Falling stocks bring protesters back
Stocks declined 3.33 percent yesterday, taking investors out on the streets once again to protest volatility in share prices.
The benchmark General Index, the yardstick of Dhaka Stock Exchange, closed at 4,864.30 points, after falling 167.69 points -- the highest in the New Year -- at the 3pm close.
Experts believe the withdrawal of the cap on lending interest rates and investors' misinterpretation of a circular of the National Board of Revenue (NBR) on undisclosed money quickened yesterday's fall.
Under the banner of Bangladesh Share Investors Association, a group of small investors staged demonstrations in front of the DSE building at 12:15pm.
They halted traffic for hours in front of the Dhaka bourse and shouted slogans demanding quick stabilisation of the market.
The market suffered a liquidity crisis as money had been transferred from the stockmarket to the money market, said Ahmed Rashid, director of DSE.
Investors were perturbed by the withdrawal of limits on banks' lending rates, Rashid said.
The NBR's circular on undisclosed money also created a negative impact on investors. The tax administrator should clarify the situation, he added.
The NBR on Sunday modified scope for investing black money in stocks and said money earned through criminal acts will not be allowed into the market.
Black money in stocks will not be questioned under the income tax law, but other laws can be applied against such investment, the tax administrator said in a statement.
"The indicators of DSE continued to puzzle the investors as it resumed price correction for the second day this week," said Green Delta LR Holdings in its daily market analysis.
"Experts believe that the ongoing debate regarding the involvement of black money in the capital market has been the key to this price correction."
The downtrend in the market has been exacerbated by the structural problems of the economy, said Yawer Sayeed, managing director and chief executive officer of AIMS of Bangladesh, an asset management company.
Once the market is back on track, the economy will also start to gain, said Sayeed.
He said after such a big plunge the market will recover slowly. There is no chance to be hopeful that the market will gain sharply as the regulator declined stimulus packages.
A dearth of liquidity and lack of institutional participation are exerting a negative impact on the general investors, said LankaBangla Securities in its market analysis.
Market PE has come down to the level of 11.94, LankaBangla said, adding that if the market continues to decline, Bangladesh capital market will become one of the cheapest in the South Asian region.
Turnover gained 29 percent compared with the previous day. A total of 1.02 lakh trades were executed, generating a turnover of Tk 318.33 crore with 6.87 crore shares being traded on DSE.
Of the 256 issues changed hands, 10 advanced, 242 declined and four remained unchanged.
The Chittagong Stock Exchange also declined yesterday. The Selective Categories Index went down 235.85, to end the day at 8,993.49.
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