toward Puerto Rico and the northeastern Caribbean, but was on a northeast trajectory away from the US Gulf, the National Hurricane Center said.

Processing units at the 500,000 barrel-per-day Hovensa refinery on St. Croix in the US Virgin Islands, a large supplier of gasoline and heating oil to the US East Coast, were being shut down ahead of Omar's arrival, Hess Corp said.

Cairn price plan rejected

Business Report

The government has rejected a proposal from Cairn Energy that has upped a previously agreed price for potential gas finds by the British company in two offshore fields.

"We discussed the Cairn proposal. If the company can confirm commercially recoverable reserves, only then can we consider or discuss the proposal," energy secretary Mohamamd Mohsin told bdnews24.com after a meeting at the ministry Wednesday.

Another official, who declined to be named, said the meeting termed the proposal "still premature".

The decision means Cairn will have to do a 3D seismic survey in the Bay without having secured any commitment from the government to pay the price in case of a find.

Cairn proposed that the government or a third party pay a price higher than the rate agreed by PSC if the company strikes gas, after determining that costly 3D surveys would have to be undertaken in the Mognama and Hatia fields.

Petrobangla said Cairn, having failed to discover gas by sinking two exploratory wells in the Bay of Bengal, is looking to the technologically more advanced 3D surveys.

Cairn told Petrobangla that it had already spent $117 million on the two wells and would have to spend another $30 million on the new surveys.

If gas is discovered, moreover, another $100 million would be required to drill wells and set up offshore platforms, Cairn argues.

The gas exploration company claimed in its price hike proposal that it would not be a profitable investment if gas was sold at the PSC rate.

If the government failed to pay a higher price, Cairn insisted on the right to sell the gas to a third party.

Petrobangla says its production sharing contract with Cairn sets a maximum rate for gas at $120 for a thousand cubic feet.

The Scottish company now extracts 38 million cubic feet a day from the country's only offshore gas field.

Markets retreat after gains

Business Report

Markets across the country lost after two days of rally as a selling spree caused the indices to close lower.

Profit-taking led almost 70 percent of the traded issues on the country's twin bourses to fall from the previous day.

Brokerage house officials termed the sell-offs as usual after days of gains.

"A sell-off was anticipated as the market was on a bullish trend for the last two days," an official of brokerage house IDLC Securities the reporter.

Most issues in banks, mutual funds, insurance and non-bank financial institutions lost on Wednesday while the blue chip shares were the buying favourites.

Dhaka Stock Exchange's benchmark DGEN or general index shed 5.27 points or 0.17 percent to finish at 2925.97 while the DSI or all share price index ended on 2426.73, edging down 4.76 points or 0.19 percent.

The blue chip, DES-20 however, gained 10.54 points or 0.42 percent to 2500.55.

Meanwhile, huge losses in banks, non-bank financial institutions and mutual funds caused indices on the Chittagong Stock Exchange to finish downbeat.

The CSCX or selective categories index fell 23.41 points or 0.39 percent to close at 5910.44.

The CASPI or all share price index finished at 9039.50, declining 34.02 points or 0.37 percent. The blue chip, CSE-30 ended 24.68 points or 0.31 percent lower on 7896.61.

Turnover at the DSE amounted to Tk 5.11 billion from trading of 33,142,246 traded shares while the port city bourse saw 6,643,986 shares changing hands with a turnover of Tk 812.434 million.

Losers took a strong lead over gainers on the DSE by 155 to 76 with six issues remaining unchanged.

Of the traded 147 scrips on the CSE, 107 declined, 36 advanced and four held steady.

Titas Gas topped the turnover board on the DSE with trading worth Tk 926.48 million. It rose 6.30 percent to Tk 535.

Second in line, Beximco Pharmaceuticals ended on Tk 178.80, up by 4.43 percent while Beximco followed it to increase 3.30 percent to Tk 250.

Market major Square Pharmaceuticals also gained 3.35 percent to Tk 3340.75.

ACI slipped 0.46 percent to Tk 597.10.

Among the other scrips on the turnover board--Lanka Bangla Finance, AIMS 1st Mutual Fund and Summit Power also lost due to profit taking.

Call to ensure business friendly environment

Business Report

Businessmen in a view exchange meeting called upon the government to ensure the business friendly environment in the country.

Businessmen are affected by the slack financial situation of the country. They urged the government not to harass and arrest anyone on the basis of inference.

Industrialists and Businessmen Welfare Foundation organised the view exchange meeting on October 14 at a local hotel in the city.

Former Secretary General of the government Shah Abdul Hannan was present as the chief guest in the meeting presided over by Kazi Harun-ar-Rashed, Secretary General of the organization, while Rois Uddin, Rafiqunnabi, Abu Hurayirah, former Vice President of Dhaka Chamber and Md. Shahidul Islam also addressed it.

Shaha Abdul Hannan said Economy is a vital factor in the current world. We have to perceive the reality of the present world. He said, we should not believe in propaganda. The fact should be justified before taking any decision. The theoretical base of Islamic economy has been established.

Islamic Banks, Insurance and financial institutes are gradually rising. Islamic Economy has been embedded in the current world.

He said, Islam does not permit hoarding and smuggling. We have to orgal1lze a movement against the unfair means. We have to give up advertisement harmful to humanity.

Kazi Harun-ar-Rashed in his presidential speech said that the economy during the regime of two years of the current government is very disappointing. The GDP of 2007 is less than that of 2005. People's savings has reduced because of abnormal price hike.

Md. Sahidul Islam said a sound environment for the conducting trade and commerce should be ensured. Government should take pragmatic and time worthy steps to boost up the economy. Manifold programs should be chalked out for the proliferation of trade and commerce all around the world. Now people are depressed.

Reducing the depression now it is essential to bring solvency among the people.

Asian markets tumble; Nikkei falls 11 pc

AP, Hong Kong

Asian stocks tumbled Thursday, with Tokyo's market plunging more than 11 percent, after another dive on Wall Street as worse-than-expected data about the U.S. economy heightened fears of a global recession.

Japanese Prime Minister Taro Aso blamed the renewed drop in markets on an "insufficient" U.S. bailout plan totaling $700 billion.

"Since it was insufficient, the market is again falling sharply," Aso told lawmakers. He did not elaborate.

Tokyo's Nikkei 225 stock average slid 1,089.02 points, or 11.41 percent, to 8,458.45, its biggest one-day drop since the stock market crash of October 1987. In South Korea, the main index dropped 9.25 percent after Standard & Poor's said it may downgrade the credit ratings of seven of the country's major banks. The ratings agency warned the credit crisis could make it difficult for the companies to refinance maturing debt. Every other key index was deep in the red, with Hong Kong off 6.2 percent, Australia down 6.7 percent and Singapore losing 7.3 percent.

Investors were unnerved by U.S. data showing the country's retail sales fell 1.2 percent in September, almost double the 0.7 percent decline analysts expected - clear evidence that consumer spending, which accounts for more than two-thirds of U.S. economic activity, was weakening.

That was followed by more bearish data from the U.S. Federal Reserve that showed the economy continued to slow in the early fall as financial and credit market problems took a turn for the worse.

All told, the readings provided some of the most ominous signs to date that the world's largest economy - a critical export market for Asia - was sliding into recession, if not already in one.

"Sentiment is deteriorating very fast. People are losing what little confidence they have on a day-by-day basis," said Jacky Choi, a Hong Kong-based fund manager at Value Partners Ltd., which manages about $5 billion in Asia. "Everyone is very worried about the economy in the U.S and around the world." In New York on Wednesday, the Dow Jones industrial average ended down 733.08, or 7.87 percent, at 8,577.91 - its second-biggest point loss ever.

The massive selling accelerated as U.S. Federal Reserve Chairman Ben Bernanke warned in a speech Wednesday that patching up the credit markets won't provide an instantaneous jolt to the economy.

Fears about the outlook for the world economy have overtaken the relief the markets breathed at the start of the week on the unveiling of a series of bank rescue packages from governments around the world. On Tuesday, the U.S. government followed Europe's lead and announced it will pump some $250 billion into shares of its leading banks, including JP Morgan Chase & Co., Bank of America Corp., Goldman Sachs Inc. and Citigroup Inc.

That money is part of the $700 billion in public funds the U.S. government will use to buy bad mortgage-related securities and loans from troubled financial institutions.

The panic selling in Asia hit many sectors. Export-linked shares such as top Japanese automaker Toyota Motor Corp., which was off 5.8 percent, retreated on worries about declining U.S. demand.

Resource firms slumped along with global commodity prices, with BHP Billiton Ltd., the world's largest mining company, losing 13 percent. In financials, KB Financial Group Inc., the holding company for top South Korean lender Kookmin Bank, lost almost 15 percent. The market tailspin helped support lending rates Thursday, showing that banks were still scared to lend money to one another - one of the core problems of the financial crisis.

The Hong Kong interbank offered rate, known as Hibor, for three-month loans ticked up slightly to 4.35 percent after easing the past couple of days.

Meanwhile, insurance policies against companies failing to make good on their debt, known as credit default swaps, were more expensive - a signal that firms believe the risk of default is growing.

Oil prices continued to fall. Light, sweet crude for November delivery slid $2.43 to $72.11 in Asian trade on the New York Mercantile Exchange. Overnight, the contract fell $4.09, or 5.2 percent, to settle at $74.54 a barrel.

The U.S. dollar edged up to 100.15 yen. The euro fell to $1.3380. The South Korean won plunged 9.7 percent to 1,373 to the U.S. dollar. South Korea's currency has fallen 31.8 percent so far this year.

Shahjalal Islami Bank's 96th Board Meeting held at Jessore

The 96th meeting of the Board of Directors of Shahjalal lslami Bank Limited (SJIBL) was held at a Hotel in Jessore on October 8. The meeting was presided over by the Chairman of the Board of Directors Alhaj Akkas Uddin Mollah, The board approved a number of' investment proposals and discussed various issues relating to policy matters of the Bank.

Among others Vice Chairman of the board Alhaj Mohammad Farooq, Directors Alhaj Sajjatuz Jumma, Alhaj Md. Solaiman, Engr. Md. Towhidur Rahman, Alhaj Abdul Halim, Alhaj Rukun Uddin Khan, Alhaj Md. Abdul Barek, Alhaj Khandoker Sakib Ahmed, Managing Director Muhammad Ali and Deputy Managing Directors Md. Jillur Rahman and Md. Mukhter Hossain were present in the meeting.

India's Jet Airways to lay off 1,100 more employees

Reuters, Mumbai

India's top private carrier Jet Airways has decided to lay off 1,100 additional employees in the next few days, a top official said on Wednesday.

Earlier in the day, Jet said it has retrenched 800 flight attendants and suspended its expansion programme, adding that it will also cut flights because of a slowdown in demand.

The additional job cuts would be across all categories and departments, Executive Director Saroj Datta told reporters in a televised press conference.

Social Investment Bank holds training on ICT Operations

Business Report

A training course titled "ICT Operations in SIBl" organised by training institute of Social Investment Bank Ltd was opened on October13 at Bank's Head Office. 30 Officers from different branches and Head Office attended the course. SIBL Chairman Abdul Awal Patwary inaugurated the course as chief guest. Managing Director KM Ashaduzzaman and Deputy Managing Director Abu Sadek Md Sohel were present as special guests in the opening ceremony of the course.

SIBL Chairman Abdul Awal Patwary called upon the participants to work hard with honesty and loyalty for improvement of the institution. Managing Director KM Ashaduzzaman asked SIBL Officers to equip themselves with proper knowledge to face the 21st century Banking challenges. Akhtar Hussain, Principal of SIBL training Institute and other Senior Executives and Officers were present in the inaugural ceremony.