Protests mark stock trade
BB's move on exposure limit pushes up benchmark index by 40 points
Stocks rose yesterday amid a positive step by the central bank and street demonstration by a group of investors. Police detained eight protesters in Motijheel.Banks with merchant banks and brokerage houses as subsidiaries will now have until December 31 next year to bring down their exposure to an allowable limit. The previous deadline was December 31 this year.
According to Bangladesh Bank requirements, banks are not allowed to lend more than 15 percent of their 'investable' amount to their subsidiaries as a single-party borrower. The investable amount is equivalent to 10 percent of a bank's total liabilities that it can keep as investment exposure to stockmarket.
With the continuation of the previous trend, the market went into freefall since the opening bell and the key index of the Dhaka bourse slid around 100 points in 20 minutes.
The market later turned back on the BB's latest step meant to support the stockmarket that is currently facing high volatility mainly due to a liquidity dearth.
The existing credit level cannot be increased during the extended adjustment time, BB said in a statement.
The move comes a week after the merchant banks urged the regulators to extend the adjustment period of single-party exposure to 2014.
The benchmark general index of the Dhaka Stock Exchange, DGEN, gained 40 points or 0.70 percent to end the day at 5,841.
The market started the day on a negative note, which prompted a group of investors to stage demonstration in front of the DSE building to protest the relentless fall in share prices.
Traffic between Shapla Chattar and Ittefaq crossing also came to a halt for three hours, causing congestion on both sides of the Motijheel commercial hub.
The protesters under the banner of Bangladesh Share Investors' Association set fire to paper and wooden materials, chanted slogans and demanded resignation of the finance minister and the central bank governor.
Police clubbed the protesters as they threw brickbats and vandalised vehicles.
“We lost our money but the government's has no headache,” said a small investor, a retired government official. “Save our life,” he urged the government.
Investors reacted positively to Bangladesh Bank's decision and the panic started abating at the end of the session keeping the index in green territory, said LankaBangla Securities.
The turnover on the DSE stood at Tk 373 crore, which is 5.7 percent lower than that of the previous day.