Liquidity crisis blamed for panic sale of stocks

The capital market has witnessed a declining trend for flight of funds to better options and panic sales by jittery investors amid a lack of confidence.
DSE Brokers Association (DBA) and Bangladesh Merchant Bankers Association (BMBA) representatives said this at an urgent press briefing on Tuesday.
The briefing was held following the sharp fall of the broad index in the past few sessions.
"Liquidity crisis is a big problem in the capital market," said DBA president Md Shakil Rizvi.
"Investor confidence will be restored if the depth of the market enhances with quality IPOs (initial public offerings)," he added.
He told the news briefing that the market is witnessing continuous correction, although most of the scrips are not overpriced.
At the event, DBA representatives made a set of proposals, including simplification of multi-layer taxation on dividend income.
The DSEX, the broad index of Dhaka Stock Exchange (DSE), declined 2.58 per cent or 141 points in the past three sessions.
Meanwhile, amid this unsteady market, a section of general investors staged on Tuesday a demonstration outside DSE office, demanding resignation of the securities regulator's chairman.
At Tuesday's briefing, the DBA laid importance on the listing of more companies having good fundamentals.
"All the authorities concerned, including the bourses, should work together to bring quality IPOs," Mr Rizvi said.
He said proposals like revision of the banks' exposure to the capital market are still to be resolved by the central bank.
"The issues should be resolved… We'll also make a proposal to issue bonds to ensure liquidity support to the capital market," Mr Rizvi added.
Meanwhile, BMBA president Mohammed Nasir Uddin Chowdhury said stock brokers and merchant banks take loans from their parent companies.
"Such loans are included in a bank's exposure to the capital market. Merchant banks and brokerage firms can get fund support if institutions can issue bonds."
"In that case, the bank's investments made in binds must be excluded from their exposure limit," Mr Nasir stated.
Mr Rizvi also proposed a cut in at-source tax to 0.015 per cent from 0.05 per cent realised from the commission of share transaction.
The market opened Tuesday's session with a negative note, losing 43 points of the broad index within one hour.
During mid-session, a recovery stance was observed but finally the index closed with a sharp loss.
The media sought to know whether the recovery stance rode on the phone calls made to seek support from different brokerage firms.
In this regard, Mr Rizvi said the market cannot be dragged through calls.
As to whether the ongoing market movement was 'artificial', he said artificial movement cannot sustain for long.
"It may be possible for a few hours or two to three days," he went on to say.
After the briefing, a delegation of stock brokers and merchant bankers held a meeting with the chairman and commissioners of the Bangladesh Securities and Exchange Commission (BSEC).
After the meeting, Mr Nasir said the regulator gave them assurances of providing necessary help to meet the market-supportive demands.
"We've told the BSEC that the market will get fund support if the proposals are implemented," the BMBA chief Said.
He said the BSEC might allow scrip netting, examining the risk management capacity of stock brokers and merchant bankers.
"The issue of liquidity crisis was also discussed at the meeting with the BSEC chairman," he added.

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