Dhaka Bureau: There was a big fall in the country’s stock market on Sunday after the ‘floor price’ was lifted. Dhaka Stock Exchange’s (DSE) main index, DSEX, fell by more than 96 points. However, the main index fell by 240 points at the start of trading. So in the end, the transaction ended after handling a big shock.
Some investors panicked and sold shares at the start of trading, market participants said. As a result, there is a big fall in the market index. But later, the selling pressure came down again. They said some good stocks rose yesterday after the floor price went up. Which is positive for the market. They advised investors not to panic and sell shares in this market situation.
It should be noted that after a long year and a half, the regulatory body, the Bangladesh Securities and Exchange Commission (BSEC), has lifted the floor price (the minimum price level of shares). Floor prices have been removed from all stocks and mutual funds except for 35 companies that influence stock market indices. After lifting the floor price last Thursday, the stock market index fell sharply in the first trade yesterday. Many investors panicked and sold shares. In this, the main index of DSE, DSEX, fell by 96.50 points to 6,240 points. Besides, the DSES, or Shariah index, fell by 14 points to 1,374 points. However, the DS-30 index, consisting of 30 good companies, rose by 7 points to 2,137 points. On this day, shares worth 588 crore (87 lakh taka) were traded in this market. Out of 386 company shares and mutual fund units traded on the DSE, 296 fell. The rate has increased to only 54. Another market, the Chittagong Stock Exchange’s (CSE) overall price index, CASPI, decreased by 476 points.
The CEO Forum, an organization of chief executives of top broker houses and merchant banks, held a meeting yesterday morning to determine what to do in the current market situation. CEOs of 30 top organizations in the country participated in the meeting under the chairmanship of the President of the Forum and Managing Director of EBL Securities Limited, Chayedur Rahman.
In this context, Chhaydur Rahman told the media that it was decided to invest 1 to 5 crore rupees in the dealer account in the meeting. Also, no shares will be sold from the dealer’s account. He said that after raising the floor price, there was a panic among the investors. But we institutional investors are active. Chhaydur Rahman said this situation happened even after the floor price was given away after Corona. But the market soon turned around.
Managing Director and Chief Executive Officer (CEO) of Prime Bank Securities. Moniruzzaman told the media that some people panicked and sold shares at the beginning of trading yesterday, but later the market became normal. He said that a free market economy does not work like this. He urged investors to invest in good stocks that have fundamental values.
Prominent capital market analyst and former professor of Dhaka University, Abu Ahmed, said that the removal of the floor price has been good for the market in the long run. I think the market will stabilize very soon.
DSE Brokers Association of Bangladesh (DBA) President Saiful Islam said that due to the existence of floor prices for a long time, transactions in the market had decreased completely. 80 percent of the brokerage houses were not able to meet their operating expenses. The stock market suffered losses. He said the market should be allowed to run like the market.
The Executive Director and Spokesperson of the regulatory agency BSEC, Mohammad Rezaul Karim, told the media yesterday that the floor price has been lifted in view of the demands of all parties in the market. However, after lifting the floor price, I had an idea of what kind of force sale could happen in the market.
He said that in order not to have a major negative impact on the market, the regulatory body had earlier discussed it with institutional investors.
He said the chief executives of the banks have assured that they will invest in the market. Government banks have also been asked to increase investment. The Capital Market Stabilization Fund (CMSF) will provide a loan of Tk 100 crore for the stability and development of the capital market. If necessary, it will be increased to Tk 200 crore. BSEC believes that investment in the market will increase further in the future. Expect the market to move upwards very quickly.
It should be noted that the regulatory agency BSEC has imposed a floor price several times in the last four years to prevent the fall in the stock market due to the Corona epidemic and later the Russia-Ukraine war. The floor price was first imposed in March 2020 but was withdrawn in July 2021. A floor price was then imposed again in July 2022 to counter the negative impact of the Russia-Ukraine war. But BSEC removed the floor price from the market after about a year and a half in the face of criticism from various parties related to the market due to the decrease in trading in the stock market.
