FE Report (November 11, 2010)
As the country's stock market continues its record-breaking rally, the chief of the country's apex trade body, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), expressed Wednesday his full confidence in the stability of the market.
"I believe the market will remain stable," FBCCI President AK Azad said at the inaugural ceremony of the renovated office of the Dhaka Stock Exchange (DSE) in the city's commercial hub Motijheel.
Dhaka stocks extended their rally to the second straight session Wednesday as the already overheated market defied a warning that there could be suspension of margin loan, an incentive to spur buying of shares by retailers.
The gain was led by banks, which make up more than one third of the total market capitalization.
Securities and Exchange Commission (SEC) Chairman Md Ziaul Haque Khondker and DSE Chairman Shahiq Khan also spoke at the function.
Dhaka and Chittagong stock exchange authorities last month rang alarm bell about the sustainability of the current bullish trend of the stock market, saying that most issues became unreasonably pricey because of the gross mismatch between demand for, and supply of, shares.
The DSE, however, changed its position last week following the government's latest decision to offload shares of some public sector enterprises, both listed and unlisted.
Dhaka City Mayor Sadek Hossain Khoka, former adviser of the caretaker government and eminent industrialist Syed Manzur Elahi and a host of businessmen, high officials of listed companies and stock dealers and brokers attended the function.
Azad, also an ex-officio member at the DSE Board, said the regulators and the operators are strictly monitoring the market to protect the interest of the investors.
He ruled out the possibility of the recurrence of the 1996 share scam that had made thousands of small investors virtually paupers.
He referred to the present government's initiative to ensure healthy growth of the capital market.
He observed that effective steps would help ensure stability of the market by increasing both the supply and the demand.
SEC Chairman emphasized on coordinated efforts by regulators and operators for more transparency with the primary objective of ensuring stability on the market.
He said the regulators and operators should work for offering improved and better services to the investors.
The market opened on Wednesday with bullish sentiment as DGEN crossed 8200-mark in the morning, but it began to decline from the mid session when the investors booked profit on financial institutions, cement and insurances issues.
The DSE General Index (DGEN), the main gauge of the market, ended at 8141.24 with a gain of 0.72 per cent or 58.23 points.
The broader All Shares Price Index (DSI) rose 0.68 per cent or 46.14 points to 6758.83. The DSE-20 Index comprising blue chips was slightly up by 0.45 per cent or 21.95 points to 4582.64.
On Tuesday, parliamentary standing committee on finance voiced its concern over "overheated" stock market and asked the securities regulator to take steps to suspend margin loan facility.
The committee also asked the Securities and Exchange Commission (SEC) to initiate an investigation to identify the manipulators, who allegedly influence prices in their favour.
"Suspension of margin loan might leave impact on the market temporarily but not for a longer period as everyday new investors with huge fund enter in the market," said a merchant banker.
"Most scrips are not qualified for margin loan. Investors invest with their own fund," he added. There is no alternative to increase supply of shares to bring stability in the market, he said.
Currently, investors are entitled to a 1:1 margin loan facility, but under the new margin maintenance formula they do not get more than 50 per cent of their equity.
Turnover recorded at Tk 25.81 billion. Losers took a lead over the gainers, as out of 239 issues traded, 91 advanced, 145 lost, and three remained unchanged.
AB Bank topped the turnover list with shares worth Tk 988 million changing hands.
Meanwhile, another report adds: The market monitoring cell of the securities regulator Wednesday discussed the proposal of the parliamentary standing committee on finance to take steps to stop margin loan facilities.
An official of the Securities and Exchange Commission (SEC) said the regulator's meeting ended without taking any final decision.
"The SEC talked about the standing committee's proposal but no decision came at the end of the meeting," the official said.
On November 9, the parliamentary standing committee on finance expressed its concern over "overheated" stock market and asked the SEC to take initiatives to stop margin loan facilities.
As the country's stock market continues its record-breaking rally, the chief of the country's apex trade body, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), expressed Wednesday his full confidence in the stability of the market.
"I believe the market will remain stable," FBCCI President AK Azad said at the inaugural ceremony of the renovated office of the Dhaka Stock Exchange (DSE) in the city's commercial hub Motijheel.
Dhaka stocks extended their rally to the second straight session Wednesday as the already overheated market defied a warning that there could be suspension of margin loan, an incentive to spur buying of shares by retailers.
The gain was led by banks, which make up more than one third of the total market capitalization.
Securities and Exchange Commission (SEC) Chairman Md Ziaul Haque Khondker and DSE Chairman Shahiq Khan also spoke at the function.
Dhaka and Chittagong stock exchange authorities last month rang alarm bell about the sustainability of the current bullish trend of the stock market, saying that most issues became unreasonably pricey because of the gross mismatch between demand for, and supply of, shares.
The DSE, however, changed its position last week following the government's latest decision to offload shares of some public sector enterprises, both listed and unlisted.
Dhaka City Mayor Sadek Hossain Khoka, former adviser of the caretaker government and eminent industrialist Syed Manzur Elahi and a host of businessmen, high officials of listed companies and stock dealers and brokers attended the function.
Azad, also an ex-officio member at the DSE Board, said the regulators and the operators are strictly monitoring the market to protect the interest of the investors.
He ruled out the possibility of the recurrence of the 1996 share scam that had made thousands of small investors virtually paupers.
He referred to the present government's initiative to ensure healthy growth of the capital market.
He observed that effective steps would help ensure stability of the market by increasing both the supply and the demand.
SEC Chairman emphasized on coordinated efforts by regulators and operators for more transparency with the primary objective of ensuring stability on the market.
He said the regulators and operators should work for offering improved and better services to the investors.
The market opened on Wednesday with bullish sentiment as DGEN crossed 8200-mark in the morning, but it began to decline from the mid session when the investors booked profit on financial institutions, cement and insurances issues.
The DSE General Index (DGEN), the main gauge of the market, ended at 8141.24 with a gain of 0.72 per cent or 58.23 points.
The broader All Shares Price Index (DSI) rose 0.68 per cent or 46.14 points to 6758.83. The DSE-20 Index comprising blue chips was slightly up by 0.45 per cent or 21.95 points to 4582.64.
On Tuesday, parliamentary standing committee on finance voiced its concern over "overheated" stock market and asked the securities regulator to take steps to suspend margin loan facility.
The committee also asked the Securities and Exchange Commission (SEC) to initiate an investigation to identify the manipulators, who allegedly influence prices in their favour.
"Suspension of margin loan might leave impact on the market temporarily but not for a longer period as everyday new investors with huge fund enter in the market," said a merchant banker.
"Most scrips are not qualified for margin loan. Investors invest with their own fund," he added. There is no alternative to increase supply of shares to bring stability in the market, he said.
Currently, investors are entitled to a 1:1 margin loan facility, but under the new margin maintenance formula they do not get more than 50 per cent of their equity.
Turnover recorded at Tk 25.81 billion. Losers took a lead over the gainers, as out of 239 issues traded, 91 advanced, 145 lost, and three remained unchanged.
AB Bank topped the turnover list with shares worth Tk 988 million changing hands.
Meanwhile, another report adds: The market monitoring cell of the securities regulator Wednesday discussed the proposal of the parliamentary standing committee on finance to take steps to stop margin loan facilities.
An official of the Securities and Exchange Commission (SEC) said the regulator's meeting ended without taking any final decision.
"The SEC talked about the standing committee's proposal but no decision came at the end of the meeting," the official said.
On November 9, the parliamentary standing committee on finance expressed its concern over "overheated" stock market and asked the SEC to take initiatives to stop margin loan facilities.
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