The general index of the Dhaka Stock Exchange on Wednesday plunged below 5,000 points again as investors, panicked by the legal battle over the minimum shareholding rule for the directors of listed companies, went for sell-offs amid fresh street protests.
The DGEN, the benchmark index of the bourse, lost 3.32 per cent, or 168.68 points, to close at 4,901.60 points on Wednesday following a fall of 98.62 points on Tuesday.
‘The panic among investors surrounding the repeated filing of writ petitions intensified today. Investors feared that the market might go down further if the legal battle lingers and if the stock market regulators lose the cases,’ said a stockbroker on Wednesday.
He said filing of two more writ petitions with the High Court on Tuesday by a senior lawyer on behalf of 13 directors of two companies made the investors more panicky.
The writ petitions challenged the Securities and Exchange Commission’s rule of holding 2 per cent chares individually and 30 per cent jointly by company directors in their respective firms by May 21.
The SEC directive issued on November 22 said that those directors who would fail to comply with the rule in time would have to leave their sponsorship or directorship.
Before Tuesday, two more writ petitions were filed in last one month against the SEC rule.
‘Investors have found that some senior lawyers appeared for the directors challenging the SEC rule. There are rumours in the market that the SEC might lose the case. Besides, there are other rumours that the legal battle might linger,’ said the stockbroker adding that these rumours might have leaked intentionally.
As the DSE general index fell heavily for second day, some of the agitated investors staged demonstration in front of the DSE entrance against the writ petitioners at around 2:00pm.
The investors said that a section of directors were spreading rumours surrounding the legal battle to the market to make it volatile.
They also urged the government to take punitive action against the ‘culprits’.
The stockbroker told New Age that the SEC’s rule on the shareholding of directors was one of the major steps for stabilising the ailing market in late last year as there were widespread allegations that the sponsor-directors had sold out majority of their stakes when the prices of stocks were high in 2010.
The SEC move was taken following a meeting of stakeholders with the prime minister to stabilise the market.
The DGEN, which came down to 3,616.29 points on February 6 this year from a record high of 8,918.51 points on December 5, 2010 following severe crashes, recovered up to 5,502 points on April 16 as some of the directors went for buying shares to fulfill regulatory requirement lifting the general investors’ confidence.
The market started to become stable as it gained 1,022 points in a six-week bull run from mid-March to mid-April.
But the DSE index started to decline amid the political tension following back-to-back general strikes enforced by the main opposition BNP after disappearance of one of its key leader Elias Ali.
In total the DGEN lost 600 points because of political tension and concern surrounding writ petitions till Wednesday since April 16.
DSE president Rakibur Rahman on Wednesday advised the investors not to pay attention to any rumours surrounding the legal issue.
‘There is no place for any rumour as the matter is pending with the court and nobody can say for sure what the court will decide,’ he told reporters after an emergency meeting with the Securities and Exchange Commission.
‘But, we are confident about our stance on the matter as we are representing all the investors and fighting for public interest,’ he said.
All the major sectors fell sharply on Wednesday with non-bank financial institutions declining the most by 5.23 per cent.
Telecommunication sector declined by 4.30 per cent, power by 3.71 per cent and bank sector by 2.35 per cent.
The bourse’s turnover increased slightly to Tk 383.77 crore compare to that of Tk 378.17crore in the day before because of heavy sell-offs.
Of the 266 issues traded on the day, 13 advanced, 245 declined, and eight issues remained unmoved.
Lankabangla Finance topped the turnover chart with its shares worth Tk 25.28 crore changing hands.
The other turnover leaders were Grameenphone, Meghna Petroleum, Jamuna Oil, Beximco, Square Pharmaceuticals, City Bank, Titas Gas, GPH Ispat and Aftab Automobiles.
-With New Age input
