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Free fall of stock: Investors demand BSEC reconstitution, revoking book building method

  • Published at 09:53 pm October 29th, 2019
Stock market investors addresses a press conference Under the banner of Bangladesh Pujibazar Biniogkari Oikya Parishad at the National Press Club in Dhaka on October 29, 2019 Courtesy

The market capitalization at DSE dropped to Tk65,500 crore in the last nine months

The key index and market capitalization of Dhaka bourse continues to fall, creating panicky situation in the market that eventually raised a string of demands from the small investors to prop up the ailing capital market.

Dhaka Stock Exchange (DSE) observed the bearish trend for the last three consecutive sessions and witnessed free fall amid poor earnings and dividend declarations of several companies, frustrating the investors afresh.

The index went down by 28.48 points or 0.60% on Tuesday to settle at 4,670, the lowest level since November 15, 2016. The benchmark index of the premier bourse lost 101.26 points in the last three days.

The market capitalization at DSE dropped to Tk65,500 crore in the last nine months. The prime index, DSEX, lost 1,250 points from its highest hit of 5,950 points, since January 24 this year.

Meanwhile, agitated stock market investors on Tuesday demanded government probe into corruption and irregularities by the securities regulator, stock exchange members, Investment Corporation of Bangladesh and issue managers.

They claimed the corruption by securities regulator and DSE members led to the recent fall and instability in the market.

They also wanted prime minister’s intervention in running a cleansing operation in the stock market like the government was currently running against illegal casinos and liquor.

Under the banner of Bangladesh Pujibazar Biniogkari Oikya Parishad, they made the demand at a press conference held at the National Press Club in the capital.

The investors urged the government to reshuffle the current Commission of the capital market regulator for failure in reviving the market after the 2009-10 debacle.

Bangladesh Pujibazar Biniogkari Oikya Parishad President Mizan ur Rashid Chowdhury also demanded immediate resignation of chairman of the Bangladesh Securities and Exchange Commission (BSEC) and its commissioners for their failure to bring back normalcy in the market despite government’s several supportive measures.

At the press conference, a total of 21 demands were made by the investors to attract the attention of Prime Minister Sheikh Hasina.

They demanded immediate action to help revive the market. The other major demands include  enacting a buyback law, stopping approval of IPOs and rights shares for next three years,  curbing the illegal trading of placement shares and revoking the book building method for IPO pricing.

The platform's General Secretary Abdur Razzaq said: “The BSEC chairman is working for the issuer companies and stock brokers, not for investors.”

Market on Tuesday  

DSE Shariah-based index DSES declined 0.66% to end at 1,067.5 points, while blue-chip index, DS30 went down by 0.82% to close at 1,635.5 points.

Turnover in the Dhaka Stock Exchange stood at Tk358.2 crore during the session, which was Tk305.9 crore in the previous session. 

Talking to Dhaka Tribune market operators and analysts said that recent corporate declarations might not meet investors' expectation for which, they have exerted sell pressures on certain sector specific stocks. 

EBL Securities in its daily market commentary said that without any prompt support from the regulators and institutional investors, market has appeared to struggle to sustain on its own in recent times. Investor's has shown greater enthusiasm to participate in the market compared to last two days as turnover has increased by 17% to Tk358 crore.

Most of the investors liquidate their stock on Pharma and Chemicals, Miscellaneous and Food and Allied sectors that took the index downwards. The bank sector dominated the turnover board and grabbed 19.7% of the day’s total turnover, it also said.

Market insiders said that the investors have been suffering a crisis of confidence for long and the recent fall of the index mounted the crisis among them.

Among the traded issues 110 gained, 197 declined and 47 remained unchanged during the session in Dhaka Stock Exchange while 67 gained, 145 declined and 27 remained unchanged in Chittagong Stock Exchange.

The port city’s bourse, Chittagong Stock Exchange (CSE), also ended lower with its CSE All Share Price Index – CASPI- shedding 140 points to settle at 14,184 and the Selective Categories Index - CSCX –losing 83 points to finish at 8,627.

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