Tk. 27 crore disappeared from stock market in 15 days

Image: Bizbangladesh.net
The index falls without bridle again. As a result, investors of the stock market lost Tk. 4,358 crore in a single day. Debt investors are in most danger. Because, shares in the portfolio of many borrowers have fell under forced selling for debt repayment. 

Continuing the trend of the previous day, the index took a big dive on Monday as well. DSEX, the main index of the country's main stock market Dhaka Stock Exchange (DSE), has fallen 5,000 points below the psychological threshold. This has led the general investors to panic.

DSEX, the main index of the Dhaka market stood at 4,966 points, falling by 67 points or 1.34 percent, at the end of yesterday. This is the lowest position since December 26, 2016. That day, the DSEX index was in the position of 4,957 points. The overall index of the other share market Chittagong Stock Exchange (CSE) stood at 15,215 points, falling by 200 points or 1.25 percent.

Since the budget of the current fiscal year of 19-20 passed on June 30, the investors lost about Tk. 27,000 crore in just 15 working days till yesterday. Due to the decline of share price, the market capital of DSE has dropped from Tk. 4 lakh crore to Tk. 3 lakh 73 thousand crore. Of these, the market capital dropped to Tk. 3 lakh 72 thousand 957 crore, due to the fall of Tk. 4 thousand 358 crore in share value of companies trading on the DSE in a single day. Market capital is the product of multiplication of the market value of the shares of the companies that are transacting with their transactional shares. Apart from the market capital, the DSEX index also dropped about 8.5 percent or 456 points in the same period. Of that, 165 points decreased in last two days.

Market participants labeled the decline of stock market index in the last two days as "free fall or fall without bridle". Such a decline occurs when investors lose confidence in the market, they added. The main index of the DSE fell more than 100 points in the first hour of trading yesterday. The shares of many companies became buyer less. In order to prevent the collapse, the regulatory body requested different brokerage houses and merchant banks to buy shares by calling them. Some organizations respond to this request of the regulatory body. The index was somewhat recovered. However, the collapse did not stop.

Upon asking, Farooq Ahmed Siddiqui, former chairman of the capital market regulatory body Bangladesh Securities and Exchange Commission (BSEC), told the Prothom Alo, when the market faces collapse, panic-stricken investors try to sell the shares in their hands before others. So yesterday, the index fell by more than 100 points in the first hour of trading. Although the level of the collapse could be somewhat reduced later. 

Farooq Ahmed Siddiqui added that there are many reasons behind this decline in the market. In the budget, the government has decided to discourage the enrolled companies from paying the bonus dividend by increasing taxation. On the other hand, the BSEC has banned the bonus dividend if the entrepreneur-managers do not have a combined 30 percent share. On the other hand, Bangladesh Bank has decided to end peoples leasing, financial company listed on the stock market. Some of these steps are good for the market in the long run. But taking these steps at the wrong time has a negative impact on the market.

BSEC issued a directive regarding minimum shareholding of the entrepreneurial managers of the company on May 25. It states that companies that do not have a minimum of 30 percent stake in the entrepreneurial directors cannot declare bonus dividends. 36 companies, whose financial year ended on June 30, cannot declare bonuses this time due to the BSEC's directive.

The inquiry committee, formed for investigating the cause of the recent 'abnormal' price drop of the stock market, has begun work. On the first day, they talked to some brokerage house officials yesterday. According to BSEC sources, the two stock exchanges were instructed to check whether the shares being sold from different brokerage houses were complying with the proper rules. 
Usually in case of selling shares, the investors have to order the sale in writing or via SMS. The brokerage house has to save a copy of that order. Both stock exchanges are directed to monitor whether the investor's shares are being sold complying that rule in the current market.

According to BSEC sources, information of six months of transactions have been sought from top 10 brokerage houses about their top 50 customers. The transaction information of those customers from last January were asked to provide to the inquiry committee. The officials of these brokerage houses are also directed to adhere to the appropriate rules during the transaction.

Apart from that, BSEC has given a letter to Bangladesh Bank for releasing Tk. 85 crore from the 800 crore reinvestment fund, which has been set up at a low interest rate for investing in the stock market. The company's executive director Saifur Rahman confirmed the information to the Prothom Alo yesterday. After receiving this money, it will be given to 27 institutions for reinvestment, he added. 

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