Persisting panic selling pressure dragged down the benchmark DGEN index below the 6000-mark yesterday, after nine months, adding further fuel to the protest fire that has already engulfed the streets for the last seven days. Thousands of small investors, fuming at the series of plunges in share prices, ran amok – clashing with policemen, setting fire to a multi-storied building, ransacking scores of vehicles, brokerages houses and other business establishments.
The DSE General Index (DGEN), the main gauge of the market, closed at 5,579.50, recording a steep fall of 7.81 per cent, or 472.90 points.
It was the third largest single-day fall, since the circuit breaker mechanism had been introduced in January 19, 2011, to prevent any large fall in the market.
The DGEN has lost more than 37 per cent since December 5, when it had hit a record high, and in the last nine trading sessions, it has shed 2,000 points or 26 per cent. The slump followed an announcement by the Securities and Exchange Commission that the government has decided to postpone a long-promised listing of 21 state-owned companies (SoEs). Losses were recorded across the board, with banks, telecommunications and power shedding more than 7 per cent each.
Eastern Bank was the biggest loser, shedding 10.9 per cent, despite declaring a 55 per cent stock dividend.
Volume of trade also tumbled as turnover stood at Tk 6.6 billion, down by 7.4 per cent over the previous session. An investor, tears rolling down his chin, cried, “I’ve become completely bankrupt.”
Several brokerage firms have suspended trading, as network cables were burnt due to arson in the capital’s Modhumita Building.
Police charged batons to dispersed protesters, in pitched battles that choked traffic for about four hours. More than 50 people were detained on charges of vandalism. Hundreds of investors also staged demonstrations in the Chittagong Stock Exchange. The investors halted trading in at least eight brokerage houses, including Kabir Security, Lanka-Bangla, IDLC and Chittagong Capitals, at about 12pm, as prices plunged sharply.
Rehman Sobhan, director of think tank, Centre for Policy Dialogue (CPD), had described the stock market as a ‘casino’, leading to a negative impact on the market, said a broker.
The government has decided to suspend offloading of 21 state-owned enterprises (SoEs) in the falling market. Finance minister AMA Muhith said, “We decided to suspend offloading SoEs, as some players were intentionally selling shares based on news of offloading of shares in SoEs.”
“When and how the shares of SOEs will be offloaded will be decided after February 20,” he said.
Analysts said the listings of SoEs have been postponed due to unfavourable market conditions and fears about the impact of new listings. On February 10, finance minister AMA Muhith had told reporters that authorities had decided to offload shares in 21 state-owned enterprises, within this month, in the wake of turmoil in the capital market.
Investors, who have not received any positive assurance from the government, demanded the government come up with a solution to restore confidence in the market. Banks and other financial institutions, some of which had invested 75 per cent of their deposits in the stock market in the past, are now holding back on further investments, leading to panic among individual investors.
Clashes between distraught investors and police have become regular occurrences in recent weeks.
On January 25, the government had formed committee that is now investigating the collapses in share prices and will submit its report within two months.