Excessive intervention of SEC leads to continuous fall in DSE

Excessive intervention by the regulator is resulting in continuous fall of index in the Dhaka Stock Exchange (DSE) resulting panic sale by the small investors, experts observed.
The general index or DGEN yesterday saw 116 points or 2.07 per cent fall to end on 5486.43 points while the DSI index fell by 90 points or 1.96 per cent to close at 4493.41 points.
Out of 236 issues traded yesterday 47 advanced, 187 declined and 2 remained unchanged.
Experts said that investors now feeling “nervous” over the frequent regulatory interventions as well as uncertainty over the DSE’s board election.
“General investors are quite nervous and uncertain due to regulatory moves,” said mutual fund operator Yaweer Sayeed.
He agreed that the rumor of postponement of the DSE board elections added to the investor jiters.
On Sunday, the DSE rescheduled the elections for March 21, which was earlier scheduled to be held March 3.
The rescheduling followed a regulator directive making a ‘no-objection’ or ‘clearance’ from the SEC as mandatory before filing nominations.
Meanwhile, brokers said that the market was witnessing a price correction.
Ahmed Rashid Lali, a former senior vice president of the DSE, said that the market was not seeing any major fall.
“Prices of those shares have come down, which got overpricedthe fall is due to price correction,” he told the media Sunday.
Some, however, disagreed, saying a price correction would not last so long. “Price correction can happen for a maximum two days but it’s going on for a week,” Yaweer Sayeed, the top official of AIMS of Bangladesh said.
Meanwhile, brokerage house officials also said that their clients were being very sceptical on puting money on shares.
“Most of our clients were kind of querying about pricesta very few of them were seen interested in buying,” an official of brokerage firm Latif Securities said.
Most of the retail investors were considering to exit from the market for the time being, he said, asking not to be named as he was not authorised to talk to the media.
Market participation has declined significantly as is evident from the falling turnover.
Dhaka Stock Exchange’s turnover dropped to Tk 745 crore on Monday from Tk 959 crore the previous day.
Share prices of banks continued to slide, joined by insurers, power and fuel shares which gained the previous day.
The lone telecom issue, Grameenphone, also suffered a 4.06 per cent or Tk 15.90 decline in prices.
Mutual funds also witnessed a huge slump, an impact of the regulator’s disapproval of AIMS 1st mutual fund’s dividends and issuance of right shares.
On Feb 24, the fund announced 70 per cent stock dividend and 130 per cent right shares upon approval from the SEC.
The market regulator on the same day halted the trading of the scrip in a bid to curtail abnormal price hike.
The mutual fund resumed trading from Monday after its corporate declarations were rejected on Sunday.
Lanka Bangla Finance came out as the turnover leader, followed by Bex Tex, Grameenphone, Beximco and Summit Power.

Courtesy of The New Nation