Investors clash with cops as stocks dip

Trackback URL

Download PDF

Hundreds of investors took to the street in front of Dhaka Stock Exchange (DSE) building clashing with police yesterday after the key index had lost 83 points on the Dhaka bourse around noon.

The melee prompted the market regulator to allow resumption of brokerage lending to investors for purchasing shares.

At least five people were injured during the half an hour clash.

On November 19, the Securities and Exchange Commission (SEC) imposed a ban on lending to investors by both brokerage houses and merchant banks for purposes of investing in stocks.

Trading on the premier bourse started with a steep fall yesterday with almost all the share prices dropping significantly. Finally, the DSE General Index fell by 5.44 points, or 0.18 percent, ending the day at 2,873.29 points.

Following the plunge agitated investors came out of the trading houses and started demonstrating around 11:00am.

The news that trading had come to a halt at 11:20am due to a technical glitch in the bourse’s server computer added fuel to the demonstration.

Members of law enforcing agencies, including police and the detective branch, rushed to the spot and resorted to baton charges on the protesters, who in turn pelted the law enforcers with brickbats.

During the clash, traffic on the road in front of the DSE building and in adjacent areas remained suspended for about an hour creating a severe jam in the city’s busy commercial hub, Motijheel.

Witnesses said several hundred investors took part in the clash staying around the stock exchange building. Police detained two of the protesters who were later released.

Motijheel police station however said none was arrested and no case was filed in connection with the incident. Several police were also mildly injured. Additional forces were deployed on the spot to avert any further clash, according to the police station.

Trading on the bourse resumed after an hour at 12:20pm and continued till 3:00pm.

Following the demonstration, DSE President Abdullah Bokhari, and its Vice-president Ahmad Rashid Lali went to the SEC and urged the regulator to withdraw the ban on brokerage lending.

During the meeting with the SEC, they said the amount of loan given by brokerage houses is bigger than the lending by merchant banks. The SEC had lifted the ban on lending by merchant banks for investment in stocks on November 25.

Yesterday’s withdrawal of the ban on lending by brokerage houses will open the gate again today for investors to borrow from those houses for investing in stocks. The brokerage houses are allowed to lend 67 percent of stocks held by investors.

The market regulator urged the investors yesterday not to panic. “Some investors have genuinely panicked with the downtrend, but there is nothing to be worried because during a market correction it usually goes down,” said SEC Executive Director Farhad Ahmed.

He also hoped that the market will stabilize very soon.

Echoing him, another SEC Executive Director Anwarul Kabir Bhuiyan said, “The SEC’s intervention was not permanent, rather it was a temporary measure for cooling down the overheated market.”

At the end of the day, a total of 8,226,262 shares and bonds worth Tk 186.95 crore changed hands on the DSE. Of the issues traded, 96 went up and 92 slid down while 19 remained unchanged.

Earlier on November 22, a group of investors staged demonstrations in front of the DSE building protesting the restrictions imposed on margin loan facilities by the stock market regulator. The investors think such restrictions led to a continuous slump on the market.

Leave a Reply