Merchant banks demand more time to cut exposure to stocks

Leading merchant banks and stockbrokers yesterday urged the stockmarket regulator to extend the deadline for bringing down banks' investment in the stockmarket by another four years.

The banks face a deadline to lower their stockmarket exposure to 25 percent of their “eligible capital” by July 2016.

If approved, the extension, the merchant banks and stockbrokers believe, will ensure banks' active participation as institutional investors in the ailing secondary market.

They also recommended calculating the banks' total exposure to the stockmarket by taking into account their investment in non-listed securities such as investment in subsidiaries.

The proposals came at a meeting between Bangladesh Securities and Exchange Commission and the merchant banks and stockbrokers.

“We sat with them to discuss the current market situation, and they have submitted a set of proposals to us that they think will improve the scenario,” BSEC spokesman Saifur Rahman said after the meeting.

As the major recommendations are under the central bank's purview, these will be forwarded to the banking regulator for consideration, he said.

The BSEC hosted the meeting to find solutions to volatility in the market, which fell for the fourth day.

DSEX, the benchmark index of the Dhaka Stock Exchange, declined 26.24 points or 0.59 percent, finishing the day at 4,416.9 points.

Turnover, another important indicator of the market, increased 2.3 percent to Tk 321.93 crore with 7.96 crore shares and mutual fund units changing hands on the DSE.

Of the traded issues, 79 advanced, 197 declined and 39 closed unchanged on the premier bourse.

Titas Gas dominated the turnover chart with 53.69 lakh shares worth Tk 31.67 crore changing hands, followed by Ifad Autos, United Power Generation and Distribution Company, Square Pharma and Lafarge Surma Cement.

Almost all the major sectors declined in market capitalisation with fuel and power taking the biggest hit of 1.98 percent, followed by textile that lost 1.43 percent, banks 0.25 percent and pharma 0.13 percent.

Only the miscellaneous sector gained 1.31 percent.

Standard Ceramic was the day's best performer with a 9.96 percent gain, while Pharma Aid was the worst loser, eroding 12.03 percent.

Chittagong stocks declined with the bourse's benchmark index, CSCX, sliding 58.93 points or 0.71 percent to finish the day at 8,216.12 points.

Losers outnumbered the gainers 154 to 53, while 32 finished unchanged on the Chittagong Stock Exchange.

The port city bourse traded 64.47 lakh shares and mutual fund units worth Tk 24.37 crore in turnover.