Measures for security in stock market suggested

The home affairs ministry, in a move to maintain order in the stock market, on Thursday asked the Dhaka Stock Exchange to strengthen its security system and introduce identity cards for investors.

It also suggested installation of closed-circuit TV cameras in the areas near the Dhaka Stock Exchange leading up to Shapla Square in Motijheel to help the law enforcement agencies to maintain law and order.

The ministry held a meeting with the Securities and Exchange Commission and the Dhaka Stock Exchange authorities against the backdrop of frequent demonstrations and incidents of violence after the free-fall of share prices and the government's perceived reluctance to protect the interest of common investors in the last few months.

'We have asked the Dhaka Stock Exchange to heighten its own security to maintain law and order,' home affairs

minister Sahara Khatun told reporters after presiding over the meeting at the secretariat.

She said that the ministry had proposed formation of a crisis management team and a coordination committee to tackle any critical situations in the capital market in a more effective manner.

The ministry's suggestions came up at the meeting as the DSE and SEC expressed concern over incidents of violent protest, in protest against the plummeting of share prices, when angry demonstrators vandalised vehicles and other properties in Motijheel.

Law enforcement agencies often had to resort to lathi-charge and firing of tear-gas shells and widespread arrests to contain violent protests by investors in Motijheel commercial area. Most of around 33 lakh beneficiary owners account holders, mainly small-scale investors, lost the major part of their capital because of the stock market debacle that started in January.

When asked when the ID cards would be issued, DSE's president Shakil Rizvi told reporters that they would take a decision in this regard after discussion with the board of directors.

Home affairs secretary Abdus Sobhan Sikder said that the meeting recommended increasing the number of security personnel inside the DSE.

The newly-appointed chairman of the SEC, M Khairul Hossain, and senior officials of the police and Rapid Action Battalion were also present at the meeting.

The SEC's chairman termed the meeting a 'courtesy call' on him after his appointment on Sunday.

Source: New Age

Dhaka stocks slides for second day as confusion returns

Dhaka stocks continued to slide for the second consecutive day on Thursday as the retail investors were yet to regain confidence in the market due to the state of dormancy of the Securities and Exchange Commission and the possibility of introducing tax in the capital market.

Market operators said general investors on the day went for sell-offs while most of the institutional investors remained inactive.

They said the delay in reconstruction of the SEC was making the investors confused about what was coming next. They said the rumours about imposition of capital gain tax and making taxpayer's identification numbers mandatory for opening beneficiary owner's accounts in the next national budget also discouraged investors from taking active part in trading.  

They also said most of the institutional investors, especially the banks, took a wait-and-see policy as they were waiting for the announcement of the budget for the next fiscal year.

Market insiders said as the central bank took a hard line against the commercial banks, they went on backfoot.

'The news that the Bangladesh Bank will investigate the roles of nine commercial banks during the stock market crash in January has also affected the market,' said a stockbroker.

The benchmark general index, or DGEN, of Dhaka Stock Exchange declined by 42.54 points or 0.73 per cent to close the day at 5,718.07 points.

Turnover of the bourse on the day also dropped to Tk 426.49 crore, compared to previous day's Tk 455.04 crore.

Out of 256 issues traded on the day, 149 declined, 100 gained, and seven remained unchanged.

Trading on the DSE started in the negative zone on Thursday. The index fluctuated heavily in the first hour and then steadily inched down, ending the day in red.

DSE senior vice president Ahsanul Islam said, 'The investors are yet to regain confidence after the recent market crash and it will take some more time.'

In his opinion, 'What is most needed at the moment to address the situation is an effective and functional SEC.'  

'A lot of work has to be done to develop the market from here on and the commission has to initiate those moves,' he added.

Source: New Age

HAC Securities’ trading operation suspended for ‘short selling’

Dhaka, May 10: The Dhaka Stock Exchange on Tuesday suspended the trading operation of HAC Securities for an indefinite period for 'short selling' of shares by the brokerage house.

DSE sources said HAC Securities placed a sale order for shares of Northern Jute against a client from its Banani branch, but there was no share of the company in the client's portfolio.

'As the brokerage house could not settle the accounts at the day's closing, we have suspended trading operation of the firm until the issue is resolved,' he said.

A number of clients of HAC Securities on Tuesday alleged that the house was involved in forced selling of shares and the incident of the 'short selling' occurred due to the move of the firm. They also submitted a complaint to the Securities and Exchange Commission in this regard.

Laique Ali Chowdhury, MD of HAC Securities, told New Age, 'Today our trading operation was suspended by the DSE management on a settlement issue. We hope that the problem would be resolved by tomorrow (Wednesday).' He said, 'I have no such information about forced selling in my firm.'

Source: New Age

DGEN sheds 118 points

Dhaka, May 10: Dhaka stocks plunged more than two per cent Tuesday after a see-saw movement throughout the trading hour with substantially low turnover as the investor's confidence remains in 'low level' in the current bearish market.

"Nervousness gripped the investors and many of them sold shares fearing further fall in the index," said a stock broker.

However, the market opened with a positive mood, gaining more than 38 points within five minutes. But in next 20 minutes, it shed 80 points.

At the end of the day, the benchmark DSE General Index (DGEN), main gauge of the market shed 118.93 points or 2.10 per cent to close at 5,519.87.

The broader All Shares Price Index (DSI) came down to 4,596.48, shedding 93.87 points or 2.0 per cent. The DSE-20 index comprising blue-chip shares also lost 47.43 points or 1.28 per cent to 3,644.33.

The market is in the shaky mood and could not get strength as there is no support from the big and institutional investors which are the main force of the market," said Ahmad Rashid Lali, managing director of the Rashid Investment Services.

"Big and institutional investors are still far from the market as the government announced different policy measures including forming taskforce and re-investigation against the big traders which continued to have negative impact in the market," Mr Ahmad said.

The liquidity crunch in the money market also affecting the share market as many of them prefer to deposit money in banks instead of investing in the volatile share market, he said.

Mr. Ahmad said the market will not be stable unless the government gives a positive signal to bring back investors' confidence especially big and institutional investors'.

Share prices of all major sectors closed red zone except cement. Cement sector gained 1.01 per cent on the day as Lafarge Surma Cement advanced substantially following its corporate declaration.

Among the major sectors, banks the market's bellwether lost 1.72 per cent, NBFIs 2.16 per cent, telecommunications 2.14 per cent and fuel and power 1.86 per cent.

A total of 46.69 million shares changed hands on the day against 51.37million in the previous session. The trade deals also decreased to 98,706 against Monday's 116,828.

Total market capitalization also decreased substantially and stood at Tk 2,577.18 billion against Tk 2,620.23 billion in the previous session.

Turnover value continued to decline and stood at Tk 3.82 billion, down by 10.54 per cent, from Tk 4.27 billion in the previous session.

Most of the issues traded on the day lost in prices as out of 245 issues traded, only 28 advanced, 215 declined and two remained unchanged.

Source: The Financial Express

Dhaka stocks plunge again

Dhaka, May 11: Dhaka stocks plunged again on Tuesday despite active participation of the Bangladesh Fund, as the retail investors went for panic-driven sell-offs in the face of government lethargy in restructuring the Securities and Exchange Commission, market operators said.

They said that fresh rumours about imposition of tax on capital gain and making the use of tax identification number mandatory for beneficiary accounts in the next budget had affected further the investors who had become jittery because of last five months volatility in the market.

The benchmark general index of Dhaka Stock Exchange, or DGEN, lost 118.93 points or 2.10 percent on Tuesday, to close at 5,519.87 points after the DGEN had advanced marginally on Monday following a 287-point plunge on Sunday.

'Although different wings of the Investment Corporation of Bangladesh including the Bangladesh Fund purchased shares worth Tk 37 crore on the day, but they failed to keep the market afloat,' said a DSE official.

After Sunday's crash, the Bangladesh Fund, a Tk 5,000 crore open-ended mutual fund, could rescue the market on Monday, but investors continued to lose faith in the market as the government was yet to clear its position on appointment of a new chairman of the SEC and rumoured tax measures, said a stockbroker.

'Most of the institutional investors are now inactive. It is not possible for Bangladesh Fund to keep the market afloat. Besides, investors also know that the Bangladesh Fund could manage only Tk 500 crore so far as most of the sponsors are yet to chip in their portion,' he said.

Trading on the bourse started on a positive note as the index gained around 40 points in the first ten minutes. But for next half an hour the DGEN curve fluctuated heavily. At around 12 noon the index started crawling down and ended the day in a negative zone.

Turnover on the day dropped significantly to Tk 382.36 crore which is Tk 44 crore less from the previous day.

Out of 245 traded issues, only 28 advanced while 215 suffered heavy losses in share prices and two remained unchanged.

Investors, who had observed hunger strike, staged a sit-in programme and rowdy demonstrations in the previous two days, remained in the brokerage houses on Tuesday.

Mahmood Osman Imam, a finance professor of Dhaka University, said, 'Government inaction over stabilising the market is making the investors more and more panicked as they are now completely trackless about what's coming next.'      

Osman said the government should immediately come up with an action for stabilising the market to ensure the investors about its willingness to improve the situation. 

Md Fayekuzzaman, managing director of ICB, said, 'We are trying the best from our end to stabilise the market, and I hope the market will be stabilised soon.'

Ahsanul Islam, senior vice president of DSE, said, 'Investors are panicked and that pushed the market down today.'

He said that an immediate government move with substantial measures would help to restore the investors' confidence.

'The investors should not pay heed to rumours and government should came up with some encouraging schemes for the capital market to address the situation,' he added.

Source: New Age

MCCI suggests thorough reform of capital market

Dhaka, May 11: The Metropolitan Chamber of Commerce and Industry has proposed six remedial measures for restoring stability in the capital market and ensuring its healthy growth.

In its quarterly review on the country's economic situation, the premier chamber suggested that the government institute a thorough reform of the system in the capital market by framing the necessary short-term, mid-term and long-term rules and regulations after discussion with all stakeholders.

The government should quickly offload the shares of the selected profitable state-owned enterprises as it promised earlier, said the chamber.

The multinational companies operating in Bangladesh should be asked to enlist themselves in the country's stock exchanges, said the MCCI. 'Such enlisting is compulsory in the neighbouring countries.'

MCCI observed that the Dhaka Stock Exchange and the merchant banks would have to be more active to attract more private issues to the market.

It said that the Dhaka Stock Exchange might persuade the big listed companies to offload a bigger percentage of their shares to meet the growing demand for shares in the market.

Strengthening the market's regulatory mechanism and making it more transparent and accountable is crucially important to increase public confidence in the stock market, MCCI pointed out.

Its review said that in the January-March period, there were mixed performances in Bangladesh's economy with healthy growth in agriculture, strong recovery in the export sector, but decline in foreign aid inflow and remittance.

'Output performance in agriculture has continued to remain healthy, thanks to good weather and favourable government and central bank support for the sector,' said the MCCI.

The rise in private sector credit and the increased volume of letters of credit opened in recent months indicate that manufacturing activities are on the rise, it added.

Despite the installation of some additional generation capacity and some increase in electricity production, the power situation has not improved much in the period.

The average deposit rate increased faster than the average lending rate, said the review which acknowledged the concern of a section of the business community over withdrawal of the lending limit and the increased cost of capital.

The MCCI stressed the need for meeting the challenge of inflation, in particular to contain the prices of food items, and increasing the supply of power.

Source: New Age

Bangladesh Fund rescues market on the day

Dhaka, May 10:

The Bangladesh Fund, a Tk 5000-crore open-ended mutual fund launched by eight state owned institutions, on Monday prevented the market from plunging massively for the second day by purchasing shares worth Tk 27 crore, ICB sources said.

On Monday, the general index of Dhaka Stock Exchange closed the day in a positive territory, gaining by 27.33 points or 0.48 per cent, thanks to late buying by the fund after the key index lost 366 points in the first two sessions of the day's trading. 

Market operators said the general investors went for sell-offs from the opening bell, resulting in heavy fall in share prices. But the Bangladesh Fund started to buy shares from the midday trading and the move pulled the market, they said.

'We were trying to lift the market in the last two days, but we got positive result today [Monday],' Md Fayekuzzaman, managing director of the Investment Corporation of Bangladesh, told New Age.

Currently the fund holds Tk 500 crore and soon they will collect the rest of the sponsors' fund which is Tk 1,000 crore, he said.

When asked whether their efforts would be enough to keep the market afloat, he said, 'We will

try our best to stablise the market.'

General investors in the last two days staged rowdy demonstrations in front of the DSE building, protesting the free fall in share prices. Investors also criticised the role of the Bangladesh Fund as many of them injected fresh funds, banking on the hype created by the fund.

On March 6 the ICB, the prime sponsor of the fund, announced the formation of the fund to stabilise the volatile capital market. The formation and the launching of the fund raised the level of the confidence of the general investors who were in despair situation after the January stock market debacle.

A stock market analyst said the Bangladesh Fund could be an important addition to the market if it could contribute to the market according to the need of the market. 

'The Bangladesh Fund can play a key role in this situation if it is used properly,' said Akter H Sannamat, a stock market analyst.

The amount of the fund is very big and it should be handled carefully, he said.

The fund should collect the rest of the sponsors' amount immediately, he added.

Source: New Age

Investors go on hunger strike over stock plunge

Dhaka, May 10:

Around 200 retail investors on Monday staged a sit-in and went on a hunger strike in front of the Dhaka Stock Exchange building, demanding immediate government action to stabilise the volatile capital market.

They, however, aborted the fast-unto-death programme after issuing a 24-hour ultimatum to the government for stabilising the market and meeting their demands.

The Dhaka stocks on the day, however, managed to inch up by 27.33 points thanks mainly to active participation of institutional investors, which succeeded to make the retail investors not to go for a binge on share-selling.

The general index of the bourse, or DGEN, clambered up by a mere 0.48 per cent to close the day at 5,638.80 points, after taking a 366-point plunge in the previous two trading days.

The trading on the bourse started at 11:00am in the same bearish mood as on Sunday and saw the DGEN make a 90-degree nosedive, hurtling down 200 points in the first 50 minutes.   

Even before that, as the DGEN did a 120-point free fall by 11:15am, the general investors in a rage rushed out of the brokerage houses adjacent to the DSE building on the Motijheel thoroughfare. As on the previous day, they chanted slogans especially against finance minister Abul Maal Abdul Muhith, Bangladesh Bank governor Atiur Rahman, and DSE president Shakil Rizvi.

After half an hour, they staged a sit-in in front of the entrance to the DSE building and began a fast-unto-death programme under the banner of Bangladesh Share Market Oikkya Parishad.

The Parishad leaders distributed a leaflet containing a number demands to the government as well as suggested action for stabilising the capital market. The demands included resignation of the finance minister within seven days and restructuring the Securities and Exchange Commission in 2 weeks time.

The Parishad also demanded that the central bank should reduce the cash-reserve ratio and the statutory liquidity requirements of the commercial banks.

Another demand listed in the leaflet was for compelling the investors named by the probe committee as being involved in price manipulation leading to the January's stocks debacle to reinvest their ill-gotten profits in the share market.

They asked the government to compensate the investors who suffered losses in the crash and also to withdraw all cases filed against retail investors immediately.

Speakers at the demonstration said one of the retail investors, Rony Zahan of Tongi, had committed suicide on Sunday, unable to bear the anguish of his losses and frustration.

After the trading ended at 3:00pm, the demonstrating investors held a Gayebana Namaz-e-Janaza for Rony Zahan.

The police made the road from Shapla Square to Ittefaq Crossing off-limits to all vehicles while the investors had held the demonstration from 11:30am to 3:30pm to avoid any untoward incident. Although an investor was detained at around 12:00 noon for abusing the law-enforcers, he was later set free.   

A DSE source said the newly launched Bangladesh Fund bought shares worth Tk 27 crore on the day. The turnover of the bourse on Monday dropped to Tk 426.60 crore from that of Tk 462.27 crore on Sunday.

Market analysts said the slight gain that the DSE maid on Monday meant no significant development.

Akter H Sannamat, a capital market analyst, said, 'The day's rise was a halt to the relentless fall of the DSE general index.'

The government and institutional investors have an important role to play to sustain the rebound, however weak it may seem to be, he said, adding that all the stakeholders, including the retail investors, should behave reasonably if they want the market get rid of volatility.

Source: New Age

SEC member Yasin Ali resigns

Dhaka, May 10:

Another member of the Securities and Exchange Commission Md Yasin Ali on Monday tendered his resignation after the finance ministry asked him to quit.

On Sunday, SEC member Anisuzzaman resigned from the commission as he was also instructed to do the same.

Sources in the finance division said Yasin Ali went to the ministry at around 2:45pm to meet the banking division secretary, Sahfiqur Rahman Patwari.

In his resignation letter, addressed to finance minister AMA Muhith, Yasin said he was resigning on a personal ground as per the clause 5(7) of the Securities and Exchange Ordinance 1993.

Yasin Ali was appointed as member of the commission in 2008 for a three-year term which was to end on December 31 this year.

Finance ministry sources said a section of government high officials pressured the two members to resign immediately as part of the restructuring programme of the SEC announced by the government following the probe committee report on January stock market scam. 

In the probe committee report, however, there ware no allegations against Yasin Ali and Anisuzzaman.

The probe committee recommended the restructuring of the commission by replacing a number of senior officials including its chairman Ziaul Haque Khondker, but the concerned authorities are yet to take any actions against them, the sources added.

Source: New Age

Dhaka bourse asked to list MI Cement

Dhaka, May 9: The Securities and Exchange Commission (SEC) has issued a circular for a second time to the Dhaka Stock Exchange (DSE) to allow a listing for MI Cement Factory Ltd.

The DSE did not comply with the first circular that asked it to list the company, as the conditions of compensation would create complexities and contradict the securities law, said a DSE official.

However, the Chittagong Stock Exchange (CSE) approved the listing in a condition of compensation and the company made a trade debut yesterday.

"We will take action against DSE, if they do not follow our circular," said an official of SEC.

The DSE should list the company as the CSE has already done so, he adds.

DSE sent a letter on May 3 to the SEC, explaining 11 points of negative impact of compensation on the market.

In line with the letter: "The introduction of the concept of compensation for the equity mark shall be nothing but risky. There is no such instant compensation for the capital market in the world. The compensation goes against the basic concept of equity investments. The matter of compensation means the primary issue price of the share is not justified."

"Some investors will use the chance to manipulate MI Cement share prices as they will sell shares too close once to get compensation, while the compensation will involve the investor for circular trading." But, the SEC rejected it and issued a circular to list the company to the bourses.

In another development, SEC has increased the listing period of MJL Bangladesh Ltd to end the listing stalemate.

Source: The Daily Star (May 9, 2011)