Stocks returned to the black fuelled by a Bangladesh Bank directive that acted like a catalyst to boost the markets.
The central bank has extended time for banks to trim down its single borrower exposure limit by four months to December from August.
Commercial banks with merchant banking or brokerage operations will now have to cut its single borrower exposure to 15 percent of their paid-up capital.
M Shakil Islam Bhuiyan, chief executive officer of LankaBangla Investments, a leading merchant bank, said: “The central bank has extended the time limit to adjust over exposure of merchant banks, which is good news for investors.”
The 15 percent single exposure limit means if a bank's paid up capital is Tk 200 crore it cannot lend more than Tk 30 crore to its merchant bank or brokerage house.
But many merchant banks have hundreds of crores of taka in exposures to the capital market. If they now want to bring down the exposure to the new ceiling, they have to sell shares of clients to free money for their owning companies (banks).
The benchmark general index of Dhaka Stock Exchange rose 105 points, or 1.98 percent, to 5,397 points. The selective categories index of Chittagong Stock Exchange increased 183 points, or 1.92 percent, to close at 9,700 points.
A group of investors under the banner of Capital Market Unity Council staged a sit-in in front of the DSE building after submission of a 15-point charter of demands to the Securities and Exchange Commission.
They demanded resignation of Finance Minister AMA Muhith, Bangladesh Bank Governor Atiur Rahman and DSE President Shakil Rizvi.
Saiful Islam, vice-chairman of BRAC EPL Investment and managing director of BRAC EPL Stock Brokerage, said the liquidity crunch pushed down DSE turnover as most institutional investors failed to trade though the market price earnings ratio is 15.
Turnover on the DSE yesterday hit its lowest in 26 months and stood at Tk 296 crore, down by Tk 27 crore from that on the previous day. The earlier lowest turnover on the DSE was Tk 275 crore on March 30, 2009.
Salahuddin Ahmed Khan, who teaches finance at Dhaka University, said it would have been better if the BB had taken the decision to increase the time limit for exposure a few months earlier.
The central bank has extended time for banks to trim down its single borrower exposure limit by four months to December from August.
Commercial banks with merchant banking or brokerage operations will now have to cut its single borrower exposure to 15 percent of their paid-up capital.
M Shakil Islam Bhuiyan, chief executive officer of LankaBangla Investments, a leading merchant bank, said: “The central bank has extended the time limit to adjust over exposure of merchant banks, which is good news for investors.”
The 15 percent single exposure limit means if a bank's paid up capital is Tk 200 crore it cannot lend more than Tk 30 crore to its merchant bank or brokerage house.
But many merchant banks have hundreds of crores of taka in exposures to the capital market. If they now want to bring down the exposure to the new ceiling, they have to sell shares of clients to free money for their owning companies (banks).
The benchmark general index of Dhaka Stock Exchange rose 105 points, or 1.98 percent, to 5,397 points. The selective categories index of Chittagong Stock Exchange increased 183 points, or 1.92 percent, to close at 9,700 points.
A group of investors under the banner of Capital Market Unity Council staged a sit-in in front of the DSE building after submission of a 15-point charter of demands to the Securities and Exchange Commission.
They demanded resignation of Finance Minister AMA Muhith, Bangladesh Bank Governor Atiur Rahman and DSE President Shakil Rizvi.
Saiful Islam, vice-chairman of BRAC EPL Investment and managing director of BRAC EPL Stock Brokerage, said the liquidity crunch pushed down DSE turnover as most institutional investors failed to trade though the market price earnings ratio is 15.
Turnover on the DSE yesterday hit its lowest in 26 months and stood at Tk 296 crore, down by Tk 27 crore from that on the previous day. The earlier lowest turnover on the DSE was Tk 275 crore on March 30, 2009.
Salahuddin Ahmed Khan, who teaches finance at Dhaka University, said it would have been better if the BB had taken the decision to increase the time limit for exposure a few months earlier.