Stock slips to two-year low
The key index of Dhaka Stock Exchange fell to a two-year-low yesterday in signs of a bigger crisis ahead in the market, setting off protest in the busy financial hub of Motijheel.
The slide bears the hallmark of the January-February crash that left many retail investors in the lurch.
The General Index, DGEN, of the premier bourse, broke the psychological support level of 5,000 points for the first time in two years and went below the level seen in January-February this year.
Market breadth, which indicates the health of the market, was also very negative, as only 15 securities traded higher, while 235 lost their values.
At the close of yesterday's trade, the DGEN stood at 4877, after plunging 3.26 percent or 164 points, prompting the Securities and Exchange Commission(SEC) to sit with bankers tomorrow.
A chief executive of a bank brokerage house said the government and the securities regulator have completely failed to restore the investors' confidence at a time when the country's economy is in a bad shape.
“Once more, the stockmarket looks certain to be heading towards another collapse,” the stockbroker said on condition of anonymity.
According to a merchant banker, if the market crashes again, it would be severe than the debacle in January-February.
“Unless the confidence is restored, the situation would be worse and, yet again, the general investors at the bottom will bear the brunt like they did in January-February,” he said, also speaking anonymously.
Although the Association of Bankers, Bangladesh (ABB), a platform of the commercial bankers, earlier announced a plan to bolster their investment in stocks, they are yet to make any fresh investment in the market.
“The commission will sit with the ABB to ensure active participation of the banks in the stockmarket,” SEC spokesperson Saifur Rahman said.
The SEC will also discuss the current market situation and future work plan with the ABB.
The commission also requested other institutional investors to act responsibly, and not like the retail investors, he added.
The regulator thinks that the institutional investors should act more professionally to help bring back normalcy in the market, added Saifur, also an executive director of the SEC.
“The commission has talked with the government high-ups to improve the market situation,” he said, adding that the commission is working to stabilise the market.
Lack of confidence and deteriorating macro-economic factors such as recessionary fears in developed economies, liquidity crunch in the local market due to tightening monetary policy and the government's heavy bank borrowing are the reasons behind the continuous slump in share prices this time, analysts say.
“Horrific losses are continuing, investors continued to leave the market at a fire sale price,” LankaBangla Securities, a leading stockbroker, said in its recent market analysis.
Protesting the free fall, a group of small investors, under a banner of Bangladesh Capital Market Investors Unity Council, took to the streets in front of the DSE as well as SEC in the capital.
Traffic in front of the DSE came to a halt in the noon. Some investors set fire to their shirts. They left the streets around 4:00pm.
The council president Mizanur Rashid Chowdhury, accompanied by some others, met SEC member Arif Khan and demanded suspension of trading until the market stabilises.
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