Stocks plunge as ‘manipulators’ go for massive sell-offs

Stock indexes in Bangladesh plunged by over 2 percent yesterday as a section of investors sold shares on a massive scale apprehending punitive measures from the regulator for their past malpractices.

The benchmark index of Dhaka Stock Exchange (DSE), plummeted by 132 points, or 2.36 percent, from that on the previous day to 5,453.

Over the last three consecutive days, the index had dropped by 205 points.

Some investors staged protests in Motijheel of Dhaka yesterday blaming some recent "wrong decisions" of the Bangladesh Securities and Exchange Commission (BSEC).

The "wrong decisions" include imposition of fines on some investors and downgrading of some companies to "Z" or junk category for regulation violations.

On Tuesday, the BSEC imposed a fine of Tk 428.52 crore on five firms and four individuals for manipulating prices of Beximco stocks to realise gains of Tk 477 crore.

On September 26, 28 companies were downgraded to "Z" category for violating regulation by not properly paying investors their dividends.

These are prompting the sale of shares on a massive scale, which, in turn, is causing the indexes to fall, said the protesters, who also demanded resignation of the BSEC high-ups.

A number of stock brokerage firms confirmed that those who had usually taken part in stock price manipulations have sold off shares on a massive scale as they fear that they would be caught by the regulator.

At the same time, they are spreading rumours among investors that the market index will soon fall by a massive extent.

Stocks of Islami Bank Bangladesh contributed to yesterday's fall by 19 points alone, according to LankaBangla Securities data.

"Because of the fine on Beximco Limited imposed by the BSEC, I believe the index has fallen," said Asif Khan, chairman of EDGE AMC.

"In recent years, many gamblers and speculators have been active in the market, and other investors have followed their lead. When these manipulators get fined, it clearly impacts the market, and that's exactly what we're seeing now," he said.

Khan pointed out that there was no straightforward solution.

"We've been saying that the regulator can't control the market completely. Their job is to set rules and punish those who break them," he said.

"We've met with the regulators and urged them to be tough on the wrongdoers. If the index falls as a result, we have to accept it and wait for better times, even if it takes a while," he added.

The overall economic situation needs to improve, said Khan.

The Bangladesh Bank governor recently mentioned that inflation would eventually decrease. "When inflation goes down, interest rates will also drop, and that should help the market recover," he said.

He emphasised the importance of patience for investors.

"It's not wise to jump in and out of the market quickly. Investors need to understand that market prices will go up and down. They must be prepared to take risks," advised Khan.

In this challenging environment, he remains hopeful that with time, the market would attain stability and grow stronger.