Bangladesh Securities and Exchange Commission (BSEC) has moved to revive the confidence of investors through injecting money into the capital market.
It has also directed the Dhaka Stock Exchange and the Chittagong Stock Exchange to activate a standard downward price change limit (circuit breaker) of 2 percent based on the previous trading day’s closing price.
“There is a market stabilization fund. We have directed Investment Corporation of Bangladesh (ICB) to inject Tk 1 billion from the Capital Market Stabilization Fund to keep the market stable,” Dr Shaikh Shamsuddin Ahmed, commissioner of BSEC, told the Daily Sun on Tuesday.
“After implementing the circuit breaker system, price of any share can advance to maximum 10 percent and cannot be down below 2 percent,” Dr Shamsuddin said.
He expressed hope that the circuit breaker is not only helping recover the trust of investors but also preventing unnatural profit gains by companies.
Earlier on March 1, Bangladesh Bank sat with top officials of banks and capital markets to discuss injecting money into the market from the financial institutions.
The central bank has directed the banks to form a fund of Tk 2 billion as a condition of running perpetual bonds. However, many banks are yet to form the fund.
Analysts suspect that fear among retail investors amid the war between Russia and Ukraine has affected the stock prices on Monday.
But the institutional investors didn’t hand over any share on that day, according to Bangladesh Securities Exchange Commission (BSEC).
“There is no visible reason for panic among the retail investors. We talked to the merchant bankers. They didn’t sell shares. Only the retailers sold shares due to unknown reasons. We hope the market will bounce back shortly,” Prof Shibli Rubayat-Ul-Islam, chairman at BSEC told the Daily Sun on Monday.
The BSEC chief thinks the global price hike of oil amid the Russia-Ukraine war may have created panic among the retail investors.
Bangladesh Merchant Bankers Association (BMBA) appreciated the move of BSEC to stabilise the market.
“It is a good tool for stopping the panic and irrational fall in stock prices,” BMBA President Sayadur Rahman told the Daily Sun.
The international oil price hike caused a negative impact on bourses across the world. The index of Japan Nikkei downed to 3.6 percent and 4 percent in Hong Kong.
Investors traded shares worth Tk 7.4 billion on Monday which was 6.51 billion on Sunday. The price of around 96 percent share fell on Monday while only 2 percent shares gained value and the price of 2 percent traded shares remain unchanged.