The New Nation - Internet Edition

UNB, Dhaka

Finance Adviser Dr Mirza Azizul Islam yesterday said he was still in the dark about the recent stock market slump.

"Nobody could tell me about any specific reason. SEC (Securities and Exchange Commission) also could not say anything," he told reporters at the Finance Ministry conference room.

The Finance Adviser said he has asked the SEC to hold talks with the merchant banks and the leading brokers to identify the reasons.

The main index in the Dhaka Stock Exchange, country's prime bourse, shed 637 points or 20 percent since June 1 this year.

The Finance Adviser said the issue of Titas that took away a lot of money could have been a reason, but the market has by now overcome the liquidity pressure.

He, however, pointed his finger to the merchant banks and institutional investors, who have an important role in developing the capital market.

"It's okay, they execute clients' order. Yet they have important role to play," he said, adding: "They didn't play their own strong role that we expected from them."

Dr Aziz expressed satisfaction over the development in last two days and said the SEC efforts have been effective.

The DSE General Index recovered by 134 points in last two days (Wednesday and Thursday) as the regulator, the Securities and Exchange Commission (SEC), began a series of meetings with institutional investors and leading brokers to identify the reasons behind the slump.

Yet, the small investors roaming around the market Thursday were exchanging views among themselves that the two-day upward trend was nothing but a quick response to SEC's effort in building confidence among the investors.

"Surprisingly, the market reacts sharply to any news that the SEC was holding meeting - be it on policy decisions or not," said a broker, requesting anonymity.

"You think whether the merchant banks will come up with additional fund without any reason, if they had withdrawn from some reason or other," he told UNB.

Talking to the reporters, former senior vice president of Dhaka Stock Exchange (DSE) Ahmed Rashid Lali termed the market trend as a post-dividend phenomenon.

He expects that the market would again take upturn with the central bank decision to increase their capital base. "There is no reason to be panicked," Lali said.

SEC executive director Anwarul Kabir Bhuiyan told UNB that they had three separate meetings with Union Capital, Standard Bank and Shahjalal Bank on Thursday. He would not disclose what reasons the merchant bankers assigned behind the market slump, but said they would let it know after completion of their meetings.

He only apprised that the recent IPOs and Titas shares took away around Tk 1,500 crore from the market while some banks invested in the call money market on high return.

Meanwhile, the DSE benchmark index recovered 85 points or more than 3 percent to close at 2,706 points on Thursday. Prices of shares gained across the board with 188 gainers out of 227 issues traded while 27 were losers and 12 remained unchanged.

The turnover also increased to Tk 260 crore on Thursday, climbing from as low as Tk 181 crore on August 14.

The market suffered a technical setback in trading for an hour from 11:30 am to 12:30 pm today, but the DSE authority extended the trading hour by one hour to 3 pm to cover the trading loss.