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STOCK MARKET MANIPULATION
Can ICB unscramble an egg?
Share Shah
The direct listing of shares has always been an enigma having been introduced by the Finance Ministry to give respite to the conversion of defunct Bank Credit & Commerce International Ltd., into the Eastern Bank Ltd. It has remained an easy way out for the regulators to push their favourite company and thus save time and the rigors of accountability and transparency. Indeed the government has all powers and because of overriding powers can do and undo anything good or bad. And so it did.
Surely SEC would have a very difficult time to give any ratings to Jumuna and Meghna Petroleum. The offer price by the standard SEC reckoning would be set around Taka 30 at the most. SEC would raise its brows about the shameless dilution of stock seven or eight times. Surely SEC staff would want serious answers to many unsaid questions. They would analyse matter based on the existing IPO regulation-all of which can be short circuited by going for direct listing. After all a prospectus is an important legal and binding document and the information document given by the two companies is not.
The stock market debut of two oil companies indeed showed the degree of behind the scene manipulation both by the directors of the company and the monopoly trader ICB. One wonders what is wrong with the regulators who usually talk of fundamentals to be so different this time. At the least the regulators must turn to the regulation and ensure that this is changed to be more equitable. Firstly there is a definite conflict of interest if ICB remains both the seller and the buyer. This status gives it opportunity to manipulate prices openly. Secondly why should there be a single seller. Why can't say, ten and twenty brokers be appointed by the issuer. Thirdly, there should be no interference by the issuer once the offer is opened. And why should there be a cooling off day on the third day. Moreover the selling brokers should ensure that the entire deal is completed within the stipulated time and if otherwise they would be penalised. Preferably they should have a daily quota and there should be no price control.
The doings of ICB has hurt many a small investors who because of the long drawn media hype anticipated a boom and not a burst in the stock prices of these oil companies. It was unfortunate that many were told by the stock brokers that the fundamental value of these stocks were based on the value of Padma Oil which has an absurd price. But there is no liquidity in Padma stock which is a mere fraction of the shares in public hand. I wonder, what is the secret for Bangladesh Petroleum Corporation to keep holding on to the lion's share? Why these shares have not been divested is a mystery. Only a moron would calculate the valuation of these companies based on the current value of Padma Oil which is around Taka 1300. Some people have not forgotten that about 40 years ago the shares of Burma Eastern Ltd., formerly Padma Oil when floated were miserably under subscribed!
One's image is like an egg, once unscrambled you cannot change it back to what it was. Despite the fact that an unscrambled egg has all the ingredients and properties of the original egg, you cannot change it back. ICB a respected organisation should also realise that "you can fool some of the people all the time, and all the people some of the time, but you can not fool all the people all the time." Also those who run the stock exchange must ensure that investors do not keep on burning their fingers. They should put more attention to their work and as elected leaders they should do their job and duty instead of passing their time in the useless task of who gets the sand deal or who gets the brick deal for the new building venture of the exchange. After all most large exchanges of the world are trying to become virtual instead of a concrete jungle. Or else ICB and the leaders of the exchange my dream of a niche market; after Mr. Bush who has said I will concentrate only on those I can fool all the time.
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Tata launches world's cheapest car
Pranab Prakhar in London
With the launching of Tata Nano, the cheapest small car in the world, Mr. Ratan Tata has achieved goals of the Nobel Prize winners --- Prof. Amartya Sen OF India and Prof Muhammad Yunus of Bangladesh --- as its price at UA$2,500 is closer to a motorbike or a scooter.
Tata Nano car will fulfill decades of cherished desire of two wheeler riders moving into car with marginal extra cost in the countries of Afro Asian Continent. This is a great revolution in private transport sector in the world.
Revolutionary economic theories of two Noble Laureates from South Asian materialised in the fast lanes of Ratan Tata's NANO.
The 1998 Nobel Prize winner for Economics was Prof. Amartya Sen, India, for his contribution to welfare economics.
The Norwegian Nobel Committee at that time noted while conferring him the award: "His felicitation was for several key contributions to the research on fundamental problems in welfare economics. His contributions ranged from axiomatic theory of social choice, over definitions of welfare and poverty indexes, to empirical studies of famine. They are tied closely together by a general interest in distributional issues and a particular interest in the most impoverished members of society".
The 2006, Noble Peace Prize was given to Prof Muhammad Yunus, Bangladesh, and Grameen Bank, of which he was the founder, for his efforts to create economic and social development from below. The Norwegian Nobel Committee at that time noted in their Press Release while conferring him the award, "Lasting peace can not be achieved unless large population growths find ways in which to break out of poverty.... Development from below also serves to advance democracy and human rights".
Interestingly both of these Nobel Laureates had seen for decades the challenges faced by third world country and developing economies of South Asia and probably made it their laboratory for progress and development apart from the basis for their study and regeneration.
Almost in the same time frame, i.e., between 1998 and 2006, a passion and dream was shaping up in the mind of the Chairman of Tata Motors, Ratan Tata and it was how to find a synergy between 'welfare economics' of the Noble Laureate Prof. Amartya Sen and also how to utilise the Noble Laureate Prof Muhammad Yunus' ideas on 'efforts to create economic and social development from below'.
With the Launch of Tata Nano, the cheapest small car in the world, Mr. Ratan Tata has achieved goals of both the Noble Prize winners and in fact far exceeded it by putting together the logistics and support system and eventually manufacture car at the price closer to a motorbike or a scooter. In reality this cheapest car is a tribute to the concepts of Prof. Amartya Sen and Prof Muhammad Yunus related to the utility of welfare economics where large population finds growth and development to break out of poverty.
Low cost Airlines in air and Tata Nano on roads are the latest success stories of Indian Corporate in the 21st Century which the world will be proud to be associated with and lap the successes coming out of it and not to forget, most importantly try to emulate these success stories. The flag bearer of economic success of the world in the 1st decade of 21st century was digital sphere. Now in the 2nd decade of 21st century that baton of world economic success will be attributed to the low cost travel revolution brought by Indian aviation in air and Tata Nano on the roads.
The writer is a London-based journalist-analyst with eight years of professional experiences in India, UAE & UK. His contact: contactpranabprakhar@yahoo.co.uk.
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COMMODITY SCARCITY AND INFLATION
The year of re-thinking basic premises?
Martin Khor
The start of the New Year was marked among other things by the price of oil touching the US$100 a barrel level. At the same time, the price of crude palm oil is also hitting historically high levels.
These events as 2008 phased itself into our lives served to highlight some of the new realities the world will have to face - an increasing scarcity of oil, a looming energy crisis, the depletion of natural resources, higher prices of food and commodities, and a deepening spiral of environmental problems, with a stress on global warming.
The $100 a barrel oil price may or may not be maintained this year, as some analysts predict a slight decline later in the year. But there is no doubt that from now on there will be more scarcity of oil especially in relation to demand.
The analysts talk of 'peak oil' - the moment when world petroleum production hits its peak and then will decline, in some places steeply, from then on.
Some estimate that we have already reached that moment, while others predict it will come within a few years. Oil gets more and more difficult to extract as the best located ones have already been taken out. The cost of extraction and the price will thus tend to increase sharply.
In Malaysia, oil has been a major source of exports, government revenue and economic growth for decades. But its heyday is past. The Deputy Prime Minister Datuk Seri Najib Razak had revealed that "If we don't find new reserves by 2011, our oil imports will exceed exports."
Indonesia some years ago already reached its 'peak oil' point, and today it is a net oil importer. It will be Malaysia's turn in just a few years.
The fast rising cost of oil is already causing many ripples. It is contributing to inflation through raising the production costs in many products.
For example, the high oil price is making it more profitable to produce bio-fuels, and farms in some countries are switching from growing crops for food to crops for bio-fuel. This contributes to rising prices of some food items.
The demand for bio-fuels is said to be a major reason why the prices of edible oils has been jumping. By the end of last year, the prices of palm oil had risen 56 per cent and of soybean oil by 62 per cent compared to the previous year.
The inflation in food prices is causing alarm if not to policy makers then certainly to consumers, especially those that are not well off. There have been riots in various parts of the world when the prices of bread or flour were raised.
Commodity prices are rising not only due to increased demand, especially from big countries like China and India, but also because of the reduced ability of nature to supply commodities due to the limited and decreasing stocks of land, forests, minerals, metals and marine life.
Evidence of humanity's abuse of the environment is mounting. This is the generation that will suffer the effects, while the next generation will face even more severe consequences.
Last year's four reports by the Nobel prize-winning Inter-governmental panel on climate change have sealed the debate on whether climate change is taking place.
A 'paradigm shift' is now rapidly taking place that will hopefully change the way we look at and treat nature and the environment.
There is simply no way in which humanity can continue 'business as usual' in spewing out hundreds of millions of tons of carbon dioxide and other Greenhouse gases into the atmosphere, and hope to sustain a decent standard of living into the future.
Climate scientists believe that global emissions must peak in the next 10 to 15 years and then go down significantly to a level in 2050 which is 50-85 per cent below 1990.
Can this be done, and through which technologies? How is the burden of change to be distributed, among countries and within countries?
Will the rich countries, and the rich within each country, try to maintain their luxurious lifestyles and push the burden onto the developing countries and onto the middle class and the poor in each nation?
Should we take the approach (now prevalent, for example in the United Nations climate change negotiations) that we should only change the way in which things are produced, and still maintain current lifestyles?
For example, to assume that every family should own a motorcar (or even two), and what we need to do is to make cars more energy-efficient and use non-carbon fuels.
Or do we need to question and change lifestyles? For example, that efficient public transport should be developed so as to reduce the need for private cars.
Should we let the economy continue to run on the basis of the insatiable demand of fashion and status driven consumers, whose motivations and criteria of success are cultivated by the advertisements of companies that need to sell more to survive and thrive?
Or to re-think human values and life's priorities, and reshape the way economies and societies are run?
These are some of the big issues that are prompted by the onset of the peak-oil era, the energy shortage, and the larger crisis of climate change.
The year 2008 is a good time to start discussing the premises of the modern world, if we are serious about tackling these deep-seated multiple crises.
- Third World Network Features
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Summit Group's Aziz Khan refutes ACC allegation
Holiday Desk
Muhammed Aziz Khan, Chairman of Summit Group, has denied the ACC's allegations and has stated that the Wartsila Power Development Consortium, presently known as Khulna Power Company Limited was the lowest bidder as per the terms of the tender conditions, says a press release issued by the company.
It says, Khan informed the media over telephone on last Tuesday. He further said that international auditors and financiers have confirmed that the Wartsila Power Development Consortium was indeed the lowest bidder. A declaration suit has been filed with the District Court of Dhaka, in order to establish his (Aziz Khan's) claim that the Wartsila Power Development Consortium's bid was the lowest.
He has also clarified that the Tk. 3 crore was given as a donation for a public trust, namely the Bangabandhu Memorial Trust, in order to establish the Bangabandhu Museum. No undue favor was received or necessary from the former Prime Minister of Bangladesh, he added.
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