Amid growing worries about the market mayhem, Bangladesh Securities and Exchange Commission (BSEC) chairman has urged investors to be patient and not to go for panic selling whimsically.
“There is no reason to panic,” Shibli Rubayat-Ul-Islam told The Business Post on Monday minutes ahead of his flying to Dubai to attend an event.
Since retail participation has been increasing in the stock markets, he has cautioned investors against investing on the basis of market rumours. “You need not be worried about negative equity issues as the commission extended negative equity adjustment deadline to 2023.”
“I know merchant bankers, dealers, and institutional investors are not selling shares but retailers are doing so,” he said.
Some unnerved retailers have been selling stocks at lower prices in the last few days, making the market volatile, said Shibli.
However, the BSEC chairman did not see any negative impact on Bangladesh from the growing Russia-Ukraine conflict.
On Monday, the Dhaka Stock Exchange (DSE) took yet another heavy battering as the benchmark index recorded the largest single-day drop in two years, plunging to a seven-month low.
The Russia-Ukraine war with no sign of slowing down continued to weigh on investor sentiment, dealers say.
The market began its slide soon after opening with the benchmark index crashing more than 182 points, or 2.74 per cent to settle at 6,456. The index was its single-day biggest fall since March 16, 2020, when it nosedived 196 points and lowest since July 29, 2021, when it was 6,425.
With the crash, the index extended its losing streak for the fourth straight session after some respite in the early sessions of the week.
Investors continued to shy away from the market since the Russia-Ukraine conflict began on February 24, according to dealers. The DSE's average weekly turnover fell about 25 per cent to Tk 750 crore.
Last week, the BSEC extended the negative equity adjustment period by a year to December 31, 2023. The previous deadline for the negative equity adjustment was December 31, 2022.
The regulator clarified the much-discussed negative equity maintained by some brokerage houses and merchant banks in their clients’ portfolios.
Negative equity was piled up during the 2010 market crash when the value of share prices fell below the prices bought by the investors with margin loans from the brokerage firms and merchant banks.
The negative equity stood at Tk 8,673 crore as of September 2021, down from Tk 12,250 crore in 2020 and Tk 9,091 crore in 2017, according to the BSEC data.
