Investors rattled by market plunge take to streets

A group of stock investors took to the streets once again on Wednesday in protest against the continuous market fall and inaction of the securities regulator.

The prime index of the Dhaka Stock Exchange (DSE) plunged 183 points in the past eight straight sessions to 5,022, tumbling to six-month low.

Angry investors under the banner of Bangladesh Capital Market Investor Association (BCMIA) gathered at Shapla Chattar in the capital at 2:30pm and brought out a procession and held a rally in front of the old building of the Dhaka bourse in the capital's Motijheel.

Protesters demanded immediate resignation of Khondoker Rashed Maqsood, chairman of the Bangladesh Securities and Exchange Commission (BSEC), and Prof Abu Ahmed, chairman of the Investment Corporation of Bangladesh (ICB), for their "failure" to bring back stability in the market.

They also sought Chief Adviser's intervention and replacement of Mr Maksood and Prof Ahmed to restore investor confidence.

Protesters burnt the effigy of the BSEC chief in front of the old DSE building. They also gave 24-hour ultimatum for the government to meet their demand.

Investors alleged that the regulator had continuously been failing to address manipulations and wrongdoings in the market, which frustrated them.

The current BSEC chairman and the ICB chairman, according to the protesters, are incompetent and that they lack the necessary expertise to manage the stock market.

"Thousands of investors have been losing their money every day and have become broke due to the ongoing downturn. The commission has failed to ensure the security of their investments," said SM Iqbal Hossain, president of the association.

Investors have no confidence in the BSEC chairman and the ICB chief, he said, adding that many investors witnessed 30-40 per cent erosion of their portfolio in just eight trading days.

Investors have been compelled to protest because the government and the regulatory bodies have taken no action to halt the decline, said Mr Hossain.

"Continuous price erosion forced them to take to the streets.

"Save us. Save the capital market. Otherwise, investors will further lose confidence in the market."

The BSEC led by Mr Maksood failed to formulate any effective policies in the last eight months after his appointment, said Mr Hossain. Instead, some decisions went against the market, he added.

The market index of the Dhaka bourse plunged more than 16 per cent while market cap shed Tk 460 billion since the August peak last year through Wednesday.

Last month, BSEC officials and employees also staged demonstrations, demanding the resignation of the BSEC chairman and three commissioners, and urged the government to appoint "qualified" persons in their positions.

The unrest at the BSEC was apparently triggered by the forced retirement of an executive director over graft allegations.

Market performance

The market extended the losing streak for the eighth session on Wednesday as jittery investors continued to dump their holdings to escape further losses, despite regulatory efforts to stabilize the market.

Against the backdrop of the continuous erosion of stock prices, the market regulator held a meeting with top brokers on Tuesday to find out the reasons behind the market plunge.

The stock market regulator on Tuesday relaxed the investment limit of the Investment Corporation of Bangladesh (ICB) in a single "A" category stock to enhance its capacity to invest more in good stocks.

The exemption was granted in response to a request, intended to boost market liquidity and increase investment capability in fundamentally-sound stocks, said the BSEC.

The securities regulator also assured stockbrokers of considering their proposal with 'importance' regarding extension of the timeframe for provisioning against negative equity and unrealized losses.

But the effort failed to bring any positive result as the key index of the Dhaka bourse went further down by more than 4 points or 0.80 per cent to 5022 on Wednesday, lowest in six months.

Investor participation remained sluggish, as turnover on the prime bourse tumbled to Tk 3 billion hitting four-month low.

Market experts said investors had been suffering from a confidence crisis for a long time amid depressed market outlook.

The market index failed to stay afloat despite a brief support from bargain hunters that fell short of breaking the continuous losing streak in absence of any major catalyst to revive investor participation, said EBL Securities.

On the continuous fall of the index, market experts said concerns over the potential impact of abrupt gas price hikes alongside possible corporate tax rate hikes by the National Board of Revenue, discussed in pre-budget sessions, had negatively affected investor sentiment.

The government increased gas prices by 33 per cent on average last week. On the other hand, the yield rate of risk-free Treasury bonds rose significantly recently.

The Chittagong Stock Exchange (CSE) on Wednesday also plunged with its All Share Price Index (CASPI) shedding 54 points to 14,011 and the Selective Categories Index (CSCX) losing 33 points to 8,550.

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