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“No manipulation” in rise of stock market? |
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July 7, 2000
Dhaka (UNB)- Again it’s the investors’ choice whether to rush to the stock market as both the bourses of the country basked in bullish trade for a week closed yesterday (Thursday). “No manipulation,” claimed an official of the market watchdog while a stock think tank and the official smelt “nothing unusual” although the all-share-price indices of the two markets gained over 11 per cent in share prices in the week revamping from a slowdown. Market analysts say budgetary measures and strengthened supervision gave the market a “big push” to pull it out of the prolonged moribund state since 1996 nosedive. Mainly the good shares are being traded to push the indices up while the bad ones of 71 listed companies remained almost inactive, market players observed. They said recent expulsion of the 71 companies, 38 of them listed with the CSE and the rest with DSE, from the daily netting trading system for defaulting on dividends and AGMs contributed a lot to restoring investors’ confidence. Beginning on 561.00 on Sunday, the benchmark index of Dhaka Stock Exchange (DSE) shot up by 62.10 points or 11.06 per cent to close the week’s trading at 623.10. Today, the DSE index gained 16 points or 2.62 per cent over Wednesday. The day’s trading heated up to peak at 647 point mark at 12.16pm and later fixed at 623.10 points at closing of the day’s trading. Both the stock exchanges remained closed on Saturday on account of bank holiday for June final. The Chittagong Stock Exchange (CSE) began the week’s trading with the price index 1173.89 that gained 134.09 points or 11.42 per cent to close at 1307.98. The CSE index registered 52 points or 4.14 per cent up today from Wednesday’s mark. Last week, DSE average price index fell 1.07 per cent and CSE 1.08 per cent. One-year average (July 1999-June 2000) of DSE price index was 5.58 per cent up and CSE 4.58 per cent up. “Next few days are very crucial to see whether the benchmark cross 700 point or fluctuate between 600 and 700,” said Chairman of Dhaka University’s Economics Department, Prof Abu Ahmed. He said the investors who earlier abandoned the market might be allured to come back if the upswing sustains for at least one month. Prof Ahmed suggested certain steps, including completion of the reform process and bringing more sectors and multinationals into the stockmarket, to help the present trend sustain. “No matter what the market position remains, ongoing capital market reforms should not be left halfway,” said the Economics Professor, who keeps firsthand view of the share market. Besides, he felt, major public-sector bodies should be put on the stockmarket to bring in more investments as the present narrow market size leaves few options for investors. He however said market itself cannot ensure its sustenance alone, rather it is related to overall macroeconomic strength as factors like GDP, export, inflation altogether determine the size of the stockmarket. Although nothing unusual has so far been seen in the recent turnaround, which he said is still within the limits, Prof Ahmed felt the capital market watchdog Securities and Exchange Commission (SEC) should keep a watchful eye over the market mood. He said investors, both individual and institutional, hope the present trend would be sustainable and not be short-lived one artificially created just to appease capital-market investors in the election year. “We are closely monitoring both the markets…We did not find any manipulation yet,” said a senior official of Securities and Exchange Commission (SEC). He said the SEC surveillance teams were alert so that none can take the advantage of a market boom. “The price hike of good shares is the outcome of the corrective measures taken by the SEC. It’s nothing unusual,” he said. “If you look at the market reports, you’ll find the bad shares were being traded very limited,” he told UNB. The new year’s budget offered a 10 percent tax rebate for a listed company which declares dividends of 25 per cent or more. It also raised the exemption limit of dividend incomes from Tk 30,000 to 40,000. Other budgetary measures include making investment on secondary market share eligible for tax credit and allowing investment allowance up to Tk 225,000 in place of Tk 200,000 if investment is made on IPOs. |