Sunday, June 16, 2024

Stock index hits 2-year low

Prompts agitating investors to demo in front of SEC
Capital market investors on Monday staged demonstrations on the streets in Motijheel and in front of the Dilkusha office of the Securities and Exchange Commission as the stock prices on the Dhaka bourse went on a free fall and its general index fell to below the 5,000-point-mark for the first time in the past two years on the day. The benchmark general index of Dhaka Stock Exchange, or DGEN, lost 3.26 per cent, or 164.71 points, on Monday to close the day at 4,877.52 points on panic
selling. The index on the previous day shed 3.20 per cent, or 166.72 points.
DGEN had stood at a higher than Monday’s level of 4,876.25 points on January 17, 2010.
As the index had lost about 220 points by around 11:45am on Monday, panic drove investors out of different brokerage houses on the streets.
They halted the traffic on the road from Shapla Square to Ittefaq crossroads and formed a human chain in front of the DSE building. The agitating investors also brought out processions at regular intervals that paraded the road between the DSE building and the Bangladesh Bank head office.
The demonstrating investors blasted finance minister Abul Maal Abdul Muhith  and prime minister’s finance adviser Mashiur Rahman and termed them ‘mentally retarded’ and ‘shameless’.
‘The finance minister has crippled the country’s economy and the capital market by following the advice of the prime minister’s finance adviser,’ said Bangladesh Capital Market Investors’ Council president Mizanur Rashid Chowdhury.
He also alleged that the government had no genuine intention to stabilise the market, adding, ‘if they had, the market might not have improved but it would not have seen the share prices going on such a free fall’.
The demonstrators demanded immediate resignation of Muhith, Mashiur Rahman, Bangladesh Bank governor Atiur Rahman, and DSE president Shakil Rizvi for their failure to stabilise the market.
They also demanded that the government should take steps to force the banks invest in the capital market up to their limit and to start investing in stocks from Tuesday as per their declaration.
Investors’ protest took on a new dimension on Monday as a group of them staged a demonstration in front of the Dilkusha office of the capital market regulator.
The group of investors also met SEC chairman M Khairul Hossain and placed to him a number of demands including suspending share trading until the government came up with a concrete measure to bring stability back to the market.
The SEC chairman told the investors that the commission was also greatly concerned over the relentless fall in stock prices and would do whatever it took to make the situation normal.     
Later in a press briefing, SEC spokesman Saifur Rahman urged the brokerage houses not to force-sell investors’ shares and said the commission would sit with the stakeholder soon.
‘The SEC will sit with the Association of Bankers, Bangladesh on Wednesday to discuss the market situation and how to address its liquidity crisis,’ he said.
In late October, the ABB, a forum of top bankers, announced that the banks would invest in stocks immediately up to their allowable ceiling of 10 per cent of liabilities.
The DSE had been highly volatile in the week before it had closed for Eid vacation, because the investors’ confidence took a sheer plunge as the banks did not participate in the market in line with the announcement they had made of increasing their capital market exposure up to the allowable limit.
Saifur, however, said, ‘Although the index has suffered a sharp fall today, the turnover did rise significantly.’
Turnover of the Dhaka bourse on Monday rose to Tk 321.74 crore compared to that of Tk 206.54 crore in the previous day.
The country’s capital market has been going through a depression for the past 10 months that started with the January crash. The Dhaka bourse had been witnessing a fresh meltdown for the last five weeks as the investors turned panicky, seeing back-to-back market-stabilising measures falling flat on their faces.
Market experts said the investors’ panic intensified as the country’s economic condition at present was in a bad shape.
‘Investors had been hoping that the market would make a positive turn after the nine-day Eid vacation, but the vulnerable economic situation offered them the opposite,’ said Salahiddin Ahmed Khan, a professor of finance at Dhaka University.
He said institutional investors, to whom the retail investors and even the market regulator looked up to, were in a tight spot due to the crisis prevailing in the real economy.  
He also said, ‘The realisation of investors that the government or the banks did not have any new tools to boost the market intensified their panic.’
According to the latest report of the Bangladesh Bureau of Statistics the point-to-point inflation in September stood at 11.97 per cent, while the BB statistics show that the government had borrowed as much as Tk 149.05 billion from the banking system in the first four months of the current fiscal year.

-With New Age input

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