DSE decides not to accept conditions of SEC

Ahmed Shawki

The Dhaka Stock Exchange at a board meeting on Thursday decided not to list Mobil Jamuna Lubricants Bangladesh Ltd with the compensation condition given by the Securities and Exchange Commission.

'The DSE board took the decision as it found the condition is impractical,' DSE senior vice-president Ahasanul Islam told New Age after the meeting.

The SEC on Tuesday asked the DSE to take necessary actions according to the bourse's listing regulations for enlistment of MJL Bangladesh with a condition that the company would compensate its primary share holders from company's premium account if the market price of shares drops below the issue price within six months of its listing.

'Analysing the Companies Act thoroughly we have found that the relevant clause of 57-2c does not allow any company to compensate on such ground,' he said.

'We will send a letter to the commission conveying our decision,' he added.  

MJL Bangladesh on January 2 went for an initial public offering with a share price of Tk 152.40 each under the book-building method. As the SEC had suspended the book-building method on January 20 as per a government directive, the company has been facing complications in listing its shares with the bourses.

The company had collected Tk 400 crore from the public offering under a condition given by the SEC that it would buy back its shares if the price falls below its issue price in one month after its listing with the bourses.

The commission, to avoid the legal complications due to the suspension of the book-building method, proposed MJL Bangladesh Ltd to give compensation for the IPO holders for a time frame of six months.

MJL Bangladesh Ltd on last week sent a letter of undertaking on this regard to the SEC where it agreed to the condition given by the commission.

The SEC, meanwhile, sent a letter to the DSE on Thursday allowing the bourse 15 days more for listing of MJL Bangladesh.

As per the existing rules, the MJL Bangladesh's listing is supposed to be completed by March 31.

Read the original story on the daily New Age

DSE continues to fall as investors’ worry about economy intensifies

Dhaka stocks plunged for the third consecutive day on Thursday, with the general index of Dhaka Stock Exchange, the DGEN, losing 176.09 points, or 2.77 per cent as investors' worry about the country's overall economic condition intensified further.

The DGEN closed the day at 6,164.81 points, posting a loss of around 362 points over the last three trading days.

The turnover of the bourse on Thursday was Tk 867 crore, marking a decline of Tk 197 crore from the Tk 1,064-crore turnover on Tuesday.

Out of the 250 issues traded on Thursday, only 30 advanced, while 217 suffered price falls and two remained unchanged.

Market operators said the alarming economic indicators and the discouraging statement about the Bangladesh Fund made by the International Monitory Fund recently made a huge negative impact on the investors, making them more nervous about their investment.

A news report run by a major vernacular daily on Thursday also deepened the panic among the investors, prompting them to go for heavy sell-offs on the day, they said.

A senior official of a brokerage house said, 'The retail investors have been banking a great deal on the Tk 5,000-crore Bangladesh Fund. But, after the IMF had forecast that it would add a new degree of volatility to the market, their hopes were shattered.'

'Following a news report run by a Bangla daily that the country may be approaching a great economic crisis, the investors went for blanket sell-out, fearing another market debacle,' he observed.

Trading on the DSE started downbeat on Thursday, with the DGEN losing 101 points in the first five minutes. The DGEN curve had continued to nosedive for the next one hour, losing 233 points by 12.10 pm.

At this point, two institutions became active and went for buying shares to support the market.

An insider, however, said, excepting those two, the rest of the institutional investors on Thursday went for heavy sell-offs.

Experts guess the Libyan crisis will also make an adverse impact on the country's economy in the long run.

One of them said, 'As the Bangladeshi expatriate workers are returning from Libya, the country will not only face a shortage of remittance inflow but will also have to support them and their families using domestic resources.'

'The continued price hike of US dollar against taka and the possibility of an intensified credit crunch in the money market would also affect the securities market,' he added.

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Probe body stock market debacle to submit report by this month

The probe committee on the stock market debacle in January will submit its report by the end of this month, the committee chief, Khondokar Ibrahim Khaled, told New Age on Monday.
The committee had conducted investigations for the past three months, while it had talked to at least 100 people of different professions, including members of Dhaka and Chittagong stock exchanges, leaders of the Association of Bankers, Bangladesh, journalists, and other people related to the stock market.
Committee sources said the investigation had been completed and the committee was now drafting the report.
Although Ibrahim Khaled, who is also the chairman of Krishi Bank, declined to make any comment on the outcome of the probe, committee sources said they detected incidents of unusual trading, which had led to the stock market crash, by a number of known and unknown figures, including politicians belonging to both the ruling Awami league and the main opposition Bangladesh Nationalist Party, businessmen, government officials, and bankers.
Following massive plunges in share prices on Dhaka and Chittagong bourses, the government on January 26 formed the 3-member investigation committee headed by Ibrahim Khaled and with Bangladesh Institute of Bank Management director general Toufic Ahmad Choudhury and Institute of Chartered Accountants of Bangladesh former president Abdul Bari as its members.
The committee was asked to submit its report within two months but later the time was extended for one more month. Nihat Kabir, a Supreme Court lawyer, was also included in the committee.
The committee was asked to find the causes of the massive overpricing of share as well as frequent ups and downs of share prices in the previous two years.
It was also tasked with identifying the people and institutions that had withdrawn large amounts of money in unusual ways by taking advantage of the overheated market through direct listing, book-building, and fixed price methods of initial public offering.
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Volatile trading sends Dhaka stocks into red again

Ahmed Shawki
Dhaka stocks went back into negative zone in the past week amid volatile trading marked by huge fluctuation in share prices as retail investors were confused about the fate of the government’s ‘bail-out fund’ for and long-standing stability of the market. The general index of the Dhaka Stock Exchange, or DGEN, had lost 227.27 points, or
3.42 per cent, in the past week to close at 6,411.91 points after gaining 1,210.78 points the week before.
Before the previous week, the DGEN had shed 1,957.50 points as panic-stricken retail investors went for heavy sell-off in five weeks in one of the severe market debacles in the country.
In the past week’s topsy-turvy trading, the DGEN went up and then down on every alternate day.
‘Share trading on the DSE in the past week remained choppy as the DGEN had sharp fluctuations. The trend shows that the investors were still confused about the long-standing stability of the market and went for heavy-sell off whenever they got any amount of profit,’ an analyst said.
‘The news of uncertainty over the formation of Tk 5,000 crore Bangladesh Fund by 10 state-run financial institutions for investment in the money and capital market, the DSE’s president election and a host of news of liquidity crisis in banking sector contributed to the return of nervousness among the investors,’ he said.
He, however, observed that the rise in the turnover in the past week showed glimpses of a stable market.
Out of the total 160 issues traded, 101 advanced, 158 declined and 1 remained unchanged.
The average daily turnover in four trading days increased by 18 per cent to Tk 1,204.88 crore from Tk 1,017.56 crore in the previous week.
Trading on the DSE was closed on Thursday on the occasion of the birth anniversary of the Bangladesh’s founding president Sheikh Mujibur Rahman.
The trading on the DSE began on Sunday in the negative zone with the DGEN plunging by 459.65 points, or 6.92 per cent, after a news of uncertainty over the Bangladesh Fund spread.
The stocks bounced back on Monday with the DGEN gaining by 278.45 points, or 4.50 per cent, following an announcement by the Investment Corporation of Bangladesh that there was no uncertainty about the fund and it would be formed in the shortest possible time.
The DGEN shed 139.83 points, or 2.16 per cent, on Tuesday because of profit-booking sell-off by big investors. Witnessing the declining curve of the index, some retail investors also went for panic-driven sell-off on the day.
Rumours among the investors once again marked the trading on Wednesday as the index gained 93.76 points, or 1.48 per cent.
Prices of all the 44 insurance issues gained heavily after a rumour had spread that a newly-elected DSE director,
who is also the managing director of an insurance company, would become the new president of the bourse.
The incumbent DSE president Shakil Rizvi, however, was re-elected at the DSE’s annual general meeting on Wednesday evening.
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Bangladesh creates $700mn fund to prop up stocks

AFP, Dhaka, March 7: Bangladesh will create a $700 million mutual fund, the country's biggest ever, in a bid to stabilise the highly volatile Dhaka stock exchange, the head of a state-owned investment bank has said.

The plan is part of the government's drive to restore calm to the market, whose sharp fall has triggered angry protests by investors in the capital Dhaka and cities and towns across the country.

Eight state-run financial institutions will invest cash to create the planned 50 billion taka ($700 million) Bangladesh Fund, said M. Fayequzzaman, chief executive officer of Investment Corp of Bangladesh.

"It is the largest ever mutual fund in the country's history. It is aimed at stabilising the country's stock exchange and boosting liquidity in the crisis-hit market," Fayequzzaman told AFP.

The Dhaka Stock Exchange has shed more than 40 percent in the last three months, wiping over $16 billion off the share market's capitalisation since its benchmark index hit a record high of 8,918.51 points on December 5.

Tens of thousands of small investors have been worst hit as they started buying shares when prices were peaking.

The benchmark DGEN index was trading up 2.90 percent, or 160 points, at 5,697 points in morning trade on the back of Sunday's announcement of the fund's creation.

Monday's gains came on top of a 1.99 percent rise in the index on Sunday, a trading day in mainly Muslim Bangladesh.

The fund comes on top of a reform package that includes tighter regulation and other measures announced earlier by the government to prop up the market and boost investor confidence.

Anxious to assuage investor anger, the government has also ordered a probe into the sharp fall.

The Dhaka Stock Exchange has been one of the best performing markets in the world with the DGEN index climbing 400 percent between 2007 and 2010. In 2010, it soared 80 percent despite repeated warnings that the market was overheated.