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http://latestworldbusinessnews.blogspot.com/2011/01/bangladesh-stock-market-loses-bdt-850.html

JAN 23, 2011

Bangladesh Stock Market loses BDT 850 Billion

A total of Tk 85,000 crore have been channeled out through the Bangladesh Share Marketwithin the last 30 working days, sources said.

The General Index was 8918 points on December 5, 2010 and it labelled down at 6312 point onJanuary 20, 2011.

The amount siphoned off during the last six month specially was very preplanned sourcesadded. Total market capital was Tk 3,68,000 Crore (Tk 3680 Billion) on December 5, 2010which now collapsed to Tk 2,83,000 Crore (Tk 2830 Billion) on January 20, 2011.

Total Capital reduces of Tk 85,000 Crore (850 Billion), which amount is channeled out by theMarket Makers in the last one month, sources said.

Regulators fail to protect investors interests inBangladesh

The capital market regulator has failed to play its due role in protecting interests of the retailinvestors and handle the stock market, says a former Bangladesh Bank governor.

"It is the failure of the regulatory body [Securities and Exchange Commission] as it did not

exercise its independent authority," former central bank governor Dr Salehuddin Ahmed told adiscussion in the city on Sunday.

Economic Reporters' Forum (ERF) organised the discussion on monetary policy managementand Bangladesh Bank.

"I do not understand why the finance minister keeps on saying that he made some mistakes. Itis the duty of the regulator to maintain stability in the market. The SEC's approach is reactiverather than being proactive, and that is its main problem," he said.

He also commented: "Before taking any decision, it should have analysed the whole situationand its impact, but it has changed its policy as a short-term remedy. A policy may favour one

and hurt another, and it can not be a win-win situation. And the SEC should understand that."

The recent debacle in the market could have been avoided if the manipulators of 1996 scandalhad been put on trial and brought to book, he said.

"Heavy penalty is imposed on insider trading everywhere in the world, but it is absent here,"Salehuddin said.

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The former governor said banks should not be overexposed to the capital market as they dealwith the depositors' money. "If the banks make profit, depositors will not get any benefit, but ifthey incur any loss then the burden falls on the depositors. This is unfair and the banks shouldnot do it."

He advised the central bank to strengthen its supervisory and monitoring system to avert any

untoward situation in the market in the future.

"The Basel III, which will come into effect in 2018, put emphasis on supervisory and monitoringsystem, and this is the high time for the Bangladesh Bank to start implementing this seven yearsahead," he added.

Bangladesh Bank executive director Jahangir Alam said five banks invested in the share marketmore than their legal limit, and they had been warned for that and asked to adjust the exposure.

"We've issued a circular on July 9 in 2009 to provide all information related to investment andexposure of the banks, but a quarter outside the central bank spread a rumour that it (BB)withdrew the circular," he said.

There is enough liquidity in the market even after increasing cash reserve ratio (CRR) by 0.5percentage point as the central bank injected about Tk 70 billion on January 6 alone. "Themarket has the experience of confidence crisis, not the liquidity shortage."

Former Bangladesh Bank deputy governor Khondkar Ibrahim Khaled said it was 'absolutelywrong' to say that the central bank was responsible for the recent crisis in the stock market. "IfSEC cannot find out who play foul in the market, then we can say it fails to perform," he said.

"When the central bank increased the CRR it did not think of the share market. The focus wasrather on containing inflation," he added.

Palli Karma Sahayak Foundation chairman Quazi Kholiquzzaman said the share market crisisdid not happen on its own. "It was staged."

"If the manipulators are not identified and brought to book then it will happen again," he said.

Mentioned that a total of Tk 85,000 crore have been channeled out through the BangladeshShare Market within the last 30 working days, sources said.

The General Index was 8918 points on December 5, 2010 and it labelled down at 6312 point onJanuary 20, 2011.

The amount siphoned off during the last six month specially was very preplanned sources

added. Total market capital was Tk 3,68,000 Crore (Tk 3680 Billion) on December 5, 2010which now collapsed to Tk 2,83,000 Crore (Tk 2830 Billion) on January 20, 2011.

Total Capital reduces of Tk 85,000 Crore (850 Billion), which amount is channeled out by theMarket Makers in the last one month, sources said.