The indexes in both the stock exchanges of the country have dropped sharply within hours of a warning sounded by the Bangladesh Bank in its monetary policy announcement.
The DSEX, the main stock index for the Dhaka Stock Exchange (DSE), fell 118 points. Most stock prices fell as trading volumes dipped.
The Chittagong Stock Exchange (CSE) main index CSPI fell 419 points as share prices and trades drifted down.
“The fall is not a standard market correction (price correction),” former DSE president Raqibur Rahman told bdnews24.com. “The market has been forced downwards.”
“Recent apprehensions over the upward trend of the stock market and the latest monetary policy announcement by the Bangladesh Bank were responsible for the fall.”
“The Bangladesh Bank governor’s comments on stricter regulations created panic,” said former Bangladesh Merchant Bankers Association chairman and AAA Finance and Investment Corporation Chairman Mohammad A Hafiz Uddin.
The market opened optimistically. Though trading was slow, the market remained upbeat until 11:30 am.
But the indices fell as soon as the central bank issued its stock market warning and continued to fall until trading closed at 2:30pm.
“Regulators must be vigilant to ensure the health of the capital market and its recovery from the bearish trends since 2010,” Bangladesh Bank Governor Fazle Kabir had said during the press briefing over the latest monetary policy.
“Regulatory authority, The Bangladesh Securities and Exchange Commission, has already advised prudence and asked investors to take precautionary measures,” he said.
“It may be advisable to restrict the supply of credit for stock market buying instead of allowing it to boost stock valuations abnormally.”
Kabir urged stricter bank oversight to ensure regulations were followed. He also called on banks and financial institutions to pay heed to whether customers make proper use of their loans.
“Do not let large profits influence investment decisions . Monitor it strictly.”
>>Tk 11.37 billion worth shares were traded at the stock market on Sunday, down Tk 1.32 billion from Thursday’s Tk 12.69 billion
>>Shares of 327 companies and mutual funds changed hands at the DSE on Sunday. Of these, the prices of 47 have increased, 275 have decreased and five have remained the same
>>The DSEX price index fell 117 points to 5,500. The DSES, or Shariah index, fell 17 points to 1,274. The DS30 index fell 35 points to 2,003
>>The CSE traded Tk 68. 07 million on Sunday, down from Tk 72.43 million on Thursday
>>The CSE main index CSPI fell 479 points to 16,979 on Sunday. Shares from 263 companies and mutual funds were traded. Of these, the price of 42 rose, 217 fell and four remained unchanged
The 2010 stock market boom-and-bust left many investors pauperised overnight.
Though the market dipped in the six years ever since, it has recently shown signs of revival.
The DSEX index rose past 5,000 for the first time in several years. Past experience has led many analysts to urge caution.
Even Prime Minister Sheikh Hasina has advised investors to avoid rumours and only invest in companies after checking their long-term viability.