Regulator's foot-dragging in bringing the suspected market manipulators to book and an untimely remark made by the finance minister prompted the latest spell of bear run in the capital market, said experts on Sunday.
They said the rumour that some big market players were going for large-scale disinvestment following the announcement made by the Securities and Exchange Commission of taking legal actions against the market manipulators named in the probe report on January's stocks debacle but not going for the action yet made a large number of investors panicky and go for heavy selling.
The remark made on Saturday by finance minister Abul Maal Abdul Muhith also had a negative impact on the market, they added.
Muhith on Saturday said gamblers, not investors, were dominating the country's capital market at the moment.
The latest bear run began on July 25 with a market correction, following the government decision to offload more shares of state-owned enterprises in the market. Poor corporate disclosures made by listed companies and the tight monetary policy adopted by the Bangladesh Bank also fuelled the fall at the time.
The announcement made by the SEC on Monday that it was going to file cases against the market manipulators suspected to have been behind the January's stock market crash aggravated the situation.
Investors took to the street twice in the last week in protest against the relentless fall in share prices and claimed that it was plotted by a syndicate to put pressure on the market watchdog to let its members go scot-free. The general index of the country's premier bourse, Dhaka Stock Exchange, lost 590 points in last 10 trading days.
Mahmood Osman Imam, a professor of finance at Dhaka University, said, 'The SEC should not have made its future legal actions public as it generated panic among the investors and helped the market manipulators as well.'
He also termed the finance minister's comment discouraging for the investors.
Akter H Sannmat, a capital market analyst, said, 'Investors became panicked once again as many of them are yet to recover the losses incurred in the stock market crash in January.'
He said when the market started rolling and
the investors were regaining confidence, a vested quarter might have
spread rumours in the market to make the investors shaky.
He said, 'The SEC should not have made the announcement about filing cases against market manipulators in advance and when it did, it should have gone for immediate action.'
Sannamat also identified the recent comment of the finance minister as one of the factors that fuelled Sunday's market crash.
'People in key positions should act more responsibly towards a sensitive and rumour-driven market like ours,' he added.
Mirza Azizul Islam, finance adviser to the immediate past interim government, said, 'If the investors make their investment decisions based on rumours then I have no rational explanation to make of the current bear run.'
He said, 'Although the investors became panicked after the SEC had announced that it would take the market manipulators to justice but the scenario should have been the opposite.'
Mirza Aziz, however, said, although the remark of the finance minister was not wrong, the timing was not right. 'In the current situation, such a comment is not welcome at all.'
DSE senior vice president Ahasanul Islam said, 'Investors should not get panicky and pay heed to rumours.'
In his opinion, 'Regulators will do their job and the investors should do theirs.'
Chittagong Stock Exchange president Fokhor Uddin Ali Ahmed said 'The SEC should not make any further delay in lodging the cases as it is making the situation worse.'
He also said that no one should be accused of illegal act or market manipulation without concrete evidence.
Source : New Age
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