SEC to seek investment info from fund managers

Star (September 08, 2011)

The stockmarket regulator will seek investment information from the mutual fund managers in the backdrop of a bearish trend in the market.
The Securities and Exchange Commission wants to see whether the managers are utilising the funds properly in the market, which is now facing a liquidity dearth, an SEC official said yesterday.
“The commission will issue letters to the fund managers seeking their investment information,” the official said, adding that it is a responsibility of the regulator to see how the managers are using funds that were raised from public.
The SEC has also informally requested some mutual fund managers to be active in daily transactions so that the trade volume increases.
Like other investors, mutual fund managers have also taken a wait-and-see policy and remained on the sidelines of the market.
Presently, there are 36 mutual funds with their combined amount of around Tk 3,500 crore.
A mutual fund is a professionally managed collective investment scheme that pools money from many investors and invests it in stocks, bonds and short-term money market instruments.
Although stocks witnessed a rise in their prices yesterday, a bearish trend continued in the market in the last one month and so investors lost confidence and turnover declined drastically.
The market lost over 600 points in the last one and a half months, while the daily turnover came down to Tk 300 crore.
The month-long chronic bearish trend in the market was intensified by a number of factors. Firstly, a confidence loss triggered by the finance minister's comments on the index hike and his dissatisfaction over the consecutive rises in the market prompted the investors to book accumulated gains, said market analysts.
Secondly, the regulator's pre announced action of filing cases against some individual investors allegedly involved in the stockmarket manipulation kept the investors in anxiety and contributed to a selling spree.
Also the liquidity dearth due to a high demand of money ahead of Eid-ul-Fitr almost kept the institutional investors inactive in the market, while retail investors remained on the sidelines, seeing the continuous volatility, they said.
Though in the past, participation used to improve on the eve of and after the festivity, both institutions and retail investors acted differently this year due to those factors.
The investors who have been waiting to participate are now very skeptical of taking fresh exposure in the market.