Share market plunges as investors lose confidence

The index of Dhaka Stock Exchange has declined by 1200 points in about nine months and the market has lost capital worth Tk 600 billion (60,000 crore).

The share market index is plummeting continuously as the investors have no confidence on the market.

Bangladesh Securities and Exchange Commission (BSEC), the regulatory body, is now faces a serious crisis in investors’ confidence.

“The investors have no confidence in the regulatory body and it is natural they will not invest,” said Khondokar Ibrahim Khaled, former deputy governor of Bangladesh Bank.

Khaled was also the chief of the investigation committee formed for the share market scam in 2010.
On 24 January 2019, the DSE index was on top with 5,950 points and the capital was Tk 4,200 billion. The index declined to 4,782 points on Wednesday and the capital stood at Tk 3,600 billion.

Out of 319 companies, the prices of 46 companies are under the face value which is only Tk 10 each share.

The price of 73 per cent of shares among the transitioned companies on Wednesday fell in Dhaka Stock Exchange. The index fell by 40 points whereas the index fell by 91 points in Chattogram Stock Exchange.

Speaking to Prothom Alo, BSEC spokesperson Saifur Rahman said the regulatory body has taken all out steps to restore stability in the market.

Capital market analysts and stakeholders said the investors have no confidence in the regulatory body.

The analysts lamented that market manipulators were not punished. They also said the new investors are not investing in the market. On the other hand, money was taken out of the market through low category companies.

Wishing not to be named, capital market analysts said the new investment will not enter the capital market when the investors lose confidence on the regulatory body. If the new investment does not come, it is natural that the price will fall.

Citing past experience, Khondokar Ibrahim Khaled said the share market collapse when the people lose confidence in the regulatory body.

He also said BSEC current chairman was recruited for the third time violating the law. When the top official of the regulatory body was recruited by violating law, it is not possible for him or her to establish good governance in the market, he added.

Khondokar Ibrahim Khaled suggested increasing the number of members of DSE.
Finance minister AHM Mustafa Kamal held a meeting on the share market on 16 September. The decision was taken to bring prominent companies in the market and to increase investment of the bank.

Bangladesh Bank also took an initiative to supply money to increase investment of banks in the share market.

State-owned Sonali Bank provided Tk 2 billion to Investment Corporation of Bangladesh (ISB) to invest in the share market.

ICB has said that they have started investing in the share market.

Despite these initiatives, the share market is plunging continuously.

The initiative is not yielding any results due to crisis of confidence.

BSEC former chairman Faruque Ahmed Siddique said the main duty of the regulatory body is to create confidence among the investors.

But current BSEC failed to restore confidence, the former chairman added.

*This report, originally published in Prothom Alo print edition, has been rewritten in English by Rabiul Islam.