The fear of the pandemic coronavirus is everywhere. Fear of death almost stopped leaving the house. Everyone is busy saving their lives after doing business. Just four years ago, in the days of such unknown fear of death chasing the epidemic, the stock market trading was stopped.
In such a difficult situation, the Shibli Rubaiyat-ul Islam-led commission took several positive steps with the responsibility of the regulatory body Bangladesh Securities and Exchange Commission (BSEC). In this recession the stock market gradually regained momentum.
The commission which put a smile on the face of the investors with the responsibility of the regulatory body in the difficult situation, the stock market has come under a heavy pressure at the end of the commission’s term. Millions of investors are constantly losing capital due to the continuous decline in prices.
No party can find the real reason for such decline. As a result, the cries of investors about loss of capital do not stop. Rather, the bleeding of investors is increasing day by day. As a result, the anger of the investors is increasing on the regulatory body.
Naturally a section is against the commission. They do not want this commission to be extended. In the current scenario, that segment is inactive in the market. As a result, there is a liquidity crisis in the market and prices are falling. Along with this, the increase in bank interest rates has become negative for the stock market. All in all, the market is going down
The market participants call this fall in the share market as ‘unusual’. They say that several factors are working behind the fall in market prices. But due to those reasons, the rate of decline in the market is actually higher than that. There is no rational reason for the rate at which the market is falling now.
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The commission led by Khairul Hossain, the then chairman of BSEC, stopped trading when the stock market crashed in early 2020 due to the corona virus. In such a situation, Shibli Rubaiyat-ul Islam took over as BSEC chairman in May 2020. Three others joined him as commissioners. The new commission with the responsibility of BSEC resumed trading in the stock market which was closed for 66 consecutive days on May 31 of that year.
The fall in the stock market does not stop
The Shibli Commission issued a stern message against the irregulars besides opening the closed transactions. Several individuals and institutions were fined heavily for their involvement in irregularities. Government investment institution Investment Corporation of Bangladesh (ICB) has been warned. Various brokerage houses are warned along with fines. Subsequently, initiatives were taken to reorganize the ICB. IPOs of a dozen weak companies were cancelled.
The Shibli Rubaiyat-ul Islam-led commission was praised by various parties for such a step. Which has a positive effect on the stock market. The stock market turned around in the middle of the corona epidemic. Transactions that went down to 50 crore rupees suddenly increased to thousands of crores.
This price drop is called ‘unusual’ by market participants. They say that several factors are working behind the fall in market prices. But due to those reasons, the rate of decline in the market is actually higher than that. There is no rational reason for the rate at which the market is falling now
After that, there have been several ups and downs, but currently the stock market is in a continuous decline for the past one month. The term of Shibli Rubaiyat-ul Islam and three commissioners, who were appointed for four years, will end in the first phase in May. It is not yet clear whether their appointment will be renewed or not.
At the end of the term of the chairman and the three commissioners, some people related to the stock market think that there may be a special cycle behind the continuous fall in the stock market. In this regard, a member of Dhaka Stock Exchange (DSE) told Jago News that some big investors have received special benefits during the current commission. Despite committing major irregularities, strict disciplinary action was not taken against them. Punitive action has also been taken against some investors.
He said, naturally a section is against the commission due to these reasons. They do not want this commission to be extended. In the current scenario, that segment is inactive in the market. As a result, there is a liquidity crisis in the market and prices are falling. Along with this, the increase in bank interest rates has become negative for the stock market. All in all, the market is going down.
Investors lose their capital
“While the regulatory body was initially praised for its good actions, it has taken several controversial decisions of late. This also has a negative impact on the market. Among them, holding the market with floor price for a long time was the biggest wrong decision. After that recently controversial decisions have been taken about Z Group as well. The market has continued to fall ever since the controversial decision was taken on this group,’ said the member of DSE.
On February 15, the regulatory body BSEC issued a directive on the basis of which the listed companies will go to the Z group. The last point of the directive states that the directive will come into effect from the date of next dividend declaration or annual/interim dividend declaration of the issuer company.
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Stock market tumbles, index hits 34-month low
BSEC Chairman Shibli Rubaiyat
Despite such instructions from the regulatory body, 22 companies were suddenly transferred from DSE to Z Group on February 18. Then comes the announcement that no more companies will be taken into the Z group. But later some other companies were included in this group.
Thus, after some companies were taken into the Z group, the stock market fell in price. Over Tk 92,000 crore has already been lost from the market capitalization of DSE in this price drop that has been going on for more than a month. Meanwhile, the main price index of DSE decreased by 613 points.
The decision to lend Rs 100 crore from the Capital Market Stabilization Fund (CMSF) to capital market intermediaries has not yet been released. The commission is trying to release this money quickly. Besides, a plan has been taken to work jointly with all parties to develop the market
Capital market analyst Farooq Ahmed Siddiqui told Jago News that there could be many reasons for the slump in the stock market. One of the reasons for this is lack of confidence in the market. Many investors had crores of rupees stuck for a year and a half. A mistrust has arisen between them. There is a fear of money getting stuck in new investments. In this situation, there will be no foreign investment, because foreigners have understood that if they invest in this country, the money will be stuck. Distrust has also been created among domestic ordinary investors.
He said, the market has been manipulated for the last one and a half years and is still happening. Market discipline has broken down. Many are being favored, many are being given various discounts. In this, the same rules for everyone in the market are not in force in many cases. There is a lack of orderly conditions in the market.
“Many of the listed companies paying dividends have a net return of 3-4 per cent as share price. Bank interest rate there is 10-12 percent. So this is definitely a reason for the slump in the stock market. But I think the main reason is lack of good governance and transparency.’
Regarding the way out of this situation, this capital market analyst said, good governance should be returned to the market, transparency should be returned. All kinds of manipulation should be stopped and initiatives should be taken to restore confidence among investors. The return of good governance and transparency will also bring back investor confidence. Besides, laws or rules must be equal for all.
DSE Brokers Association of Bangladesh (DBA) President Saiful Islam told Jago News, “We are also trying to understand this, it is not supposed to happen.” Because, now there is no news in the market, still it is happening.
BSEC Chairman Shibli Rubaiyat-ul-Islam
He said interest rate is a major issue. There is nothing more than that. We think interest rates are the key here. Currently the interest rate is 11 percent. Interest rates have not been so high since 2016-17.
So what money is going out of the stock market and going to the bank? When asked such a question, he said, going to the bank, going to the treasury bond. However, the price drop in the stock market is by no means normal. It is normal for stock market prices to fall due to rising interest rates. But the rate of decline is not in line with our expectations.
BSEC chairman and several commissioners are on the way to the end of the mayor. There is buzz in the market whether their appointment will be renewed or not. Is there any impact on the market? When asked, Saiful Islam said, there is still a lot of time. It doesn’t seem to have any impact on the market.
Executive Director of BSEC and spokesman of the organization Mohammad Rezaul Karim told Jago News that the stock market is now in a bearish trend. We believe that panic cell and force cell cause this rearward condition to exist. The commission is taking various steps to get out of this situation.
When asked about the nature of the action, he said that the decision to give a loan of Tk 100 crore to the capital market intermediaries from the Capital Market Stabilization Fund (CMSF) has not yet been released. The commission is trying to release this money quickly. Besides, a plan has been taken to work jointly with all parties to develop the market.
“If someone is trying to destabilize the market for a specific purpose, those issues will be looked into. Action will be taken against anyone who tries to do this,” he said.
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When asked about the renewal of the current commission, the BSEC spokesperson said, “We are hopeful that the entire commission will be renewed.” But that is still not certain.
No index is about 613 points
The stock market regained some momentum after a temporary price correction that lifted the floor price after a long time. The share price of most of the companies increases almost every day. In this, the main price of DSE rose to 6 thousand 447 points on February 11. But the main index of DSE has now fallen to 5 thousand 834 points due to continuous decline in prices. That is, the main price index of DSE has decreased by 613 points in just one and a half months.
Market capitalization is not 92 thousand crore rupees
On February 11, DSE’s market capitalization was Tk 7 lakh 75 thousand 985 crore. Now that market capitalization has reduced to 6 lakh 83 thousand 700 crores. That is, the market capital has lost 92 thousand 285 crores. Declining market capitalization means that the share and unit prices of listed companies have collectively fallen by that amount.
Trading at the bottom
From February 1 to February 15 of this year, more than 1000 crores of rupees were traded in DSE in 11 consecutive working days. Out of this, 11 thousand 852 crore 51 lakh taka was traded on February 11. 1 thousand 857 crore 75 lakh taka was traded on the previous working day on February 8. Now that transaction has come down to 400 crores. Last March 25, DSE was traded for Tk 445 crore 53 lakh. Through this, out of the last six working days, four working days were traded in the house of 400 crores.
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