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Stocks trading halted abruptly

DSE feared negative impact of renewed ban on stock investment by govt staff

Sarwar A Chowdhury
Dhaka and Chittagong bourses hastily suspended trading yesterday, after the government had expressed the day before its plan to strictly enforce an already existing ban on investment in stocks by public servants.
The trade suspension was prompted by a fear that the government's move would have a big negative impact on the
stockmarket, officials of
the bourses said adding that trading will resume today.
Yesterday's shutdown was unprecedented as the bourses halted trading without any prior instruction from Securities and Exchange Commission (SEC), the stockmarket regulator.
SEC had directed the bourses to halt trading twice in January last year after Dhaka Stock Exchange (DSE) plunged to historic lows and lurched into market crashes.
Retail investors, who lost much of their investments due to the bearish trend since last year, greeted yesterday's trade suspension as a relief from financial pain at least for a day, but market analysts saw it as putting pressure on the government to allow public servants to invest in the capital market.
The suspension, market experts said, might deepen panic among the investors and destabilise the market when trading resumes.
Dr Musharraf M Hussain, chief executive officer of DSE, told reporters yesterday that news about the government's renewed effort to refrain public servants, both military and civilian, from investing in the stockmarket might "create confusion".
The DSE authorities think that it might leave a big negative impact on the capital market, he said. "So, trading has been suspended for the sake of the capital market and investors."
"The DSE authorities also think that public servants, both civilian and military, should have the opportunity to invest in the capital market for the sake of the market and the country's economy," he added.
Chittagong Stock Exchange (CSE) said it stopped trading as DSE had halted it. "Following trading suspension by DSE, we stopped trading within one minute and fifty seven seconds of the beginning of transaction," said Syed Sajid Hossain, chief executive officer of CSE.
"Trading in the first two minutes has also been cancelled," he said.
The main gauge of the Dhaka bourse, General Index, declined 37 percent in 2011, a year that will be remembered as a time of twin debacles in the stockmarket. This year the index has so far suffered a 9 percent fall, according to data from DSE.
On Monday, the cabinet decided to remind public servants about service rules that prohibit their involvement in profit-making activities, including stock business, without prior permission. The public administration ministry is supposed to issue a notification to that effect in a day or two.
At the meeting, a couple of ministers drew the cabinet's attention to the huge number of government employees and their dependants being engaged in stock business, saying this has been hampering public service.
To discuss the prevailing situation, DSE sent a letter to Finance Minister AMA Muhith yesterday, the chief executive officer of the bourse said.
The boards of directors of DSE and CSE met the SEC
chairman and commissioners yesterday noon and expressed their concern about the market situation.
SEC however refrained from making any comment about yesterday's trade suspension and the government's move.
After repeated attempts by reporters to reach SEC Chairman M Khairul Hossain for comments, he only said, "If there is any development we will announce it."
Faruq Ahmad Siddiqi, a former chairman of SEC, questioned the timing of the government's reminder for public servants about a rule that had not been enforced in the last 32 years.
"It's not the proper time when the market is passing through high volatility, and everyone is talking about bringing back normalcy," he said.
As a career bureaucrat, Siddiqi said government employees should be allowed to invest in the primary market unconditionally, and in the secondary market only for longterm.
"But they should not be permitted to participate in daily trading, as it hampers an employee's official services," he added.
Although trading was suspended, general investors continued their demonstration yesterday under the banner of Bangladesh Share Investors Association (BSIA) in front of the DSE building and the central bank in the capital.
The agitating investors were demanding permission for public servants to invest in the stockmarket.
The demonstration, which started at 11:00am and ended at 5:40pm, halted traffic from Ittefaq crossing to Shapla Square for hours.
Kazi Abdur Rajjak, general secretary of BSIA, said it was a good decision to suspend trading. "The situation would have been worse if they had continued trading, "he said.
The government should allow public servants to invest in the stockmarket for the development of the market, he added.
Another platform, the Federation of Bangladesh Capital Market Investors Forum, submitted a 20-point charter of demands to SEC.
Our Chittagong correspondent added that a group of retail investors brought out a rally in Agrabad area of the port city around 11:20am demanding stability in the stockmarket.
They, under the banner of Investors' Forum of Chittagong, also staged a sit-in in front of the CSE office and submitted a memorandum to the bourse authorities.