6 brokers’ trading suspended for 30 days on market volatility charges; top bosses stripped of responsibilities; book-building system on hold; markets closed on Sunday
The share index breaker failed to prevent a free fall in prices on the Dhaka and the Chittagong stock exchanges yesterday.
The Dhaka stock index had nosedived 600 points before the just-introduced circuit breaker put a stop to trading on the two bourses.
The latest fall prompted the Securities and Exchange Commission to keep trading shut on Sunday and suspend trading activities of six stockbrokers, their managing directors and chief executive officers for 30 days.
The stockmarket regulator also postponed the book building method for initial public offering after a strong criticism for the system’s misuse by some issuer companies.
The stockmarkets saw the share prices slump five minutes into the start of trading.
Trading on the Dhaka and Chittagong bourses started at 1:00pm, instead of 11:00am, in line with a decision of the Securities and Exchange Commission that approved a DSE proposal to cut the transaction period by two hours for now.
The circuit breaker, introduced on Wednesday, was meant to stop the trading after the General Index went down by 225 points but the breaker’s manual operating system failed to do that.
Panic sell-offs by nervous investors triggered the slump, the quickest in the history of Bangladesh’s capital market.
Angry investors took to the streets and vented their frustration on passing vehicles after the market was shut for the day.
They clashed with law enforcers in the financial district of Motijheel.
Investors, who trade from other areas including Dhanmondi and Mirpur in the capital, also clashed with police.
Clashes were also reported in Chittagong, Rajshahi, Barisal and Sylhet, where investors took part in trade through brokers.
With yesterday’s slump, the DGEN came down to 6,326 points, the lowest in six months. The downward trend made the market lose nearly 1,350 points in the last six days.
Market experts put the declining trend down to the liquidity crunch in the secondary market. But the situation has worsened for lack of confidence among investors.
The retail investors got panicked seeing no positive impacts of the regulator’s measures on the market.
“Liquidity flow is slowly coming back to the market. But the main problem is to bring back confidence among investors. It should be the main focus now,” said Akter Hossain Sannamat, managing director of Prime Finance and Investment.
Others say coordinated measures from the government, the regulator and stakeholders can help the market overcome the current situation.
Angry investors said they had no option but to take to the streets to see their capital shrink in the last few days.
“My portfolio value has come down to almost zero. It is driving me crazy,” said a bewildered Shipon Chowdhury, who lost Tk 5 lakh in the last two days.
Many others said they now want the prime minister’s intervention as the measures taken by the regulator have failed to have a grip on the volatile market.
The DSE said the government should punish the persons involved in the stockmarket manipulation.
DSE President Shakil Rizvi said the government has little to do with the share prices that depend on many other variables. But it can punish anyone for violating the law.
“A crisis has arisen for diversion of funds from the market. But the market will rebound soon,” he said.
Within the five minutes, the premier bourse traded more than 58.76 lakh shares and mutual fund units on a value of Tk 68 crore. Losers outnumbered gainers 172 to 8, with two securities remaining unchanged on the DSE.
Meanwhile, small investors called a dawn-to-dusk hartal in Sylhet for Sunday to protest the recent fall in prices on the DSE, reports UNB.
Mashiur Rahman, Prime Minister Sheikh Hasina’s economic affairs adviser, however, was highly critical of the street demonstration by the investors following nosedive of share prices urging all to resist them.
When pointed to the drastic fall, he said there is a pressure on the market, as some investors want windfall gain overnight.
Mashiur was speaking to reporters after inaugurating a flood protection project in Khulna.
According to him, the money pulled in the share market never came to the real investment in the industry.
“So there is no immediate impact of it,” the news agency quoted him as saying.
