Erosion in share prices in the country's main bourse -- the Dhaka Stock Exchange (DSE) -- continued for the eighth consecutive trading day on Monday.
However, the chairman of the Securities and Exchange Commission (SEC) Faruq Ahmad Siddiqi Monday found no reasons for the investors becoming panicky. But the SEC chairman, talking to the FE Monday stuck to his earlier position that the market was still over valued.
The SEC chairman said investors should not be concerned by proposed revision of the close-end mutual fund rules.
The SEC recently decided in principle to review the close-end mutual fund rules, restricting the mutual funds from issuing rights and bonus shares.
The stock market, in addition to the move to revise close-end mutual fund rules, suffered a jolt in recent days because some other measures taken by the SEC to rein in the unabated hike in stock prices.
Issues of all mutual funds have declined sharply mainly because of the SEC move.
Stock prices of the AIMS First Mutual Fund had the biggest fall of 11.34 per cent to close at Tk 15.32 per share, followed by 7th ICB 10.97 per cent, 3rd ICB 8.59 per cent, 1st BSRS 8.50 per cent, ICB 1st NRB 8.10 per cent, 5th ICB 7.02 per cent and Grameen One 6.78 per cent on Monday.
Trading on the Dhaka Stock Exchange (DSE), however, was in the positive territory in about first two hour of the trade, pushing the key index up more than 33 points. From midday session, it began to shed points on profit taking and partly selling fro minimising the loss.
The market barometers - the benchmark DSE General Index (DGEN) and All Shares Price Index (DSI)-shed 11.12 points and 4.02 points to close at 3000.49 and 2588.02 respectively. But the DSE-20, comprising blue chips, continued to gain with 10.25 points rise to end at 2545.17.
The total turnover significantly rose to Tk 3.30 billion against previous trading day's Tk 2.65 billion. Out of 224 issues traded, 60 advanced, 157 declined and seven remained unchanged. The total market capitalisation slightly came down to Tk 931.02 billion against Tk 932.30 billion.
Tripti was the top gainer with 19.73 per cent rise on the news that the High Court approved the merge Olympic Industries limited with Tripti Industries Limited.
Square Pharma continued to retain the top turnover position with shares worth Tk 316.66 million traded and Fareast Life Insurance the second top turn over leader with shares worth Tk 248.61 million changing hands.
On the delayed move of the SEC on mutual fund rules, Mr. Faruq Ahmad said "The situation demanded the change and this is not the end, the rules will be amended in future in line with the changing situation."
"Temporarily, the investors will be affected but in the long run it will yield positive benefit for them," he added.
About the current market situation, he said, take a look at statistics of the last two or three days, it indicates the market behaviour is mature as the investors are putting their funds on stocks with good fundamentals. "But I say the market is still overvalued. However, there is no reason to be panicky," said the SEC boss.
"We have no other options but to review the mutual fund rules as the share prices of the mutual funds are rising unusually in the recent times because of speculation on the issuance of rights and bonus shares.
On alleged syndication, he said, "Neither I'll admit nor discard the matter. But the commission will take tough action against those involved in syndication, if there is any."
Shahjahan, a retired government servant who has invested all his pension funds in stocks, said, "The recent market nature is good but the basic problem in our stock market is that the syndication has become active which I have not seen since the 1996 stock market crash ."
He appreciated the amendment of mutual fund rules saying it is a good move as it not only ensure the smooth growth of the stock market but yield benefit for the general investors in future.
Economist Abu Ahmed said, "The SEC made a mistake before allowing the mutual funds to issue right and bonus shares. However, it is better late than never."
"Though the decision is painful for the investors but they should accept the reality," he added.
DSE chief executive officer Salahuddin Ahmed Khan said, "There is no scope for the close-end mutual funds to issue right and bonus shares. There were some weaknesses in the mutual fund rules, which often created speculation, resulting in volatility in the prices of mutual fund shares."
That's why the SEC has taken the move to review the mutual fund rules, he said. If the rules were amended earlier the investors had not to pay the price right at the moment, he added.
