SEC directive triggers price correction in DSE
Wednesday, 21 November 2007
FE Report
Share prices on the Dhaka Stock Exchange(DSE) went down sharply Tuesday as the capital market regulatory body has taken a move to cool down the overheated market.
The downtrend in stock prices came following the Securities and Exchange Commission (SEC)'s initiative to stabilise the market, said analysts adding that the market behaved rather cautionary on the day.
All the price barometers plummeted on the day. The DSE general index (DGEN), all share price index (DSI), DSE-20 shed 81.11, 63.99 and 54.72 points to end at 3012.42, 2548.45, 2395.56 respectively. Turnover also came down to Tk 2.38 billion from its previous day's Tk 2.80 billion.
Indices on the DSE fell in the first two hours of the trading and regained pace later toward closing because of institutional buying. Losers outnumbered the gainers. Of the total 213 issues traded on the day, only 15 advanced, 182 declined and 16 remained unchanged.
The SEC on Monday asked the merchant banks and brokerage houses to suspend new loans to their clients effective from yesterday (Tuesday). The directive came against the backdrop of recent abnormal hike in the stock prices.
A merchant bank operator, requesting not to be named, criticised the SEC's initiative and termed it unfriendly for the growth of the capital market. "The move will hamper the normal behaviour of the market and the small investors will be affected," he said.
He further said the regulatory body would not have to intervene, had there been adequate supply of quality shares.
However, a SEC official termed the price decline as price correction and normalisation of the market. "Market behaviour is normal and satisfactory," he said.
The market is a little bit cautious due probably to the SEC's move, said Yawar Sayeed, a capital market analyst and chief executive officer of AIMS Bangladesh. "But the capital market regulatory body's decision is debatable," he opined.
DSE vice president Ahmed Rashid Lali said the market behaviour is rational. "The SEC's corrective measure is necessary as some issues are over-priced, which is a matter of concern. "The capital market might see correction two or three days more," he predicated.
AIMS First Mutual Fund was the turnover leader on the day with shares worth Tk 35.97 million traded followed by Bextex with Tk 42.26 million, Square Text with Tk 75.31 million, Grameen One with Tk 49.86 million, Bxpharma with Tk43.75 million, Lankabangla Finance with Tk 50.36 million, Keyacosmetic with Tk 21.92 million, Goldenson with Tk 8.47 million, Dfodilcom with Tk6.97 million and Unioncap with Tk 18.42 million.
Top ten gainers include ICB, Nitol Tubes, Pioneer Insurance, BDF Finance, USMANIAGL, City general insurance, 6th ICB and Metrospin.
Share prices on the Dhaka Stock Exchange(DSE) went down sharply Tuesday as the capital market regulatory body has taken a move to cool down the overheated market.
The downtrend in stock prices came following the Securities and Exchange Commission (SEC)'s initiative to stabilise the market, said analysts adding that the market behaved rather cautionary on the day.
All the price barometers plummeted on the day. The DSE general index (DGEN), all share price index (DSI), DSE-20 shed 81.11, 63.99 and 54.72 points to end at 3012.42, 2548.45, 2395.56 respectively. Turnover also came down to Tk 2.38 billion from its previous day's Tk 2.80 billion.
Indices on the DSE fell in the first two hours of the trading and regained pace later toward closing because of institutional buying. Losers outnumbered the gainers. Of the total 213 issues traded on the day, only 15 advanced, 182 declined and 16 remained unchanged.
The SEC on Monday asked the merchant banks and brokerage houses to suspend new loans to their clients effective from yesterday (Tuesday). The directive came against the backdrop of recent abnormal hike in the stock prices.
A merchant bank operator, requesting not to be named, criticised the SEC's initiative and termed it unfriendly for the growth of the capital market. "The move will hamper the normal behaviour of the market and the small investors will be affected," he said.
He further said the regulatory body would not have to intervene, had there been adequate supply of quality shares.
However, a SEC official termed the price decline as price correction and normalisation of the market. "Market behaviour is normal and satisfactory," he said.
The market is a little bit cautious due probably to the SEC's move, said Yawar Sayeed, a capital market analyst and chief executive officer of AIMS Bangladesh. "But the capital market regulatory body's decision is debatable," he opined.
DSE vice president Ahmed Rashid Lali said the market behaviour is rational. "The SEC's corrective measure is necessary as some issues are over-priced, which is a matter of concern. "The capital market might see correction two or three days more," he predicated.
AIMS First Mutual Fund was the turnover leader on the day with shares worth Tk 35.97 million traded followed by Bextex with Tk 42.26 million, Square Text with Tk 75.31 million, Grameen One with Tk 49.86 million, Bxpharma with Tk43.75 million, Lankabangla Finance with Tk 50.36 million, Keyacosmetic with Tk 21.92 million, Goldenson with Tk 8.47 million, Dfodilcom with Tk6.97 million and Unioncap with Tk 18.42 million.
Top ten gainers include ICB, Nitol Tubes, Pioneer Insurance, BDF Finance, USMANIAGL, City general insurance, 6th ICB and Metrospin.