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Front Page Tuesday, January 11, 2011
Markets shut as stocks collapse
Rowdy protests flare up; bourses resume today
Thousands of angry investors vandalised cars, blocked roads around the country's main bourse and fought a
violent battle with police following the collapse of the stockmarket yesterday.
Share trading stopped only 50 minutes into the opening of transactions, when prices went into free fall.
The regulator instructed the exchanges to suspend the trading after General Index of Dhaka Stock Exchange
slumped by 660 points and Selective Categories Index of Chittagong Stock Exchange by 914 points.
It was the steepest singled-day fall in the bourses' history.
Dhaka-based retail investors attacked the office of the market regulator and staged demonstration in the bustling
Motijheel area from Ittefaq crossing to Paltan crossing, Dilkusha area, Karwan Bazar and Mirpur.
The mob vandalised some vehicles and set fire to tyres and wooden furniture stuff as they demonstrated in
Motijheel area in the capital.
Running battles between police and investors continued for hours.
Police fired tear gas and baton-charged to disperse the agitators who were throwing brickbats at them.
Some people were detained by law enforcers from Motijheel, but were later released.
Police even beat up at least four journalists near the DSE building. The journalists gathered there to cover the
volatile share market.
Protests broke out elsewhere in the country. Demonstrators in Chittagong, Comilla, Bogra and Narsingdi also
brought out processions and demonstrated in protest at price fall and market closure, report our correspondents.
The main opposition BNP expressed concern over the massive plunge of the capital market.
BNP Senior Joint Secretary General Mirza Fakhrul Islam Alamgir said, Share market went into a nosedive in
1996 when the Awami League was in power. The market yesterday experienced record plunge in its history
during the same government's tenure.
He was addressing a press conference at the party chairperson's Gulshan office while other senior leaders were
present.
They leaders demanded the government investigate whether the money looted from the capital market were
laundered abroad.
However, stock trading resumes at 11:00am today and will continue on schedule, the authorities said.
The collapse prompted the Securities and Exchange Commission and Bangladesh Bank to take a series of
measures in a desperate effort to cheer up investor spirits.
As per the measures, the SEC increased margin loan ratio, withdrew the restriction on merchant banks' exposure
to the stockmarket, allowed purchase of non-marginable securities using netting facilities and bring back 14
securities under public market trade instead of spot market trade.
And the central bank relaxed some restrictions on the commercial banks' investment exposure to the
stockmarket and advised the banks not to sell shares for the time being now.
Yesterday's slump in share prices was even greater than the market crash in 1996 when the stocks plunged by
highest six percent on a single day.
A fund manger seeking anonymity said, "It's a result of collective greed."
"Every investor is accusing the regulators of this situation, but no one blames him/herself for the greed or
unjustified investment decision in an overheated market," he added.
A former finance adviser AB Mirza Azizul Islam at a discussion said the SEC should have taken measures to
cool down the share prices while the prices were on the rise.
Bangladesh Bank should also have taken the regulatory steps earlier, he said. "Around two month ago in an
informal meeting, I pointed out to the governor to see whether the bank is diverting the credit into the
non-productive sector," said Islam, also a former chairman of the SEC.
An asymmetric flow of information, high risk taking behaviour and irrational exuberance as well as pessimism
were some of the main reasons of the price fall, said Islam.
Another former SEC chairman Faruk Ahmed Siddiqi at the discussion said the drastic fall of the capital market
could be avoided if the SEC and Bangladesh Bank could have moved to correct the price in September.

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Sarwar A Chowdhury
The Daily Star
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DSE President Shakil Rizvi came down heavily on the institutional investors saying that they are not playing their
due role.
"The institutional investors also become greedy along with retail investors," he said.
"Panic sales should be stopped first, and the government and the regulators should intervene in the market," said
another fund manager.
Although a correction in share prices was expected any time in last one year following abnormal rise in the
market, insiders see the current situation due to liquidity crisis.
The insiders said whatever the reasons behind the current downtrend are, the retail investors panicked; even the
institutional investors felt the pressure for selling.
Once we were encouraged to invest in the market. Now I lost almost everything I had, said Mamun, a retail
investor.
Who will give my money back?
Thousands like him are asking the same question. For now, Shakil Rizvi has only two words for Mamun and
others.
"Stop panicking."
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what a bunch of clowns! you
should not be investing in the
market unless you can afford to
and crucially handle loss or even
total loss, as the stock market is
not a guaranteed rise invest
scheme!! Wake up people the
market is down so what buy more
if you can afford to if not wait for it
to rise back up, look at the west
market crashed were they out
rioting? No! so get a grip and let it
be a lesson learnt, we are a
laughing stock to the outside world
and yes i agree that the market
controllers are the biggest bunch
of numbnut corrupt tossers
around!!
Good luck all.
: mohammed
COMMENTS
SNH
Tuesday, January 11, 2011 04:51 AM GMT+06:00 (195 weeks ago)
Their need analysis found out people's (investors') greed which was required to
be hurt.
rafique (london)
Tuesday, January 11, 2011 05:30 AM GMT+06:00 (195 weeks ago)
It is a shame that the investors went to the streets and did what they did. It is
totally wrong to effect innocent people in such a way. Previously I did invest in
share markets and I lost a huge amount of money, but I did not resort to this
type of behaviour. In the West if someone has a bet and next day he asks for a
refund, they will not get it. In stocks and shares the morning you are rich and
by the evening you could be poor and thats the life of the share market.
zerosopher
Tuesday, January 11, 2011 07:55 AM GMT+06:00 (194 weeks ago)
speculative investors, who are only after abnormal economic profits, should not
have a protection.
Dev Saha
Tuesday, January 11, 2011 08:49 AM GMT+06:00 (194 weeks ago)
Investing in the stock market is not a risk free business as many people may
think. On the contrary, it is very risky and people should be aware of the fact
that they can loose everything when they play with margin borrowing. When
market plunges, the margin calls are devastating and they can wipe out a
million Taka's account in a day or two.
Market goes down for reasons and it is fruitless to argue why it should not. I
am not sure whether Bangladesh stock exchange allows short sales of shares.
A short seller does not need to own any share but he or she can sell the
shares to others by borrowing them from brokerage firms and returns them by
buying back at lower price. He or she pockets the difference. This is pretty
normal in any stock market and brokerage firms facilitate the activity for the
sake of liquidity. They make money by letting short sellers borrow shares. The
Markets shut as stocks collapse http://archive.thedailystar.net/newDesign/news-details.php?...
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Sweet economic revenge.It was
not something unpredictable.
People poured in money for
illusive wealth. Companies
intentionally allowed investors to
pour more.
International businesses were not
any exception. In the name of IPO,
international mugshots put baits
for the novice investors who didn't
even have any knowledge for any
king of such investment.
There was no clear-cut market
information. There is no
automation of processes. The
entire thing is corrupt. All sort of
corrupt morons who gained
illegitimate wealth rushed in the
market. All corrupt government
officers, all unemployed youth
found this way easier than
anything else to earn EASY
MONEY!
EASY MONE COMES EASY,
GOES EASY.
Maybe, this is an initial phase for
the new world economic order to
get Bangladesh in the system.
Maybe, this is a revenge of the
fallen Titan. Who knows?
Bangladesh's economy WILL NOT
BECOME something as Indonesia
or Zimbabwe.
: SNH
market makers too could be involved in this money making games. May be it is
time time for transparency and disclose all the rules. Small investors are
important for the market and they should be aware of the intricate rules of
stock buying and selling.
Maimoona
Tuesday, January 11, 2011 08:58 AM GMT+06:00 (194 weeks ago)
There is increasing talk about a massive manipulation and profit taking in the
stock market by organized (probably external) syndicate. This was also
suspected last time when the market crashed during the last AL government.
We demand full and independent investigation (this should be done without
government interference). Our Finance Minister has no idea about his job, our
PM and the other Ministers are only interested in securing their own financial
and political goals. In the midst of all that the people suffer endlessly.
Virendra
Tuesday, January 11, 2011 09:32 AM GMT+06:00 (194 weeks ago)
I feel pity for these investors. Not because they lost money, but because they
thought equity market is meant for profits only. Perhaps we should make a rule
that only people who know stock markets can go both ways should only be
allowed to put in their money. Why were these guys not burning buses or
pelting stones on police when market was giving impossible returns.
Nasirullah Mridha,USA
Tuesday, January 11, 2011 02:14 AM GMT+06:00 (195 weeks ago)
Shut share Markets-Like chop off your head or forehead when feel
migraine.only coax from Finance Minister could not mollify the investors.need
concrete steps to gain confidence.
Abu Zubair
Tuesday, January 11, 2011 10:11 AM GMT+06:00 (194 weeks ago)
Bangladesh Bank, SEC and Finance ministry miserably fails to control stock
market. Government should adopt corrective measures for saving the millions
small investors.
Abu Zubair
Reaz Hassan
Tuesday, January 11, 2011 10:26 AM GMT+06:00 (194 weeks ago)
If the government means business, and has no dirty hands in it, it needs to constitute a high powered investigation
committee with transparent people to find out the causes of stock market crash.
Please mark the words spoken by the SEC and DSE chiefs in the past one week. They never accepted that the
shares were plunging headlong but preferred to call such historical dips as 'market corrections'. Is there no sense
of balance and proportion in them to understand the difference between normal trading where bouncing takes
place within a reasonable range and free fall of shares, as much as 25 per cent or more in just five days?
The investors have grounds to panic because I presume nasty hands are behind and quite in league with
government who performed broad day light dacoity with peoples hard earned money. We want to see ACTION,
quick and resolute.
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Markets shut as stocks collapse http://archive.thedailystar.net/newDesign/news-details.php?...
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