Photo: Messenger
The country's capital market has been experiencing a downward trend ever since the removal of the floor price. Daily, all indices and market capitalisation of the country's two stock exchanges are witnessing a decline. Consequently, many investors find themselves at risk of forced selling as share prices continue to plummet. Although there are no legal mechanisms in place to prevent forced sales, various quarters have appealed to brokerage houses not to engage in such practices in the best interest of the capital markets.
According to sources from the Dhaka Stock Exchange, the key index of DSE has plummeted by 368 points in the past month alone. On February 15, the DSEX index stood at 6,336.25 points, but as of Thursday (March 14), it has dropped to 5,968.04 points. Likewise, other indices and market capitalisation have also experienced declines. In light of this situation, individual investors are once again bearing the brunt of losses.
Various brokerage houses have issued warnings to investors engaging in margin loans, cautioning them about the risks involved. Not only have share prices of speculative or "junk" stocks fallen, but also those of many fundamentally sound companies. Consequently, this widespread decline has reignited instability within the country's capital market.
Azad Ahsan, an investor, told The Daily Messenger, “I have investments in shares of seven companies. Six of them have gone into losses. I have some margin loans. So last Wednesday I was told about the forced sale by the house. If I cannot pay the loan in any other way. They will force sell my shares.”
Capital market expert Professor Abu Ahmed told The Daily Messenger, “Legally, there is an opportunity to do forced sale. But we are always against it. The Prime Minister herself has previously requested not to do any forced sale of shares in the interest of the market. Still, some houses are doing it. The market is not good. If it happens again, there is a risk that many investors will fall prey to forced sales.”
Meanwhile, the DSE index fell below 6,000 points, creating panic among investors. In this situation, the various brokerage houses and merchant banks belonging to the capital market have been urged not to force sell the shares to take the margin of the investors.
In this regard, President of CEO Forum and Managing Director of EBL Securities Limited Sayedur Rahman said, investors are not able to get out of rumors. Affected by rumors, they are selling shares in panic. As a result, the index fell below 6,000 points. “I think, there is no visible reason why stock market is going bad. Investors who panic and sell shares, should take a more informed decision.”
BSEC Executive Director and Spokesperson Mohammad Rezaul Karim said, panicked selling of shares is not desirable for conscious investors. Nothing has happened in the market to panic and sell shares. Those who are selling shares now will buy shares at a higher price after a few days.
“We hope, in this situation, the institutional investors will do their respective responsibilities properly. Apart from this, to maintain stability in the capital market, special importance is being given to the issue of lending Tk 100 crore to intermediaries from the Capital Market Stabilisation Fund (CMSF). Hopefully the market will turn around soon,” he added.
Messenger/Sajib
