Despite having a provisioning facility, the institutional investor merchant banks have appeared nearly inactive in the country’s stock markets as they purchased shares worth only Tk1.42bn during February and March.
The participation was not sufficient to boost market turnover, although the merchant bankers earlier urged Bangladesh Securities and Exchange Commission (BSEC) for a provisioning facility to save their business hit by the continuous market downtrend.
BSEC, the stock markets regulator, allowed all merchant bankers to maintain a provision of 20% instead of 100% on unrealised loss of their own portfolio investment for the year of 2012 and the rest 80% in four equal installments on quarterly basis over the period of 2013.
The regulator observed that the merchant bankers’ participation has been very low even though they availed of the facility.
According to BSEC data, the merchant banks bought shares of Tk460m in March which was 52.08% less compared to the previous month’s Tk960m.
The total sale value dropped to Tk228m in March from Tk738m in February with a decline of 69.41%.
Of the total 38, 14 merchant banks did not buy any share in March when the market’s daily turnover values fluctuate between Tk1bn to Tk2bn.
The merchant bankers which have not bough any share during the given months included Prime Bank Investment, Trust Bank Investment, Uttara Finance, Bay Leasing and Investment, Exim Islami Investment, GSP Finance Company, IIDFC Capital, Jamuna Bank Capital, Banco Finance, AAA Consultants, Cosmopolitan Finance, Grameen Capital Management, NDP Capital and Race Portfolio and Issue Management.
Agrani Equity and Investment bought the highest number of shares worth Tk62.91m and sold shares of Tk77.43m. IDLC bought shares of Tk77.07m and sold Tk28.56m, SBL Capital Management bought Tk55.75m and sold Tk34.83m and Rupali Investment bought Tk33.58m and sold Tk9.95m in March.
The disbursement of margin loans was also slow as total disbursement amounted to Tk59.98bn in the non-discretionary account throughout the March compared to Tk59.1bn in February.
AB Investment Ltd disbursed highest amount of margin loans totaling Tk6.73bn, followed by Prime Bank Investment Tk6.62bn, ICB Capital Management Tk5.75bn, Lanka Bangka Investment Tk4.73bn, Trust Bank Investment Tk4.63bn, IDLC Investment Tk4.47bn.
The merchant bankers also failed to implement the `Special Scheme’ for retail investors which was intended to waive interests against their loans.
Recently, the merchant bankers sought Tk12.67bn as refinancing to implement the `Special Scheme’.
According to their statistics, 25 merchant banks had provided Tk9130m as margin loans to 41,922 investors. And they will have to waive interests of Tk1300m including rescheduling. Only the ICB has so far waived interest on margin loans, which amounted to around Tk140m.
The retail investors, however, alleged that in the name of fund crisis, the merchant bakers took different facilities from the BSEC but did not follow the path what they promised.