Tuesday, August 31, 2010

DSE turnover dips to 7-week low

The daily turnover on Dhaka Stock Exchange (DSE) dropped to a 7-week low on Sunday when regulator, stock exchange authorities and merchant bankers failed to reach an understanding on margin loa
The Securities and Exchange Commission (SEC) held a meeting on Sunday with executives of Dhaka and Chittagong stock exchanges and Bangladesh Merchant Bankers Association (BMBA) to ensure proper enforcement of margin loan criteria.

But the meeting ended only with mere understanding that they would meet again on next Sunday (September 5) to discuss the issue.
The market was greatly concerned about the meeting, which transmitted a volatile wave into the transactions and dragged the daily turnover to 7-week below.
The daily turnover dropped at Taka 1,154 crore on the week's opening day, which was lower than the nearest record low of Taka 1,169 crore on July 12 this year.
The fund flow to the market declined by Taka 531 crore in only three trading sessions after the SEC on August 25 directed the merchant bankers and brokerage houses to determine the market price of portfolios or securities for providing margin loans in accordance with the Margin Rules of 1999.
Under the rules, the brokers and merchant bankers have to evaluate the market price of a share by dividing the sum of its current price and net asset value (NAV) by two to provide margin loans to their clients.
But the brokerage houses do not have the effective technical setup to follow the new rules, which created a serious problem in providing their clients with margin loan that subsequently narrowed down the fund flow to the market.
According to asset management company, Aims of Bangladesh, the SEC's new loan criteria pulled DSE index 1.84 percent down in two days when the financial, power, engineering, food, telecom and tannery sector were mostly affected by it. The DSE index, however, gained some margin on Sunday on the hope that the meeting on margin loan would bring some positive news to the investors.
The index finished the day at 6670.16, 16.87 points or 0.25 percent higher than the last week closing.

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