Dhaka stocks tumble in year’s 2nd crash

A frenzied rush for sell-off by investors under the grip of a feverish panic born of the series of shocks of witnessing all the ‘market stabilising measures’ falling flat on their

faces one by one, brought the Dhaka stocks down with a resounding crash on Sunday for the second time this year since January.

The country’s premier securities market crumbled in the  second crash of this year, with the DGEN, the benchmark general index of Dhaka Stock Exchange, nose-diving to a 21-month-low on panic-sales amid rowdy demonstrations by investors on city thoroughfares in Motijheel.

The DGEN lost 4.36 per cent, or 231.65 points, to close the day at 5,077.12 points, the lowest since January 21, on which it stood at 5,095.21 points.

Investors on the day staged rowdy street demonstrations, locked in clashes with law-enforcers, set fire to wooden materials in protest at the relentless fall in share prices.

When the DGEN had lost 158 points by around 12:25pm, investors from different brokerages rushed out of the buildings and thronged the street, bringing the traffic between Shapla Square and Ittefaq crossroads to a halt.

They chanted slogans against finance minister Abul Maal Abdul Muhith, prime minister’s finance adviser Mashiur Rahman, Bangladesh Bank governor Atiur Rahman, the Securities and Exchange Commission, and DSE president Shakil Rizvi for their failure to stabilise the market and for infusing the investors with panic.

The demonstrators termed Muhith shameless for still not resigning the finance portfolio even after his attempts had failed to stabilise the stock market and the overall economy all and sundry.

‘After drawing flak from lawmakers and the common people, he is still holding on to the chair,’ said a demonstrating investor.

Investors set fire to wooden materials on the road in front of the DSE building at around 2:20pm. At that point, law-enforcers charged batons on investors to dispraise them. At that time, some investors from the Madhumita building threw brickbats at the police. Later the investors convinced the police and continued the demonstration peacefully.

Investors from the demo said after the hollow promises from the government now the private sector, especially the banks, came up with several announcements of move for injecting fresh fund into the market. But all of those have proven as empty talks.

Although the banks last week announced that they would invest in stocks up to their allowable limit of 10 per cent of liabilities, the continuous downfall of the market and relentlessly shrinking amount of turnover proved the opposite, they said.

‘Rather than cheating us, they should better say that the market would not be stable,’ said an investor.

The DGEN had fallen by 467 points over the past six trading sessions.

Salahuddin Ahmed Khan, a professor of finance at Dhaka University, said, ‘Several of the market stabilising measures were unimplemented and that have deepen the panic among the investors.’

‘Positive announcements for the market are welcome if they are implemented, otherwise those become questionable,’ he maintained.

‘The problem intensified as the announcements made by different authorities were not followed and backed quickly by action, which was more important for boosting the market,’ DSE senior vice president Ahsanul Islam told New Age,

Bangladesh Merchant Bankers’ Association president Mohhamad A Hafiz told New Age, ‘The banks are in a tight spot ahead of the Eid-ul-Azha and the selling pressure of the investors increased for that reason as well.’

The DSE index earlier hit an all-time high of 8,928.51 points with the turnover of Tk 3,249.57 crore on December 5, when the market witnessed a boom.

But the market crashed in January-February, following a series of plunges. On February 28, the DSE index stood at 5,203.08 points with the turnover standing at Tk 489.41 crore.

A liquidity crisis also hit the market at that time as most of the banks and

other large investors went for bulk selling in December and pocketed hefty profits.

After the dull period of January-February, the market began to get back onto the track in March, in which the turnover of the DSE rose to Tk 1,592.60 crore on March 21 with the DGEN standing at 6,528.20 points.

However, the market started to slip again in mid-April as investors turned panicky once more following uncertainty about the implementation of the recommendations made by the probe committee into January’s stocks crash.

The market began to rebound after the government on June 29 had allowed investment of  undisclosed money in stocks. The turnover of the Dhaka bourse posted a record high of the year of Tk 1,957.92 crore on July 24 as the investors, especially the institutional ones, became active in the market.

On July 24, the DGEN rose to 6710.53 points with a turnover of Tk 1957.92 crore, the highest of the year, following the passage in parliament of a provision of allowing investment of undisclosed money in the stock market by paying 10 per cent tax.

But the market then started to fall due to a number reasons including poor corporate disclosure by a number of listed companies, Bangladesh Bank’s tight monetary policy and Securities and Exchange Commission’s announcement of taking legal action against some suspected market manipulators.

Source: newagebd.com/newspaper1

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