No 'logical reason' behind stock market downturn

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FE Report
The securities regulator, stock exchanges and market intermediaries said Tuesday they have found no logical reason behind persistent downturn of the market.
The observation came at a joint press briefing after the meeting between Securities and Exchange Commission (SEC), Dhaka Stock Exchange (DSE), Chittagong Stock Exchange (CSE) and merchant banks.
"We have reached a conclusion that the cause of the downturn is panic selling and psychological problem of the investors. There is nothing to be panicked as the country's stock market has largely remained insulated from the global financial turmoil," said Farhad Ahmed, executive director of the SEC.
To bring stability in the market and enhance fund flow to the market, the commission is considering issuing more licences for operation of merchant banks in future, he added.
About the allegation that some merchant banks forced clients to sell stocks, Farhad said, such complaints came to the notice of the commission. If any merchant bank has done so, it will affect their clients in the long term.
To review the current market situation, the SEC sat with DSE, CSE and leading merchant banks, including AB Bank, Prime Bank, Trust Bank, ICB, IDLC and Prime Finance and Investment Limited.
MKM Mohiuddin, former president of CSE, said: "This is just a psychological impact. The investors are being panicked by rumour. But the macroeconomic indicators are good, sending positive signal to the stock markets."
There is no fund problem in the market, he said adding that the investors should invest in securities having strong fundamentals to minimise risk.
DSE chief executive officer Salahuddin Ahmed Khan said: "Mental stress is the main reason behind the continuous slide of the market as the country's economy is functioning well."
The portfolio investors invested hugely in Pakistan and India, that is why their stock market plunged due to fund withdrawal by them to meet liquidity demand of their parent companies facing credit crunch, he pointed out.
Khan said, "But the portfolio investment in Bangladesh is so negligible that there is no reason that it will have any impact on our stock market."
An investment bank from the United States started putting its funds on the country's stock markets from Monday last, sending green signal to the stock market, he disclosed.
Referring to recent report of the Goldman Sachs, he said Bangladesh is the second best investment destination now, as the country remains unscathed from the global financial crisis.
Managing director of Prime Finance Akter Hossain Sannamat said: "Ups and downs is a normal phenomena of every stock market."
"There is no other reason, but the panic selling has caused the market to fall over the weeks. Fundamentally, we are in good position as foreign investors have targeted the country's stock markets as their nest destination," he added.