Manipulators again on the prowl?

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Shamsul Huq Zahid The move of the Bangladesh Association of Bank (BAB) to revitalise the flagging stock market, apparently, has fallen through. Only a day after the formal announcement about the launching of the market stabilization fund by the BAB, the benchmark index of the Dhaka Stock Exchange (DSE), the DGEN, lost nearly 181 points or 3.19 per cent on Monday. Stocks at the DSE on the two previous sessions gained with low turnover riding on the speculations about the banks' re-entry into the market with substantial liquidity. But the market reacted negatively to the BAB announcement about a fund that did not match up with the investors' expectations. Besides, there are reasons to be sceptical about the success of the moves -- barring the one sponsored by the state-run Investment Corporation of Bangladesh (ICB) -- initiated so far by some stakeholders who rather have a tainted public image. The ICB, understandably, under instruction from the government that came under scathing criticism from all around after the collapse of the market in December last, launched the Tk 50 billion Bangladesh Fund (BF) to help stabilise the market. But until now the BF having mobilized only Tk. 15 billion has not yet succeeded in creating any favourable impact on the market. The launching of the BF followed at least a couple of market stabilisation initiatives that, many tend to suspect, have been masterminded by a few individuals at whom the Ibrahim Khaled-led probe committee pointed fingers. Questions have been raised galore about the government remaining indifferent to the need for taking appropriate actions against the people accused of wrongdoing that had led to the abnormal rise of the market and subsequent crash, as per law of the Nature. This indifference, it is widely believed, has emboldened the 'manipulators' to play yet another game with the market and complete their unfinished mission. The interest, reportedly being shown by the alleged manipulators to shore up the market, might appear as an unnatural event. It was, in fact, natural for such persons to hide themselves from public gaze, at least, for a certain period of time. But there must be something very urgent behind their frantic efforts to buoy up the market, at least, for a reasonable period. It could be that they want the market to reach to a certain height where they can offload their stocks bought earlier from the secondary market and also execute the scheme for the pre-placement of shares carrying premiums. They are also looking for avenues to complete their yet unfinished agenda through widely-feared abuses of book-building method and direct listing. Despite having support from those who matter most in the capital market, the suspected manipulators until now have not been successful in their new mission to take the market to a sustained rally for a reasonable period of time because of the investors who are desperate to make an exit from the market. Moreover, the market needs injection of substantial volume of liquidity in quick pace. But that is unlikely to happen even with the launching of a few market stabilization funds. The approval of such funds and their availability in day-to-day transactions in the bourses involve substantial time and regulatory process. There should be no reason to believe that the initiators of so-called stabilization funds are not aware of those requirements. Yet they, seemingly, are trying to raise a false hope among the investors about a market turnaround. What is most intriguing is the involvement of the BAB in the market shoring up activities. The lukewarm response from most of its members to the latest efforts for launching a stock market stabilisation fund does indicate that most banks are not interested in such a move or are not, in reality, in a position to put extra money for investment in the country's trouble-torn stock exchanges with investors' confidence being largely eroded by some uncanny developments in the market. There is a strong feeling among the banking circle that the BAB, of late, has developed a tendency to go beyond the dotted lines and play to the tunes of outsiders. There is no denying that banks had earned hefty profits from their investment in stock markets. But a good number of them are already in trouble because of the market collapse. Under the prevailing circumstances, the banks do not have enough good reasons to demonstrate any extra enthusiasm about making fresh investment in stock market. Nor the central bank would approve of any kind of adventurism on their part. While wrong signals coming galore from the stock market, the government appears to be clueless about how best it can handle the situation. Rather, some of the actions and statements coming from the finance ministry honchos appear both confusing and amusing, at times. The after-effect of the stock market crash has given rise to lots of distortions in the economy and society. The situation demands well-thought-out actions that would help stabilise the market through normal process. The government would commit a mistake if it extends support, overtly or covertly, to any attempt to buoy up the market artificially. It would cause more harm than good to the market in the long run. zahidmar10@gmail.com