The New Nation - Internet Edition

Staff Reporter

The Securities and Exchange Commission (SEC) yesterday imposed ban on issuing bonus or right shares against mutual funds despite street protests of the investors.

Consequently indices in both the bourses in Dhaka and Chittagong went down significantly for seventh consecutive day yesterday as investors confidence on the market went down and investors took to the street again.

The capital market regulator on Jun 26 decided in principle to impose restriction on issuing right shares and also announced the plan to gather public opinion.

The announcement, resulted in falldown of the share prices, angered the investors and they took to the street. However, the SEC published advertisements on newspapers seeking public opinion about it.

The board of the SEC in its meeting yesterday gave approval to the plan of forbidding bonus on mutual fund that was announced on June 26.

"We are just working to keep the market on track," SEC executive director Farhad Ahmed told reporters after the board meeting.

Asked whether the SEC felt any pressure in the wake of falling indices and investors' agitation, Farhad said: "Not so."

According to a new decision, brokerage firms will have to seek approval from the SEC instead of stock exchanges to open branches.

"From now, the SEC will approve it. Brokerage houses having paid-up capital of Tk 75 lakh will be permitted to open three branches," Farhad said.

A firm can open up to 15 branches. Brokerage firms will be required to have paid-up capital of Tk 50 lakh for each outlet after the first three.

Meanwhile, the stock market regulator approved the IPO of Republic Insurance worth Tk 9 crore. The company won approval to float 9 lakh shares each at Tk 100.

"The company's paid-up capital is Tk 6 crore while its net asset value and earnings per share is Tk 122.93 and Tk 17.20," said Farhad.

The SEC also approved issuance of right shares of Trust Bank at the 1:5 ratio.

"The bank is permitted to issue one right share against five existing shares," said the SEC official.

Meanwhile, group of retail investors took to the streets at about 11 am when the market started to slump after opening upbeat and staged demonstration in front of the DSE.

Afterwards, a delegation of the protestors met the bourse's top official and told him not to go for frequent decision changes.

DSE senior vice president Saiful Islam in an instant press briefing said 'external forces' were behind the agitation.

"We believe that external forces worked behind today's demonstration."

He told investors not to panic as ups and downs in the market were quite natural.

DSE chief executive Salahuddin Ahmed echoed Saiful and said that the correction was temporary.

"There will be risks as it is the nature of the capital market. The Bangladeshi market did not fall that much compared to the recent falls in bourses of India and Pakistan," he told the press.

Replying to queries from reporters, he said they thought the Securities and Exchange Commission was "riding the right way".

The benchmark DGEN or general index opened upbeat but slumped afterwards losing 45.82 points or 1.63 percent to end on 2764.53.

The DSI or all-share price index declined 37.84 points, or 1.54 percent, to end on 2415.29. The blue-chip DSE-20 finished at 2541.45, slumping 44.32 points or 1.71 percent.

Indices on the Chittagong Stock Exchange also slumped as shares of pharmaceuticals and insurers witnessed huge losses along with the blue chips.

The CSCX or selective categories index fell 87.76 points or 1.57 percent to end on 5468.95. The CASPI or all-share price index closed at 8519.89, down 130.20 points or 1.50 percent.

The CSE-30 blue- chip lost 122.96 points, or 1.58 percent, to end on 7635.25.

Turnover from 16,046,164 shares traded on the DSE slipped to Tk 3.11 billion from Monday's Tk 4.06 billion.

Decliners outshined advancers 153 to 63, with 10 issues holding steady.

Turnover on the port city bourse declined to Tk 382.31 million, with 3,532,574 shares changing hands, from Tk 557.71 million the previous day.

Of the traded 138 issues, 86 lost, 47 gained and five remained unchanged.