At Capital Weekly 29 September 2008

Key themes in this issue are: Global markets: • Congressional negotiators and Bush administration officials have reached an agreement on a USD 700bn rescue plan for the US financial system. • In the light of Thursday's WAMU bankruptcy, the largest bank failure in US history, and the mounting pressure on Wachovia (the fourth largest US bank) any failure to reach a deal would have had such cataclysmic consequences that it had to be agreed. • The global nature of the crisis is underlined by the nationalization of Bradford and Bingley (B&B) in the UK and the collapse in the share price of Belgium's largest bank Fortis. • In Hong Kong, the Bank of East Asia required a massive liquidity injection by the Hong Kong Monetary Authority and share purchases by Li Ka-Shing to bolster confidence. • While one can support the efforts of policy makers to avoid further chaos in financial markets, it is important not to overlook the risk that the financial firefighting may create serious long term problems. • Bank credit risk is escalating - The A2/P2 Spread hit 409bp yesterday. This is literally off the chart compared to any previous period. • US Housing weakness persists - Sales of new one-family houses in August 2008 were at a seasonally adjusted annual rate of 460,000 - this is 11.5% below July data and 34.5% below August 2007 • The Baltic Dry Index has collapsed 42% from its all-time high last November - the risks are for global commodity prices to follow and move sharply lower as the pain spreads from the US to Europe and to Asia and other Emerging Markets. • We provide a recap on the causes of the Great Credit Crunch of 2008 Bangladesh Overview and Special Focus: • In light of the BOI’s statement that it would discourage investment in industries that rely on gas due to depletion of reserves, we reiterate the need to push through the Coal Policy without delay • The retail industry in Bangladesh presents tremendous potential, considering two of the largest drivers for growth within the sector are urbanization and income per capita. • Prospects for Indian Retailing and lessons for Bangladesh • We discuss industry dynamics, constraints and prospects for growth We will not be publishing the AT Capital Weekly next week due to the Eid break. We will however be publishing the AT Capital Renewable Energy Report next week.