Investors staged a hunger strike in front of the Dhaka Stock Exchange (DSE) and took to the streets to protest the recent drop in the key index of the DSE, as stocks crashed to their lowest level since January 2017.
The benchmark index of the Dhaka stock exchange, DSEX, crashed by 1.2% or 62 points in a single day on Monday, bringing further misery to both institutional and private investors in the market, to end the day on 5175 points, its lowest in 27 months.
To add to the current drop in the key index, the turnover in the DSE is also down by more than 13.26 percent to Tk. 298.6 crore.
The current slump is a source of major concern to investors, with many demanding the resignation of M Khairul Hossain, the chairman of the Bangladesh Securities and Exchange Commission (BSEC), the regulatory body of the stock markets. At the hunger strike organized under the banner of Bangladesh Pujibazar Biniogkari Oikya Parishad, many of the investors put forward their 12-point demand and also urged the Prime Minister’s interference into the market so that sweeping changes can be made.
However, many experts blame other fundamental issues with the country’s stock markets, including the listings of sub-par companies in the market, the lack of proper Initial Public Offerings (IPOs) and the flouting of laws and buy back laws by the directors of the different listed companies. It can be seen that many of the directors of listed companies in the DSE do not own the mandatory 2% of the company’s shares per director, with some company’s directors not even holding a total 30% amongst all of themselves jointly.
The drop in the DSEX has followed a lot of individual and institutional investors selling their shares, with a lack of confidence amongst investors mostly to blame. Many investors have been urging the regulatory body, BSEC, to bring changes to the market as well as some of the laws, so that the market may gain back some of the confidence.
The value of stocks in the market have dropped by more than Tk. 32,000 crore over the last 3 months and the DSEX has dropped by more than 700 points over the same timeframe. This is a huge drop, especially after the strong performance of the market, soon after the elections in the start of the year. As liquidity in the country’s banking sector has also been drying up, the fall in the markets have made things far worst for institutional investors.
The slump in the market follows the statement by the Finance Minister, AHM Mustafa Kamal, who on Sunday mentioned in parliament that the stock market in not under the governments control and admitted that the banking sector is also in bad shape. “However, we have identified the problems and will solve them one after another,” he went on to add.
The government and the stock market regulatory authority, BSEC, must bring about some sweeping changes to the market, including revisiting the listing of some of the lowest performing companies, so that investors can gain back some of the lost confidence. As the country continues to rally, including having laudable constant improvements in its Gross Domestic Product (GDP), the stock market and the banking sector must gear up to supplement and support the continued improvements in the economy as a whole.