Express (August 15, 2011)
Dhaka Stock Exchange (DSE) President Shakil Rizvi said Sunday the regulatory body should locate the sources of financial strength of the market manipulators and take actions against them.
The DSE President said investors are prone to following the big players who are funded by some banks or clandestine sources.
"Definitely there are some banks or other sources which provide funds to a handful of players who have the strength to manipulate the market," Mr. Rizvi told the FE.
He said investors keenly watch the movement of big players instead of depending on company fundamentals. Big players, if they want to, can push the price of a particular stock up or down.
1Echoing the DSE president some investors told the FE on condition of anonymity that the news of some giant players' involvement in any listed company carries importance to retail investors.
"Small investors have a herd mentality. They tend to follow some selected investors who, they believe, in the know of things about the market", an investor said.
Without mentioning any name, the DSE president said one particular investor has deposited a fund of Tk 1.2 million with a financing agency and he has got the capacity to invest 10 times more.
DSE president said it is important to find out the sources of funds for the big market players to save the market and investors from manipulation.
He said the manipulators also make the best use of rumours about regulatory decisions.
"For example, the speculators often spread rumour when a meeting is on at the SEC office. In most cases, such rumours are baseless. But investors have no time to check the authenticity of the news and they make hurried investment decisions", Mr. Rizvi said.
Chittagong Stock Exchange (CSE) President Fakhor Uddin Ali Ahmed said in the absence of effective and reliable advice on investment, investors remain vulnerable to rumours.
"Investors need news, which will give them good returns. But that is what is lacking now," Mr. Ali told the FE.
He said it is a matter of great regret that the government is yet to introduce the stock market advisory service, despite its repeated assurances to this effect.
"The government must declare a specific timeframe to introduce financial advisory service," Mr. Ali added.
"The use of technology is also not necessary to spread rumour. You just blow a rumour in Motijheel area and it would automatically travel to a section of investors who bank on such rumours," an investor said.
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