Regulator moves to cool GP, Marico shares

The stockmarket regulator has placed shares of Grameenphone (GP) and Marico in the spot market from next Monday in an effort to rein in the two companies’ stocks prices, which reached an abnormal high.
Share trading of the companies will continue in the spot market, instead of normal trading board, until further order, the Securities and Exchange Commission (SEC) said in a directive issued yesterday. The latest move came as the previous measures failed to control the share prices, especially of GP.
The news, posted on Dhaka Stock Exchange website yesterday morning, pulled down GP and Marico prices by more than six percent, as many investors tried to exit fearing the latest development would result in undermining the stocks value in the days ahead.
On the spot market, securities are traded for same day trading and cash settlement, without the use of a financial adjustment facility.
Experts said it would put impact in two ways. Firstly, supply of shares would increase, as shares will be ready for buy and sell in the next trading day, while shares are settled in three trading days in the normal market.
Secondly, liquidity flow to the securities would be controlled, as cash or bank draft would have to be deposited to the bourses within one hour after the trading session.
Placing the securities in the spot market is a regulatory measure to control price hike, Salahuddin Ahmed Khan, a former chief executive officer of the DSE, told The Daily Star.
He, however, said it is a temporary measure, which does not work for long, when the market is riding on a forward-looking sentiment. “Until new companies are introduced, the market cannot be controlled by taking short-term steps.” Earlier in the first week this month, the SEC stopped financial adjustment or money netting facilities for GP shares and none was allowed to buy its share against value of sale of other securities within the existing settlement and clearance period.
Merchant bankers have also put the GP in the list of non-marginable securities that means investors are not allowed to seek credit to buy GP shares.
On the DSE yesterday, each GP share fell by 6.27 percent to Tk 361.20, while each Marico share went down 6.09 percent to Tk 466.90.

Courtesy of The Daily Star