New Age-January 30,2012 Monday
Dhaka stocks on Sunday took a massive fall with its key index hitting a 26-month-low as the investors thronged for sale driven by a panic stemming from the apprehended effects of the central bank’s tight monetary policy, poor corporate disclosures by a number of listed companies, and political unrest.
DGEN, the benchmark general index of Dhaka Stock Exchange, lost 6.77 per cent, or 303.91 points, to close the day at 4,183.07 points, its lowest level since November 19, 2009.
This was the second steepest single-day fall of the DGEN since it had lost 6.92 per cent, or 459.65 points, on March 13, 2011.
The retail investors, however, refrained from staging any street protest on Sunday despite the mammoth plunge in share prices fearing police action as a large number of police were deployed in the area.
Investors on the day claimed that the government and the Securities and Exchange Commission had utterly failed to solve the capital market crisis.
They also said the stock market stakeholders had zipped up their lips all of a
sudden, while a few months back, on every such occasion, they would come up with statements on market stabilisation. ‘Earlier, the SEC, the DSE, and merchant bankers on such occasions used to give speeches how the market would be stabilised. But, after the latest crash, they have all kept mum,’ said Johir, a small-scale investor standing in front of the DSE building.
‘It looks as if the policymakers approve the market going into the free fall,’ he quipped.
In the latest spell of stocks crash continuing for the last three weeks the DGEN had sunk by 931 points.
In the last week the DSE index shed 9.29 per cent, or 459.51 points, amid tensions about the government’s policy on investment by public servants in the securities market and contractionary monetary policy.
In the week before last, the prime minister’s press secretary announced that a notice would be issued soon to remind the government servants that they were not allowed to make investment in the stock market as per Section 15 of the Government Servants (Conduct) Rules, 1979.
The authorities of the Dhaka and Chittagong bourses kept trading closed on the following day, January 17, to avoid any negative impact of the confusion created by the government announcement.
SEC chairman M Khairul Hossain, however, in a briefing later in the week said the government would not issue any such notice. But, a few hours after his speech, the public administration ministry issued a gazette notification echoing the prime minister’s press secretary only to withdraw the order verbally a few hours later.
In last week, investors were on their toes as the government’s verbal assurance of withdrawing the notice was eventually fulfilled by another notice issued on Thursday, the week’s last trading day.
On the same day, the Bangladesh Bank announced its monetary policy for the second half of the current financial year aiming at curbing the soaring inflation.
The BB said the credit growth in the private sector would be reduced by 2 per cent and the available credits would be diverted to the productive sectors.
Market operators said the retail investors lost their last hope in the market sensing the situation would worsen further after the announcement of the monetary policy.
‘After the announcement of the monetary policy, investors became sure that the government was unable to solve the crisis as it lacked the funds,’ said a stockbroker. ‘So, they are selling shares out of panic.’
He also said, ‘The sudden shifts in government policies on the stock market also made the trend unpredictable, which is fuelling the panic.’
DSE senior vice president Ahasanul Islam told New Age, ‘The poor corporate disclosures by a number of companies and the political unrest have also had a negative impact on the investors.’
He also said that, while the central bank would tighten the money-flow to the market to fight the inflation, ‘the stock market needs fresh funds to for its revival’.
Dhaka stocks on Sunday took a massive fall with its key index hitting a 26-month-low as the investors thronged for sale driven by a panic stemming from the apprehended effects of the central bank’s tight monetary policy, poor corporate disclosures by a number of listed companies, and political unrest.
DGEN, the benchmark general index of Dhaka Stock Exchange, lost 6.77 per cent, or 303.91 points, to close the day at 4,183.07 points, its lowest level since November 19, 2009.
This was the second steepest single-day fall of the DGEN since it had lost 6.92 per cent, or 459.65 points, on March 13, 2011.
The retail investors, however, refrained from staging any street protest on Sunday despite the mammoth plunge in share prices fearing police action as a large number of police were deployed in the area.
Investors on the day claimed that the government and the Securities and Exchange Commission had utterly failed to solve the capital market crisis.
They also said the stock market stakeholders had zipped up their lips all of a
sudden, while a few months back, on every such occasion, they would come up with statements on market stabilisation. ‘Earlier, the SEC, the DSE, and merchant bankers on such occasions used to give speeches how the market would be stabilised. But, after the latest crash, they have all kept mum,’ said Johir, a small-scale investor standing in front of the DSE building.
‘It looks as if the policymakers approve the market going into the free fall,’ he quipped.
In the latest spell of stocks crash continuing for the last three weeks the DGEN had sunk by 931 points.
In the last week the DSE index shed 9.29 per cent, or 459.51 points, amid tensions about the government’s policy on investment by public servants in the securities market and contractionary monetary policy.
In the week before last, the prime minister’s press secretary announced that a notice would be issued soon to remind the government servants that they were not allowed to make investment in the stock market as per Section 15 of the Government Servants (Conduct) Rules, 1979.
The authorities of the Dhaka and Chittagong bourses kept trading closed on the following day, January 17, to avoid any negative impact of the confusion created by the government announcement.
SEC chairman M Khairul Hossain, however, in a briefing later in the week said the government would not issue any such notice. But, a few hours after his speech, the public administration ministry issued a gazette notification echoing the prime minister’s press secretary only to withdraw the order verbally a few hours later.
In last week, investors were on their toes as the government’s verbal assurance of withdrawing the notice was eventually fulfilled by another notice issued on Thursday, the week’s last trading day.
On the same day, the Bangladesh Bank announced its monetary policy for the second half of the current financial year aiming at curbing the soaring inflation.
The BB said the credit growth in the private sector would be reduced by 2 per cent and the available credits would be diverted to the productive sectors.
Market operators said the retail investors lost their last hope in the market sensing the situation would worsen further after the announcement of the monetary policy.
‘After the announcement of the monetary policy, investors became sure that the government was unable to solve the crisis as it lacked the funds,’ said a stockbroker. ‘So, they are selling shares out of panic.’
He also said, ‘The sudden shifts in government policies on the stock market also made the trend unpredictable, which is fuelling the panic.’
DSE senior vice president Ahasanul Islam told New Age, ‘The poor corporate disclosures by a number of companies and the political unrest have also had a negative impact on the investors.’
He also said that, while the central bank would tighten the money-flow to the market to fight the inflation, ‘the stock market needs fresh funds to for its revival’.
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