Investors run amok

Ahmed Shawki and Md Atiqur Rahman

Agitated share market investors went on a rampage on Monday afternoon vandalising scores of vehicles and business establishments at Motijheel in the city as the general index of Dhaka Stock Exchange continued to plunge, shedding 324.51 points on the day.

The angry investors took to the streets of Motijheel, the commercial hub of the capital city, for the second day on Monday as the share prices continued to decline heavily as soon as the trading began.

Trading on the DSE started as scheduled despite the general strike called by the opposition Bangladesh Nationalist Party and in the first five minutes of trading the DSE general index took a plunge of about 240 points.

The index, however, levelled after an hour of trading and stood at about 6,725 points. But the share prices started to slide again as panic-stricken investors continued to sell off their stocks amid a liquidity crisis prevailing in the market.

The investors became furious and came out of brokerage houses after the index had lost 185 points after the midday.

They set fire to woods and papers piled up on the road stretching from the Bangladesh Bank building and Ittefaq crossing chanting demands for immediate resignation of prime minister Sheikh Hasina, finance minister AMA Muhith, Bangladesh Bank governor Atiur Rahman, and DSE president Shakil Rizvi for their failure to stabilise the market.                

They blocked the road and staged demonstrations and took out processions in small groups. They also locked in sporadic clashes with the police.

Investors also took out several processions with their shirts taken off and waving their shoes in an expression of their frustration and anger towards the market regulators.

A group of agitating investors dislodged a roadside advertising board and wielding it chased media professionals covering the incident, shouting, 'We are losing every thing and you media people come here to telecast live shows without ticket.'

A small section of the investors, who were throwing brickbats at a Janata Bank branch and its adjacent business houses, locked horns with law-enforcers at round 2:30pm.

As the police went for action to disperse the rowdy investors, they took shelter in the nearby lanes and threw brickbats at the law-enforcers.

The general index of DSE lost 324.51 points, or 4.83 per cent, to close the day at 6,394.53 points as prices of 241 of the total 255 issues traded on the day declined heavily.

After the closing, the aggrieved investors ran amok, vandalising a number of cars and pelting brickbats at the offices of Bangladesh Bank, Citi Bank NA, IFIC Bank, NCC Bank, American Life Insurance Company, and a number of offices in front of the Jiban Bima Tower which houses the SEC office.

The Rapid Action Battalion then swooped on the demonstrators, chased and dispersed them.

The regulatory bodies including the government high-ups are 'worthless' and should step down immediately, shouted an investor named Shah Jalal from a rally in front of the DSE building.

Later, he told New Age, 'If the country's finance minister treated the capital market as a gambling house, it surely proves his ineligibility to have the portfolio.'

A section of investors also demanded that share trading should be suspended until the regulators could come up with appropriate measures to stabilise the market.

Mohiuddin, a small investor, said, 'What the regulators term market correction is an utter nonsense, rather it is an indicator of corruption.'

On Sunday, investors staged demonstration in front of the DSE building as the DSE general index lost 406 points, or 5.7 per cent, on the day. The market began to collapse last week for the second time in the past three weeks.

Experts attribute the recent volatility of the capital market to a lack of confidence of investors and a liquidity crisis prevailing in the market.

Salahuddin Ahmed Khan, a finance teacher at Dhaka University, told New Age, 'The investors have lost their faith in the market and are going for panic-driven sales.'

'It will take a long time for the market to bounce back in a natural process. It is suffering from liquidity crisis and the number of buyers is also declining due to the downtrend,' he said.

Salauhddin, a former chief executive officer of the DSE, said, 'The government can inject fresh funds to the market, which perhaps will stabilise the market.'

Anwar Securities CEO Azam Khan however said they were expecting the market to rebound after the merchant bankers and brokerage houses finished preparing the guideline on margin loan ratio.

'The merchant bankers and stockbrokers are supposed to formulate the guideline by February 10. Once the guideline is formulated, investors will get a clear idea about how much loans they would get and could go for buying shares,' he said.

Source: New Age

Suspension of 5 brokerages cancelled

The Securities and Exchange Commission on Monday decided to withdraw its order suspending the operations of five brokerage houses with effect from today.

The commission, in the wake of the current equities market debacle, convened an emergency meeting and decided to withdraw the suspension imposed on the houses for their alleged involvement in aggressive share sales on January 20, the day on which the capital market had collapsed.

The brokerages are Al-Arafah Islami Bank Ltd, Dhaka Bank Ltd, NCC Bank Ltd, PFI Securities Ltd, Alliance Securities and Management Ltd, and IIDFC Securities Ltd.

'The clients of the five brokerage houses will be able to trade shares from Tuesday,' said a commission official.

He, however, said the suspension of the chief executive officers or managing directors of the brokerage houses would remain in force until the end of the ongoing investigation.

The capital market regulators on January 25 suspended six brokerage houses –the five mentioned above and the NCC Bank – and their chief executives for 30 days after it had found their involvement in aggressive selling on January 20 when the general indices of Dhaka and Chittagong bourses had plunged by around 600 points in just five minutes of trading.

The commission also launched an investigation into the alleged aggressive selling by the brokerage firms and asked the account-holders with the houses to trade in shares by opening link accounts with other brokerages.

Five of the brokerage houses, except the NCC Bank, on January 23 submitted petitions to the High Court against the suspension order but a HC bench of Justice AHM Shamsuddin Chowdhury and Justice Sheikh Md Zakir Hossain summarily rejected them.

The regulators withdrew the suspension imposed on the NCC Bank on January 26 after the bank had apologised but the SEC continued with the probe into its alleged involvement in aggressive share selling on January 20.

The commission on January 30 allowed the accountholders with IIDFC to trade in shares through Bank Asia and MTB Securities Limited.

SEC officials said the decision to withdraw the suspension of five firms was taken considering the plight of general investors and to build confidence among them as the market had taken a deep plunge in the past three trading days.

Commission member Yeasin Ali told New Age that they had received reports against the brokerages houses from the six probe committees.

'We will now serve show-cause notices to the houses and ask them to reply them by 10 days. We will decide our next actions based on their replies,' he said.

Source: New Age

Key govt decisions to boost market not implemented

Md Atiqur Rahman

The government is yet to take any steps to implement the key decisions taken on January 23 to boost share market investors' confidence following the market crash in the preceding week.

Analysts said the lack of government initiative to implement the major decisions, including reinvestment by banks the profits they had made from the equities market, had depleted investors' confidence even further leading to the current bear run.

After the general indices of Dhaka and Chittagong bourses had lost 600 and 795 points respectively in just five minutes of trading on January 20, finance minister Abul Maal Abdul Muhith, following a series of meetings with stakeholders, took the decisions.

The few decisions implemented so far include resumption of trading on the bourses on January 25 after a two-day suspension, withdrawal of circuit breaker on general index, reducing the range of circuit breaker on share prices, and formation of a committee to probe into the market debacle.

But the major decisions like reinvestment of profits made by banks from the capital market, steps to amend the Banking Companies Act to allow more investment by banks in the capital market, the central bank adopting a flexible attitude towards financial institutions for investing in the share market, holding regular meetings between the Bangladesh Bank and Securities and Exchange Commission officials, suspension of initial public offerings of two companies under the book-building method, and including BB representative in the SEC advisory committee, are yet to be implemented.

Moreover, the SEC has already allowed Mobil Jamuna and MI Cement to hold draw for allocation of primary shares through the book-building method.

'The decisions taken by the finance minister seem to be mere claptraps as all the banks and financial institutions are still inactive in the market, which is facing a severe liquidity crisis,' said Khairul Anam, a general investor.

A stock analyst said, although the finance ministry decided that the BB would take a flexible stance on the issue of financial institutions investing in the capital market, the central bank in its monetary policy announced on January 30 discouraged banks' investment in the 'unproductive sector'.

'The main reason for the current capital market crash in which the DSE general index has lost 1,200 points in six days is liquidity crisis as the institutional investors like banks have remained inactive,' he said.

BB officials said, instead of listening to the central bank's comments, the banks were assessing their own risks in investing in the market.

Regarding the banks' reinvestment of profit in the capital market, a senior official said the central bank had already asked banks to separate their profits made from the capital market.

'We will know how much profits the banks had made from the capital market after they prepare their balance sheets in March-April,' he said, adding, 'Then we will know how much the banks should invest in the capital market. So, the banks might not be able to reinvest their profits made from the capital market before April.'

Source: New Age

Investors on rampage in city

Angered by continued fall in share prices for the third consecutive day, investors went on rampage in Motijheel, the business hub of the capital Monday. Trading of shares started at the Dhaka Stock Exchange as usual in the morning despite the countrywide shutdown called by the main opposition BNP but the index fell sharply from the very beginning.Around 1:00pm, the investors took position in front of the DSE building and started demonstrations. They also burnt papers on the middle of the road during the demonstration. As the transaction concluded at 3:00am with downfall of 314 points in the share price index, the investors became furious and damaged a number of business establishments on both sides of the road stretching from Shapla Chattar to Tikatuli crossing. The establishments which were damaged included IFIC Bank, NCC Bank, ICB Islami Bank, Janata Bank, Standard Chartered Bank and Banglalink office.

Later, the police went into action there and brought the situation under control at around 4:00pm.

No arrest was made in connection with the incident.

Source: The Independent

Stock investors go berserk again

A steep fall in share prices sent hundreds of investors out on the street in Motijheel to protest the plunge Monday, with many taking to vandalism for the second day. They vowed to continue their demonstration until the market bounces back.

The General Index (DGEN) of Dhaka Stock Exchange came down to 6,394 points, registering a 324 points or 4.8 per cent fall at the end of a four-hour trading session Monday.

With Monday's fall, the market remained in the red for a third trading session, marking a cumulative drop of 915 points.

As the incessant slump in stock prices creates frenzy, the government is blaming it on the main opposition.

Prime Minister Sheikh Hasina said the BNP has kicked up issues to call hartal by playing tricks in the share market and hoarding essential commodities resulting in a price spiral.

Although the freefall shaped up into a big headache for many, the government appears to be unfazed in the face of it, angry investors said.

Although the investors started gathering in front of the premier bourse from the opening bell of the trading session, the demonstration began at around 1:30pm after the DGEN plunged over 300 points.

The aggrieved investors set fire to paper and wood, burnt an effigy of the finance minister, and chanted slogans demanding resignations of the finance minister, central bank governor, market regulator's chairman and presidents of two bourses.

They also smashed up a bus and a pickup van in the area and broke windowpanes of some buildings adjacent to the DSE by throwing brickbats.

'My portfolio has been wiped out by 75 per cent. I have invested Tk 20 lakh, but now the value is Tk 5 lakh only,' said Mizanur Rahman, a shocked investor who was in tears. 'I am losing everything. I don't know what to do.'

Many others were expressing their feelings the same way, most of whose money was lost to the recent slump in share prices.

Stockbrokers said share prices kept declining without any let-up. 'Frightened investors started offloading the shares from the opening bell. Sliding confidence of investors prompted huge sell pressure and buyers were inactive in fear of further debacle,' a leading stockbroker said in its regular analysis.

Losers outnumbered gainers by 241 to 12, with two securities remaining unchanged on the DSE that traded more than 5.47 crore shares and mutual fund units at a value of Tk 609 crore.

Meanwhile, the Securities and Exchange Commission (SEC) has withdrawn a suspension order on trading of five stockbrokers.

The stockbrokers are: Al Arafah Islami Bank, Dhaka Bank Securities, NCC Bank Brokerage, PFI Securities, Alliance Securities and Management, and IIDFC.

Earlier, the SEC suspended the stockbrokers' trading activities for 30 days on charges of their involvement in the ongoing volatility in the secondary market.

However, the probe activities on these firms by the SEC will continue.

'Considering the current market situation and investors' interest, the commission has decided to withdraw the trading suspension on these stockbrokers,' said Saifur Rahman, a spokesman and executive director of the SEC.

Source: The Daily Star

Dhaka stocks dip as protest continues

Dhaka stocks saw yet another plunge, the latest in a series of recent collapses, as violent protests by angry retailers entered the second day in a row on Monday. The benchmark DSE General Index (DGEN) shed 4.8 per cent or 324.51 points to close at 6394.53, the lowest since January 20 this year when it fell 600 points in five minutes, forcing the regulator to suspend the trade.

The volume of trade also fell alarmingly as turnover clocked at Tk 6.0 billion, a decrease of 13 per cent over the previous session and the lowest in a year. 

Hundreds of investors, who have been reeling under a confidence crisis, staged demonstrations sporadically outside the DSE building, chanting slogans against the regulators and authorities, damaging some brokerage firms and smashing some vehicles.  Presence of investors on the trading floor was relatively thin due mainly to the countrywide daylong strike called by the main opposition party to protest mainly rising food prices and a recent stock market crash.

'Continued free fall and liquidity concerns have accelerated erosion of the investors' confidence,' said RY Shamsher, chief executive officer of the AB Investment Bank Limited.

At around noon, investors started to vent their anger by setting fires to papers, wood and other debris on the busy road in Motijheel, the commercial heart of the country.

They pelted brickbats at the entrance point of the central bank as they alleged that the central bank's raising cash reserve ratio has limited the bank's stock investments, leading to liquidity shortage in the market.  They also damaged some offices, including Citi Bank NA, housed near the DSE.       

The financial sectors were the worst losers.  Banking issues, the market's bellweather, declined 5.15 per cent, non-banking financial institutions 5.32 per cent, life insurance 3.40 per cent and energy 5.32 per cent. Grameenphone, the most weighted shares in DSE, slipped 1.55 per cent even though it had declared 85 per cent cash dividend for the year ended 2010.

'Sliding confidence of investors because of the consecutive falls accelerated huge sell pressure and buyers were inactive in fear of further debacle,' said LankaBangla Securities in its market analysis. Investors' fury has been prevailing over the twin bourses since December last year as the DGEN lost 30 per cent since its peak of 8918.51 recorded on December 5, 2010.

On January 25, the government formed a committee to probe irregularities in the market. The Securities and Exchange Commission (SEC) took a number of steps to bring the confidence from brink but it was futile. Institutional investors, the key market players, along with retailers continued to remain inactive as they make no fresh investment in the market fearing overexposure in the market, said a merchant banker.

Source: The Independent