Key index of Dhaka bourse plunges 180 points
No efforts from the regulator and the private sector proved effective to pro up the stumbling stockmarket, which yesterday slipped again by more than 3 percent.
Owners of commercial banks, under their platform Bangladesh Association of Banks (BAB), decided on Sunday to launch a Tk 5,000 crore fund to give a financial support to the stockmarket facing a liquidity crisis.
But the move also failed to leave any long-term impact on the market.
The key index of the Dhaka Stock Exchange, DGEN, came down to 5,473 points after plummeting 180 points.
The BAB will sit with the Securities and Exchange Commission today to discuss the Tk 5,000-crore fund.
Last week, Association of Banks, Bangladesh (ABB), a platform of the chief executives of the banks, also decided in principle to make new investment in the market, within permissible limits.
Before that, a series of regulatory measures to bring back normalcy to the market was surpassed by the chronic liquidity crunch in the bourses.
The regulatory measures included the reinstatement of 10 percent tax rebate facility for stock investment, withdrawal of a 10 percent tax on mutual funds income, reduction of tax at source on brokerage commission by half and formation of an advisory council.
All the initiatives left little impact on the market that witnessed only some occasional gains, analysts said.
While the bankers had promised to inject fresh money to the market, the bank owners decided to launch a market stabilisation fund, which is contradicting, they said.
If the banks can sponsor a fund then why they are not injecting the money into the market through their own portfolios, they questioned.
“The news of the formation of the mutual fund by the bankers prompted the market to fall further,” said Prof Mahmood Osman Imam, who teaches finance at Dhaka University.
“The banks should go for buying shares in their portfolios to boost the investors’ confidence,” said Osman, also a member of the index development committee of the DSE.
LankaBangla Securities, a stockbroker, in its regular market analysis said euphoria of investors started evaporating from Sunday afternoon while bankers retreated from their earlier promise.
“The investors booked profit and some went for panic sales speculating no tangible impact of the stabilisation fund,” it said.
The investors took pessimistic view after the declaration, sensing no immediate solution, the stockbroker added.
Earlier, a same nature Tk 5,000 crore Bangladesh Fund was launched to inject liquidity into the market, but the fund tangibly failed to bring liquidity and confidence.
Activities declined on the DSE yesterday with turnover, volume and trade going down by 32 percent, 31.21 percent and 2 percent respectively.
A total of 1.15 lakh trades were executed, generating a turnover of Tk 419 crore. Only 13 shares gained, while 242 declined and one remained unchanged.
-With The Daily Star input
