Stocks suffer biggest fall in years on GP

The benchmark index of Dhaka Stock Exchange yesterday suffered the biggest loss since its introduction, as the shares of Grameenphone (GP) and Marico marked a sharp decline in value.
The fall came as a result of the market regulator's effort to rein in the prices of the two stocks by placing them in spot market.
This means investors cannot buy the shares of the two companies on credit. And the settlement period for a share is one day.
The DSE General Index (DGEN), which was introduced in 2001, lost almost 138 points or 2.39 percent before closing at 5,622.99 points. The previous largest fall was 133.13 points on January 11, 2005.
The DGEN was introduced with a base of 817.62 points. The index, which excludes 'Z' category companies, is calculated on the basis of individual stock price movement under 'A', 'B' and 'N' categories.
Placing the trading of GP and Marico stocks on the spot market was the main reason behind such a fall, said analysts.
The Securities and Exchange Commission on Thursday announced that the trading of GP and Marico will take place on the spot market, instead of normal trading board, until further order.
Each GP share went down around 8 percent to Tk 332.60 yesterday, while Marico plummeted 9.65 percent to Tk 421.80.
Experts said it seems the regulator's latest move, which came as the previous measures proved futile in controlling the share prices -- especially of GP, worked well.
Shares of the mobile phone operator were trading on the spot market with no margin loan facility as well as no financial adjustment or money-netting facility as directed by the regulator, BRAC-EPL, an investment firm, said in a daily market analysis.
Trading on the spot market puts impacts in two ways. Firstly, supply of shares increase, as shares are ready for buy and sell on the next trading day, while shares are settled in three trading days in the normal market.
Secondly, liquidity flow to the securities can be controlled, as cash or bank draft has to be deposited to the bourses within one hour after the trading session.
“The fall was mainly because of restriction on trading of GP and Marico shares that impacted other sectors also,” said Yawer Sayeed, managing director of AIMS of Bangladesh, an asset management company.
Investors remain jittery when the regulator makes intervention in selective securities, he said.
The broader DSE All Share Price Index also dropped 109.89 points, or 2.32 percent, to 4,609.51.
The losers beat the gainers 169 to 66 with two securities remaining unchanged. A total of 4,40,09,412 shares worth Tk 1,098.94 crore changed hands on the prime bourse.
Chittagong stocks also marked sharp fall yesterday. The CSE Selective Categories Index went down 258.92 points, or 2.36 percent, to 10,676.03. The CSE All Share Price Index dropped 385.9 points, or 2.31 percent, to 16,314.69.
A total of 74,50,922 shares worth Tk 96.53 crore were traded on the Chittagong Stock Exchange. Of the traded issues, 40 advanced, 116 declined and two remained unchanged on the port city bourse.