Bourse chiefs warn investors of collapse. Seek PM’s intervention in offloading SoE shares

Staff Correspondent

The chiefs of Dhaka and Chittagong stock exchanges on Saturday warned investors of huge losses in the wake of an overheated capital market and sought the prime minister’s intervention to offload shares of state-owned enterprises for cooling down the market.
   ‘Many of the investors are in a risky zone as the stock market is currently overheated. Investors should stop buying over-priced shares. If they continue to buy over-priced shares, they will face losses once there is a collapse,’ warned the president of the Dhaka Stock Exchange, Shakil Rizvi, on Saturday at a press conference in a city hotel.
   The bourses organised the press conference in the wake of recent surge in share prices on the stock exchanges, which broke records in general index and turnover almost every day in last two weeks.
   Citing increase in prices of some of the shares, Shakil said, ‘price of a share of Tk 500 has surged to Tk 3,000 in last few weeks which gives an ominous signal.’
   The general index of the premier bourse, the DSE, has broken records in every trading session in last 11 days while turnover hit all time high at a massive Tk 2,800 crore on Thursday.
   The general index rose by 5.40 per cent last week and turnover by 12.29 per cent after general index and turnover grew by 2.8 and 20.23 per cent respectively.
   Chittagong Stock Exchange president Fakhor Uddin Ali Ahmed said, ‘We’re observing with concern that some shares are being overvalued even though their financial base is weak... at this stage the investors will have to invest carefully and consciously.’
   He said that some syndicates were manipulating the markets taking the advantage of lack of good shares.
   Shakil and Fakhor said that the market needed more supply of quality shares to cool down.
   ‘If the market falls heavily, the investors will ultimately make the government responsible,’ said Fakhor.
   Shakil urged the prime minister, Sheikh Hasina, to immediately intervene in the market by taking steps to offload shares of the state-owned enterprises, the process of which has remained stalled because of bureaucratic tangles.
   ‘All the directives of the market regulators [Securities and Exchange Commission] failed to cool down the market.’
   ‘Finance minister earlier assured us that the shares of the SoEs would be offloaded but the process has stalled as bureaucrats do not want to allow offloading of shares in fear that they will lose control over the enterprises,’ he said.
   He requested the government to offload at least 49 per cent shares in total of the state-run companies that had already been listed with the bourses by offloading up to 20 per cent shares.
   Fakhor said some issue managers were fabricating the accounts of companies to bring them in the share market with higher face value.
   He suggested SEC for allowing professional consultants who would guide the investors properly as some people with inadequate experience in share trading were misguiding investors.
   Defending all the steps of the Securities and Exchange Commission, DSE and CSE chiefs said the regulators needed to be strengthened so that it can protect the investors by strict monitoring and surveillance activities.
   Indicating recent writ petitions filed by investors challenging the SEC’s directives, Shakil said, ‘The capital market cannot perform well if the regulators is challenged for its decisions,’ he added.
   Other suggestions of the stock market operators include strengthening of bond market, accelerating the approval process of initial public offerings and reducing the lock-in time for placement of shares.