FE Report (January 22, 2011)
"It was a week of large-scale correction in the history of the stock market and was also full of incidents, as the market saw interruption in trading three days in a row," analysts said.
The market suffered significantly because of suspension of trading by the regulators and introduction of 'index circuit breaker.' Out of the five trading sessions in the week, three sessions were suspended.
During the week, the benchmark index DGEN lost 1249.54 points or 16.49 per cent to end at 6326.34, which was the highest-ever fall in a single week since its introduction in 2001. And all the sessions of the week ended negatively.
The broader index DSI also lost 1,025.15 points or 16.30 per cent, while the other index DSE-20 lost 644.52 points or 13.52 per cent during the week.
Total turnover for the week stood at Tk 32.3 billion, down by 40.4 per cent than the previous week, and the average daily turnover of the week was Tk 6.5 billion, which was 10.08 billion last week.
Thousands of angry investors took to the street during the last three consecutive trading sessions of the week, protesting continuous fall in stock prices, which led to vandalism and sporadic clashes with the law-enforcers.
The law-enforcers also lobbed teargas canisters and charged batons on the demonstrators to disperse them. Police also picked up at least 15 people on the last day of the week.
The market opened with a negative tone Sunday, as the DGEN lost 141 points, and it also lost 57 points Monday, while turnover declined by 27.3 per cent.
Tuesday marked the start of larger corrections. The Securities and Exchange Commission (SEC) suspended trading for the second time within eight days with 80 minutes remaining for the session in the wake of massive fall when the DGEN closed 237.33 points down.
On Wednesday, the SEC imposed a circuit breaker for the index, which would automatically halt trading in case the index moved more than 225 points in either direction.
Thousands of angry investors went on rampage at Motijheel area in the city, protesting the continuous slide, as the newly introduced 'index circuit breaker' failed to stabilise the market.
Within 90 minutes of the day's delayed trading, the benchmark index hit the lower limit by losing 237.77 points or 3.33 per cent, halting trading automatically at the Dhaka Stock Exchange (DSE).
On Wednesday and Thursday trading started at 1:00pm, two hours later than the usual time following the SEC's order.
The market witnessed the most significant correction Thursday. Trading at both bourses was suspended again following a stupendous fall in share prices, 600 points in just five minutes from the start of the day's delayed trading, leading to violent protest by thousands of aggrieved investors in Dhaka and across the country. The DGEN closed 587 points down after adjustments though the trade was extremely low.
Small investors have called for a dawn-to-dusk hartal in Sylhet on Sunday, protesting the continuous fall in stock prices. The securities regulator, overwhelmed by the bizarre behaviour of the market, also suspended trading at both the bourses on that day. The SEC said it would take decision on resumption of trading on Sunday.
The SEC also suspended the exercise of Book Building Method until further notice. The regulator also prohibited the managing directors and chief executive officers of six brokerage houses from performing all sorts of activities as MDs or CEOs of their respective brokerage houses for the next 30 days, as the firms created volatility through aggressive sale.
"Panic sale by general investors, contributing to the sharp decline of share prices, has been stoked by the absence of financial institutions," analysts said.
Banks and other financial institutions, some of which had invested 75 per cent of their deposits in the stock market earlier, are also abstaining from further investments, prompting fears among individual investors, the analysts added.
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