Investors rally as DSE sees record plunge

Hundreds of investors on Sunday staged a rowdy demonstration in front of the Dhaka Stock Exchange building as the bourse experienced a record plunge following a series of stringent directives of the Securities and Exchange Commission and the Bangladesh Bank.
The DSE general index lost 551.77 points, or 6.72 per cent, to close the day at 7,654.40 points. It is thehighest single-day fall in the history of the bourse.
The DSE index fell by 284 points on December 13 last and earlier, on November 6, 1996, it dipped 233 points.
After the DSE index had shed 311 points by midday, investors on Sunday blocked the road near the DSE building at 12:08pm by setting fires to tyres, suspending all traffic movement on the road. The demonstrators also put the effigies of the SEC chairman and the DSE president on fire at 12:40pm.
Investors became restive and took out another procession after the DSE index had lost 340 more points by 2pm. They tried to enter the DSE office to discuss the situation with officials of the bourse but the officials closed the door on their face.
The traffic movement on the road in front of the DSE building resumed at 2:30pm with the help of police and the Rapid Action Battalion.
According to market analysts, most of the investors were panicked on the day as most of the brokerage houses, driven by the SEC directive to double their deposits from January 2 for any additional trade exposures, influenced them to sell their stakes off.
The recent liquidity crisis in the banking sector following the Bangladesh Bank’s move resulted in a liquidity shortage in the capital market that made investors worried and go for panic-selling, the analysts added.
The consultative committee of SEC sat in an urgent meeting at 12pm and postponed the directive on member’s margin to influence the investors.
Apel Mahmud, a member of the Small Investors’ Association of Bangladesh, claimed that the SEC created a panic in the market by issuing a string of short-term stringent directives to make opportunities for market manipulation.
Apel also alleged that ‘SEC members Mansur Alam and Mahmud Yasin Ali and DSE president Shakil Rizvi deliberately manipulated the market.’
‘We demand resign of those SEC members and the DSE president,’ he said, adding that most of the small investors wanted the government to take initiatives to sustain and develop the capital market.
Mansur Alam told New Age, ‘I cannot say any thing about this matter.’
Khandokar Teenvir Ahmed, another small investor, said the finance minister had also helped create the panic in the market by declaring that the government within 20 days would offload 50 per cent of its stakes in the state-owned enterprises in the capital market that resulted in a massive slide in SoE share prices.
The consultative committee of SEC on Sunday decided to increase the margin loan ratio to 1:1.50 from 1:1.
The commission also postponed the net asset value-based margin loan evaluation system. For example, if the market price of a share is Tk 500, an investor will get a Tk 750 margin loan.
The commission postponed the net asset value-based margin loan system to keep up the market, SEC executive director Anwarul Kabir Bhuiyan told New Age.
Small Investors’ Association of Bangladesh member Apel Mahmud quoted Anwarul Kabir as saying that SEC members Mansur Alam and Mahmud Yasin Ali created a panic in the market prompting a panic selling.
But Anwarul Kabir said, ‘I did not tell the members of the Small Investors’ Association of Bangladesh that SEC members created panic in the market.’
The daily turnover at the DSE on Sunday was Tk 1,486.81 crore, down by Tk 216.87 crore from that of the previous trading day.
Investors also took to the street and staged demonstration in Rajshahi.
Our staff correspondent in Rajshahi reports: Hundreds of investors of Rajshahi city took out a procession from the Investment Corporation of Bangladesh trade centre at around 1.30pm on Sunday and, after parading the major roads of the city, held a rally at Saheb Bazar Zero Point.
At one stage, they went back to the ICB trade centre and confined the manager of ISTCL, the associate institution of the ICB, to his office for some time. Keep on reading