Capital market upbeat again

Dhaka stocks continued to gain on Tuesday as the country’s capital market has become upbeat again in last one week with participation of investors following some government moves and speculation about a market-friendly budget.
The benchmark general index of Dhaka Stock Exchange, or DGEN, advanced by 97.04 points, or 1.66 percent, on Tuesday to extend the rally for four days.
The DGEN closed the day at 5,941.77 points while it advanced by 649 points since May 26 when the DGEN hit a two-month low of 5292.43 points because of panic-driven sell-offs by investors.
Turnover on Tuesday also hit a one month high of Tk 877.23 crore, up by Tk 206.41 crore from the previous day. On April 11 the turnover was Tk 1,224.16 crore.
‘The DGEN and turnover are advancing because of the renewed confidence in the investors due to government move to restructure the Securities and Exchange Commission, Bangladesh Bank’s move to allow banks more time to cut down their stock market exposure and speculation over positive budgetary measures,’ said a stock broker.
Many of the investors, who remained in the sideline because of panic in April-May following uncertainty over government action in line with a probe committee report and restructuring of SEC, started to flock to different brokerage houses with the hope that they would recover their loses, he said.
Market operators said rumours that the government would allow laundering of undisclosed money in the capital market had boosted some investors who were hoping such move would increase liquidity supply in the market.
The DGEN had hit a record 8918.51 points and the turnover rose to Tk 3200 crore on December 5,  but the DGEN came down to 5203 points on February 28 as the market crashed because of fund withdrawal by banks and large investors.
Investors staged rowdy demonstrations as they found that they were losing money in almost every trading session.
The market, however, rebounded and the DGEN went up to 6556.52 points on April 10 before sliding to 5292.43 points on May 26 because of rumours that the government would punish a number of large investors for January’s stock market crash and impose gain tax and introduce taxpayers’ identification number for share trading in the budget.
The government, however, decided in late May that gain tax and TIN would not be introduced in the next fiscal year’s budget, which would be placed by finance minister AMA Muhith tomorrow.
Capital market experts and stakeholders are terming the recent gain positive but also warned the regulators to handle the optimism tactfully to avoid another bubble market.
Salahuddin Ahmed Khan, a professor of finance at Dhaka University, said, ‘The investors seemed to regain confidence gradually as the market trend was quiet stable over the last week.’
‘The SEC should utilise this momentum to build a stable and sustainable capital market for the future,’ he said.
Salahuddin, also a former chief executive officer of DSE, said, ‘The government and the SEC should revise the laws to bring about substantial changes in the market.’
Ahsanul Islam, senior vice president of DSE, said, ‘Coordination and combined effort of the related parties including SEC, Bangladesh Bank, Dhaka and Chittagong Stock Exchanges and Insurance Development and Regulatory Authorities  helped to restore the confidence of  investors.’
‘A positive and market-friendly budget proposal by the parliamentary standing committee for finance ministry also raised the hopes of the investors,’ he said.