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Dhaka Tribune

Stakeholder’s Emergency meeting held to prop-up share market

Representatives from merchant banks, stock exchanges, brokerage houses, ICB, and BSEC might be included in the proposed committee

Update : 23 Oct 2018, 10:38 PM

Securities regulator and stakeholders at an emergency meeting on Tuesday decided to form a Joint Working Committee (JWC) to identify reasons behind the recent sharp fall in indices and prop up the jittery markets with policy supports and fresh liquidity.

The meeting was informed that the Investment Corporation of Bangladesh(ICB) will invest Tk1,500 crore in the capital market next week to ensure available liquidity in the fund-crunch market, caused mainly to investors’ wait and see policy  ahead of the upcoming national election, meeting sources said.

Stakeholders of share market including representatives from merchant banks, Dhaka Stock Exchange (DSE), Chittagong Stock Exchange (CSE) and Bangladesh Securities and Exchange Commission (BSEC) were present at the meeting.

The meeting was held at the Investment Corporation of Bangladesh’s (ICB) head quarters in the capital.

DSEX, the key index of the Dhaka Stock Exchange (DSE), the premier bourse has seen a sharp fall of 130 points in the last three trading sessions, while the Chittagong Stock Exchange shed 169 points. 

The market capitalization of DSE declined by about Tk8,221 crore last month. On Tuesday, the total market cap of the prime bourse was Tk3,80,367 crore. 

The meeting decided that the stakeholders will form a JWC outlining its Terms of Reference (ToR) to supplement the functions of BSEC, DSE and CSE in improving market appetite before identifying reasons for continuous fall, it was learnt.

Representatives from merchant banks, stock exchanges, brokerage houses, ICB, and BSEC might be included in the proposed committee.

The proposed JWC will evaluate the implementation status of  earlier decisions of the BSEC to vibrant the capital market, and recommend action plan for the government to shore up the fragile market situation, sources said.

 “In the meeting we have broadly discussed market situation as it has been going through down trend this month, particularly for the last three days. But we did not find any valid reason for the sharp fall and declining market transaction,” Kazi Sanaul Hoq, managing director, ICB told reporters after the meeting.

“We have agreed to form a ‘Joint Working Committee’ to work on different aspects of the capital market. The committee will work to take new steps for the development of the stock market and to overcome the present situation. It will also work to implement the measures earlier taken   to streamline the stock market, “Sanaul added.

BSEC Executive director Md Saifur Rahman, who also attended the meeting, said currently the country has no political instability that could cause downswing in the market. The election will be held as a usual and there is nothing to be worried about it, he added.

Furthermore, pointing to fresh liquidity, he said the DSE shareholders will invest the money, which they earned by selling shares to Chinese  Consortium as the National Board of Revenue (NBR) is going to issue a circular soon giving a 10% rebate on gain tax.

In response to the DSE shareholders, Finance Minister AMA Muhith last month offered 5% gain tax cut on investment of money earned by selling 25% share to Chinese Consortium.

The DSE sold off 25% shares  to Chinese Consortium at Tk947 crore. 

“Local investors became cautious in making investment decision ahead of the election as  foreign investors also went on see- saw move to observe the election period. As a result, the stock market has seen a downward trend,”  DSE MD KAM Majedur Rahman  said. 

Before election investors become more aware about their investment decisions. It is not only in Bangladesh but applies also in many countries in the world, he added.   

The Bangladesh Securities and Exchange Commission (BSEC) Executive Director Md. Saifur Rahman, ICB managing director Kazi Sanaul Hoq, DSE Managing Director K.A.M. Majedur Rahman,  Bangladesh Merchant Bankers Association (BMBA) president Mohammed Nasir Uddin Chowdhury and Dhaka Stock Exchange Brokers Association (DBA) President, Mostaq Ahmed Sadeque were present the meeting.

ICB to invest from next week 

As per the meeting decision, the ICB will make investment of Tk1,500 crore next week already raised by offering bond of Tk2,000 crore.  

On July 17, the BSEC gave nod to float non-convertible fixed rate subordinated bonds worth Tk2,000 crore. As per the regulatory directive, the ICB has to invest at least 75% or Tk1,500 crore in the stock market. 

In overcoming the liquidity crisis, the stock market regulator has approved ICB’s proposal to offload bond of Tk2,000 crore, which would be invested in the stock market from next week, said Rahman.

Stock prices at the Dhaka Stock Exchange (DSE) ended flat on Tuesday. However, the daily turnover fell by 12.8%, reaching 19-week low to Tk379 crore. In the previous session it was Tk435 crore.

The market back to black on Tuesday riding on rise of prices of shares of telecommunication, life insurance and cement sector.

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