Equity market shutdown quandary

The stock exchanges have decided to keep the capital market closed for the two days to Monday after the government announced public holiday for the weekdays through an executive order.

Trading may resume on Tuesday if the tension that ensued over the street violence stemming from quota-reform protests eases, said Sattique Ahmed, acting managing director of the Dhaka Stock Exchange.

"We don't have any idea as to when Internet connections will be restored. Besides, banking operations are crucial for trading in stocks."

Even if Internet is not restored, trading in stocks is possible since the exchanges and brokerage houses are connected through a wide area network (WAN). Investors will be able to participate in trading from brokerage houses. Transactions through mobile apps and Internet-enabled remote services will, however, remain halted in that case.

Whatever the case, banking operations should be on. Otherwise, settlement of funds and securities will face disruptions.

Another concern is that investors' participation will remain thin as tension is rife surrounding the quota-reform protests and violence carried out over the last couple of days.

"So, turnover is expected to be low but the index movement is unpredictable," said Saiful Islam, president of the DSE Brokers Association (DBA).

"If things get back to normal, there will not be much loss [after the resumption of the stock trading]," he said.

Investors' worry over the market outlook already reflected on the index on Thursday against the backdrop of a countrywide shutdown enforced by student protesters. Tension had been brewing throughout last week over the demand for reforms to the quota system in government jobs, which culminated to street battles between protesters and members of the ruling party's student wing, Chhatra League and the police.

Daily turnover declined 34 per cent to Tk 3.71 billion on Thursday, compared to the previous trading session.

The market faced the setback just days after it started showing signs of recovery from the prolonged bearish trend. On July 9, the prime index rose to 5,594 points, with turnover crossing Tk 10 billion.

As uncertainties loom large over the economy, with curfew being imposed for the second day until 10:00am on Sunday, Md Saifuddin, chief executive officer of IDLC Securities, says transactions of assets of any kind at fair value are not possible in such an emergency situation.

He speaks in favour of the market being closed for a short while.

"The market remaining closed has negative impacts too on the market.

"I don't want to lose hope though. I expect the crisis will be over soon and the market will get back to where it was before the crisis," added Mr Saifuddin.