Stocks rebound

After suffering the steepest fall on Sunday, Dhaka stocks recovered half of the previous session's losses yesterday, with the key indices making a record gain.
The benchmark index of the Dhaka Stock Exchange, DSE General Index (DGEN), jumped 304 points, or 4 percent, to 7,959.
The gain is only the second to the 22.61 percent or 764.88 points appreciation of the DGEN, back in November last year, when the Dhaka bourse incorrectly calculated the index movement following the listing of Grameenphone.
Market insiders correlated the gain with some decisions taken by the Securities and Exchange Commission on Sunday, following the biggest fall of 551 points in the stockmarket's 55-year history.
On Sunday, the SEC suspended net asset value-based calculation in providing share credit, increased the margin loan ratio to 1:1.5 from 1:1, and scrapped a revised rule on member's margin.
The regulator also brought back Grameenphone and Marico Bangladesh shares to normal trading from spot market transactions.
"The market bounced back mainly by the lenient policy support of the regulator," according to daily market analysis by LankaBangla Securities, a leading stockbroker.
However, the turnover still remains low and came down by 2 percent to Tk 1,459 crore.
Even the SEC's effort to increase liquidity flow to the market through raising the margin loan ratio failed to improve the situation.
"The increase in margin lending is yet to impact the turnover value as liquidity crisis is still persisting in the banking system, signified by the high call money rate," said Brac-EPL, an investment firm.
Only a few of the credit providers increased the margin loan ratio in line with the new ratio, while majority of the lenders cannot raise it due to unavailability of necessary funds.
"It will be possible to provide more credit for share purchase only when the money market will be stable," said Arif Khan, president of Bangladesh Merchant Bankers' Association.
However, Grameenphone hit circuit breaker after its price shot up by around 17.50 percent to Tk 249.80.
The circuit breaker does not allow a particular stock to go up or down by a certain limit on a single day.
Meanwhile, market stakeholders at a meeting recommended that the regulator take long-term policies, instead of piecemeal measures.
They said it was seen in recent times that the regulator came up with many directives within a short period to control the market. The regulator also changed its decisions one after another, when a measure failed.
They also called upon the SEC to establish a separate exchange or trading floor for small capitalisation companies.
Presidents of Dhaka and Chittagong stock exchanges, Bangladesh Publicly Listed Companies Association, Bangladesh Merchant Bankers' Association, Federation of Bangladesh Chambers of Commerce and Industry; an executive director of Bangladesh Bank and senior officials of the SEC attended the meeting.
Ziaul Haque Khondker, chairman of SEC, said: "It's not a policy making meeting. We sat to discuss the latest market situation."
"However, the recommendations made in the meeting will help us set our future market policies."