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Central & South Asia
Clash in Bangladesh as stocks dive
Police fire tear gas as thousands rally in capital, Dhaka, to vent their anger at record 9.25 per cent plunge in stocks.
Last Modified: 10 Jan 2011 11:24 GMT
Protesters gathered outside the stock exchange building to denounce the dive in stocks [AFP]

Trading has been halted at Bangladesh's main stock exchange amid protests over the largest single day loss in the bourse's 55-year history.

The exchange halted trading on Monday as per orders from the Securities and Exchange Commission after the benchmark index plunged 9.25 per cent within the first hour of trading.

Buses of riot police were deployed to the stock exchange building in the capital Dhaka where protesters chanted slogans against the government and market regulators.

Some protesters burned vehicles as riot police struggled to keep control, firing tear gas and charging the crowd with batons.

Al Jazeera's Nicolas Haque, reporting from the capital, said: "Because Bangladesh's stock market is largely driven by individual retail investors, many investors have lost their savings."

Monirul Islam, an investor attending the protests, told the AFP news agency: "I lost $70,000 dollars. This is insane - my whole savings are gone."

"I poured all my money into the Dhaka stock exchange," Humayum Kabir, another Bangladeshi investor, said.

"The finance minister lured us into the stock market, he told us it was safe, but now we have lost everything. They artificially jacked up the prices of junk shares and now our savings have vanished," Kabir said.

Necessary correction

The country's stock exchange hit a record high of 8,918.51 on December 5, but it has so far lost 27.4 per cent, which many experts have called a necessary correction.

Tanvir Chowdhury, the editor of the online journal News from Bangladesh, told Al Jazeera: "One of the factors that could explain these dramatic losses is how the market has widened but the number of the shares does not match the expectations of the people waiting to buy. There is also a lot of speculation from investors who do not understand the stock market.

"Small time entrepreneurs who have little money to invest think they'll get a quick return out of the market by buying stocks without realising the real face value of the stock versus the performance of the companies they are buying from, but it doesn't work like that," Chowdhury said.

Prices of shares have suffered a series of slides since early December after the stock regulator and the central bank took measures to cool the market, prompting some street protests.

The central bank had raised banks' cash requirement ratio from 5.5 per cent to 6 per cent, effective December 15, to rein in on inflation and to curb runaway credit flow, especially to the volatile capital markets.

Call money market rates also hit a record high last month. Some banks have invested 75 per cent of their deposits in the stock market against a ceiling of 10 per cent and had been told to get back under the limit by December 30.

This deadline has now been extended to January 15.

Source:
Al Jazeera and agencies
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