Finance ministry finalises 14 decisions to stablise market
Trading at the Dhaka and Chittagong stock exchanges will resume today with the circuit breaker on general indices withdrawn after a two-day trade suspension following a share market debacle and subsequent violent protests by small investors.
The market regulators, as per the directive of the government, had suspended the share transactions at the bourses for two days in a bid to allow the government to find a solution to the current market crisis.
The finance minister, AMA Mhuith, after a series of meetings with top government officials and stakeholders, on Sunday came up with a set of measures to build confidence among general investors, who had got panicked following two weeks of massive slides in share prices.
Thousands of investors staged violent protests as the Dhaka Stock Exchange’s general index fell by 16 per cent in a week due to liquidity crisis in the capital market as large investors remained inactive in share trading after taking hefty profits in December.
Muhith on Sunday assured that the merchant banks would reinvest their profits made from volatile share market in a bid to bring back normalcy.
The finance ministry, meanwhile, prepared the minutes of the finance minister’s meetings on Sunday with stakeholders. In the minutes, the ministry on Monday include 14-point decisions of the ministry to stablise the country’s capital market.
The major decisions include resumption of trading at two bourses on Tuesday, withdrawal of circuit breaker on general index, reducing the range of circuit breaker on share prices, formation of probe committee for the market plunge, formulation of private placement policy, inclusion of a Bangladesh Bank representative in the advisory committee of the SEC, steps to amend the Banking Companies ACT to allow more investment of banks in the capital market and reinvestment of profits made by merchant banks from the capital market.
Other decisions include holding of regular meetings between BB and SEC officials, formulation of a long term policy for margin loan, suspension of IPOs of two companies under book building method, setting up of price earning ratio in line with the current market situation, flexible attitude of the BB towards the financial institutes for their investment in capital market and arranging training for investors.
Salahuddin Ahmed Khan, who teaches finance at Dhaka University, told New Age that the market might see positive behaviour Tuesday (today).
But, he warned that the medium- or long-term measures taken by the government would not be effective if the institutional investors’ participation in the market remains low and they do not go for long-term investment.