New Age-January 23,2012 Monday
Ahmed Shawki
The majority of retail investors have lost the hope of recovering the losses they sustained in the series of stock market crashes and the depression that continued to reign over the market since late 2010.
Many of the investors said they failed to keep their nerve after the government’s indecision had come out so loudly last week.
On Sunday, the benchmark general index of Dhaka Stock Exchange, or DGEN, lost a mammoth 4.78 per cent, or 236.58 points, to close at 4,709.91 points.
‘The government’ pledge to stabilise the capital market said again and again like a broken record won’t work anymore as its policies have proven ineffective,’ said Mohammad Hamid, a retail investor.
He said he lost most of his savings invested in the capital market in the past one year of depression and was now looking for a way out with the amount of his loss reduced to a bearable level.
‘I don’t want any profit or to recover the entire capital I had invested. All I want is to quit the market with a loss that is bearable,’ Hamid said.
The DGEN had taken a sheer plunge of 37 per cent over 2011 to a series of crashes, wiping out entire investments of thousands of investors.
On Sunday, angry investors blocked the city thoroughfare from Shapla Square to Ittefaq crossing in protest against the free fall of share prices.
They brought out a number of processions holding broomsticks as a symbol of their furious attitude towards the regulators for their failure to stabilise the market.
Another short-term investor, Rafiq, who works at a private firm, said he had sold off all his shares in last week after losing all confidence in the market.
‘I couldn’t keep my cool and sold my entire portfolio of shares at a loss of Tk 9 lakh,’ he said.
According to Rafiq, there is no possibility for the market to make a rebound in the near future as the key policymakers are not dealing with the issues properly.
‘I don’t know whether it is a deliberate move of the government or simply its failure that the capital market has continued to plunge despite all the stabilising measures taken,’ he said. ‘But, I give up.’
Market operators said the investors had no confidence left after the contradictory announcements made last week by different government bodies about imposing a ban on investment by government employees in stocks.
‘The government’s indecision about enforcing a ban on investment by its employees in securities and the withdrawal of unconditional investment of undisclosed money in the stock market by the National Board of Revenue devastated investors’ confidence,’ said a stockbroker.
The capital market became shaky yet again after the revenue board in last week had withdrawn the facility of unconditional investment of undisclosed money in the stock market. In a statutory regulatory order, the board said only legally earned but untaxed money could be invested in it.
The government in the current budget allowed investment of undisclosed money in stocks without any question. The NBR on several occasions also assured that the provision would be in place till June 2013.
On Monday, the prime minister’s press secretary in a briefing said an official order would be issued soon to remind public servants that they were not allowed to make investment in the stock market as per Section 15 of the Government Servants (Conduct) Rules 1979.
Following the statement, the Dhaka and Chittagong stock exchanges suspended trading on Tuesday and investors staged rowdy street demonstrations against the government decision.
The confusion created by announcements contradictory to each other further intensified on Wednesday when Securities and Exchange Commission chairman M Khairul Hossain in a hurriedly called press briefing in the morning said the cabinet in its meeting on Monday had taken no such decision.
The public administration ministry through a gazette notification on Wednesday evening ruled that government employees were not allowed to invest in as speculative a market as the equities market as per the Government Servants (Conduct) Rules 1979. The ministry, however, retracted the notice a few hours later.
Market operators said the extent of losses incurred by the investors in the depression continued for more than a year was much more severe than the first stock market crash in 1996, when the current ruling party, Awami League, was also in power.
Then the size of the market was much smaller, with around 20,000 investors active in trade, whereas, the number of active investors now stands at around 15 to 20 lakh, said market operators. The number of registered investors is about 28,11,837, according to the data of the Central Depository of Bangladesh Limited.
Sudden investment inflows, mostly from the banking sector, gave rise to a boom in 2010 over which the DGEN had skyrocketed by 82.87 per cent to end at 8,290.41 points, with the peak reached at 8,918.51 points on December 5.
The DGEN had plummeted by 3,032 points over 2011 from 8,290.41 points to 5,257.60 points while the market capitalisation of the DSE had declined by 25.42 per cent from Tk 3,508,00 crore to Tk 2,61,673 crore.
The majority of retail investors have lost the hope of recovering the losses they sustained in the series of stock market crashes and the depression that continued to reign over the market since late 2010.
Many of the investors said they failed to keep their nerve after the government’s indecision had come out so loudly last week.
On Sunday, the benchmark general index of Dhaka Stock Exchange, or DGEN, lost a mammoth 4.78 per cent, or 236.58 points, to close at 4,709.91 points.
‘The government’ pledge to stabilise the capital market said again and again like a broken record won’t work anymore as its policies have proven ineffective,’ said Mohammad Hamid, a retail investor.
He said he lost most of his savings invested in the capital market in the past one year of depression and was now looking for a way out with the amount of his loss reduced to a bearable level.
‘I don’t want any profit or to recover the entire capital I had invested. All I want is to quit the market with a loss that is bearable,’ Hamid said.
The DGEN had taken a sheer plunge of 37 per cent over 2011 to a series of crashes, wiping out entire investments of thousands of investors.
On Sunday, angry investors blocked the city thoroughfare from Shapla Square to Ittefaq crossing in protest against the free fall of share prices.
They brought out a number of processions holding broomsticks as a symbol of their furious attitude towards the regulators for their failure to stabilise the market.
Another short-term investor, Rafiq, who works at a private firm, said he had sold off all his shares in last week after losing all confidence in the market.
‘I couldn’t keep my cool and sold my entire portfolio of shares at a loss of Tk 9 lakh,’ he said.
According to Rafiq, there is no possibility for the market to make a rebound in the near future as the key policymakers are not dealing with the issues properly.
‘I don’t know whether it is a deliberate move of the government or simply its failure that the capital market has continued to plunge despite all the stabilising measures taken,’ he said. ‘But, I give up.’
Market operators said the investors had no confidence left after the contradictory announcements made last week by different government bodies about imposing a ban on investment by government employees in stocks.
‘The government’s indecision about enforcing a ban on investment by its employees in securities and the withdrawal of unconditional investment of undisclosed money in the stock market by the National Board of Revenue devastated investors’ confidence,’ said a stockbroker.
The capital market became shaky yet again after the revenue board in last week had withdrawn the facility of unconditional investment of undisclosed money in the stock market. In a statutory regulatory order, the board said only legally earned but untaxed money could be invested in it.
The government in the current budget allowed investment of undisclosed money in stocks without any question. The NBR on several occasions also assured that the provision would be in place till June 2013.
On Monday, the prime minister’s press secretary in a briefing said an official order would be issued soon to remind public servants that they were not allowed to make investment in the stock market as per Section 15 of the Government Servants (Conduct) Rules 1979.
Following the statement, the Dhaka and Chittagong stock exchanges suspended trading on Tuesday and investors staged rowdy street demonstrations against the government decision.
The confusion created by announcements contradictory to each other further intensified on Wednesday when Securities and Exchange Commission chairman M Khairul Hossain in a hurriedly called press briefing in the morning said the cabinet in its meeting on Monday had taken no such decision.
The public administration ministry through a gazette notification on Wednesday evening ruled that government employees were not allowed to invest in as speculative a market as the equities market as per the Government Servants (Conduct) Rules 1979. The ministry, however, retracted the notice a few hours later.
Market operators said the extent of losses incurred by the investors in the depression continued for more than a year was much more severe than the first stock market crash in 1996, when the current ruling party, Awami League, was also in power.
Then the size of the market was much smaller, with around 20,000 investors active in trade, whereas, the number of active investors now stands at around 15 to 20 lakh, said market operators. The number of registered investors is about 28,11,837, according to the data of the Central Depository of Bangladesh Limited.
Sudden investment inflows, mostly from the banking sector, gave rise to a boom in 2010 over which the DGEN had skyrocketed by 82.87 per cent to end at 8,290.41 points, with the peak reached at 8,918.51 points on December 5.
The DGEN had plummeted by 3,032 points over 2011 from 8,290.41 points to 5,257.60 points while the market capitalisation of the DSE had declined by 25.42 per cent from Tk 3,508,00 crore to Tk 2,61,673 crore.
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