Regulator doubles share credit
The stockmarket regulator yesterday doubled the ratio of share credit in an effort to increase liquidity flow in the market.
With the latest initiative, investors who trade on credit can receive margin loan at 1:1 ratio, meaning if an individual has shares worth Tk 1, he/she will get another Tk 1 loan.
The previous ratio for share credit was set on November 21 at 1:0.5.
Credit providers will however have to follow a method based on net asset value (NAV), while giving loans to their clients or investors.
According to such method, loan providers will determine the price of a stock by adding the market value to the NAV and dividing the sum by two.
For example, if an investor buys 1 share at market price of Tk 1,000 each and the company's NAV per share is Tk 500, the value for a margin-loan purchase will be Tk 750 {(Tk 1,000 + Tk 500)/2}.
The latest development came following a downward trend at both Dhaka and Chittagong stock exchanges for the last one week, said an official of the Securities and Exchange Commission (SEC).
The news of the increased margin loan that was posted on the trading server just before starting of share transactions put a positive impact on the market.
"The market gained following the SEC's directive of increased margin ratio," BRAC-EPL, an investment firm, said in its regular market analysis.
Benchmark index of the Dhaka Stock Exchange, DSE General Index, rose 33 points, or 0.4 percent to reach at 8,329.
The key index of the Chittagong Stock Exchange -- CSE Selective Categories Index -- also gained 38 points, or 0.25 percent to 15,134.
Losers however beat advancers 125 to 116, with four securities remaining unchanged on the premier bourse that traded more than 9.78 crore shares and mutual fund units worth Tk 1,745 crore.
Also, losers beat gainers 102 to 81, with two securities remaining unchanged on the port city bourse, which traded more than 1.18 crore shares and mutual fund units on a value of Tk 171 crore.
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