Share market investors’ confidence hit the lowest ebb last week as Dhaka stocks kept on plunging in every trading session, prompting the market regulators to halt trading for three consecutive days amid violent street protests by small investors.
The benchmark general index of Dhaka Stock Exchange last week lost a massive 1249.54 points, or 16.49 per cent, the highest ever in a week, as panic-stricken investors went for heavy selling, in most cases offloading their entire stocks.
The severity of the plunge in share prices prompted the market regulators to put a circuit breaker on the DSE general index with effect from Wednesday and take many other measures. But all such efforts failed to lift the investors, many of whom even left the market.
‘Investors’ confidence has been shattered due to the volatility in the market. Liquidity shortage was the main reason for the current crisis,’ said DSE president Shakil Rizvi.
The capital market has been facing liquidity crisis since the middle of December after banks and other big investors virtually left the market by taking huge profits and leaving the general investors with high-priced shares in their hand.
The market opened the week on Sunday with a negative tone, as the DSE general index lost 141 points on the day, following previous two weeks of bear run amid credit crisis.
The index also lost 57 points on Monday, while the daily turnover hit the lowest in nine months at Tk 848 crore, giving clear indication about the liquidity crisis and investors’ lack of confidence in buying shares.
A number of government organisations including Investment Corporation of Bangladesh bought a huge number of shares worth over Tk 400 crores on Sunday and Monday to stop the market from heavy plunge.
But investors, panicked by plunging turnover and share prices, went for heavy selling on Tuesday while the government organisations failed to stop heavy plunge and the general index of the DSE fell by 237.33 points by 1:40pm, prompting the Securities and Exchange Commission to suspend trading for the second time within eight days.
On Wednesday, the four-hour trading at DSE was curtailed by two hours and SEC imposed a circuit breaker on the index, which would automatically halt trading in case the index advances or decreases by 225 points or more.
Within 100 minutes of the day’s trading, the benchmark index fell by 237.77 points or 3.33 per cent and the circuit breaker halted trading.
Hundreds of angry investors went on rampage at Motijheel and surrounding areas protesting the continuous slide.
The market witnessed a dramatic collapse on Thursday. Market fell by 600 points in five minutes after the trading started two hours after the normal schedule. But the trading was immediately suspended.
Thousands of aggrieved investors in Dhaka and elsewhere in the country again took to the street to protest the collapse of the stock market and fought pitched battles with police.
Police in Dhaka lobbed teargas canisters and charged batons on the demonstrators to disperse them. Police also picked up at least 20 demonstrators from the scene on Thursday.
Small investors said that many of them had lost more than 50 per cent of their capital in the current spell of crisis.
Investors also called for the resignations of finance minister Abul Maal Abdul Muhith, Bangladesh Bank governor Atiur Rahman, SEC chairman Ziaul Haque Khandkar and DSE president Shakil Rizvi for their failure to stablise the market.
The SEC also suspended the exercise of book building method for initial public offerings until further notice.
The regulators also suspended six brokerage houses and prohibited their managing directors and chief executive officers from performing all sorts of activities as MDs or CEOs of their respective brokerage houses for the next 30 days, alleging their involvement in creating volatility through aggressive sales.
The regulators have also decided that trading at DSE will not be held today while the finance minister AMA Muhith has invited market regulators, experts and other stakeholders at a meeting today to discuss ways to overcome the current crisis in the stock market.
