B'desh govt orders probe into recent stock market debacle

Bangladesh government has ordered a probe into the recent stock market debacle and unveiled a series of reforms to restore confidence in the market, as major stakeholders have held an influential businessman responsible for the crisis.

Dhaka: Bangladesh government has ordered a probe into the recent stock market debacle and unveiled a series of reforms to restore confidence in the market, as major stakeholders have held an influential businessman responsible for the crisis.
 
Finance Minister AMA Muhith announced that a high-powered committee would be constituted in next 15 days to investigate into the alleged manipulation in stock market with directives to submit reports in subsequent 30 days.
 
He also announced a series of bailout measures under which the merchant banks were asked to reinvest their profits made from the volatile share market in a bid to bring back normalcy to the capital market.
 
Muhith made the announcement after a four-hour long meeting with major stakeholders Sunday.
 
The minister also announced that the under the rescue campaign, the recently introduced circuit breaker system would be lifted, the current book-building method would be suspended, companies would be allowed to buy-back their shares and Bangladesh Bank to remain "soft" on banks exposure to stocks.
 
Muhith, who earlier admitted "wrong handling" of the stock market situation on his part as well as the regulatory Securities and Exchange Commission, said the market was not "free of risk yet" but "we now have a tremendous ability to observe the market (and so) it is very much possible to stabilise the  market".
 
"Trading will resume on Tuesday... the overall price-earning ratio in the market is 23:1 and the index now stands at around 6,300 points. I do not think it is too high. The market fundamentals are good," he said.
 
The minister, however, urged the investors to be a littler more cautious in future saying "it is not likely that an investment of Taka 10 would yield a profit of Taka 50 overnight".
 
Meanwhile, the Daily Star reported Monday that a leading businessman came under fire at the high-profile stormy meeting Sunday.
 
It said several high-profile individuals told the meeting that businessman, who too was present, "is very close to the ruling (Awami League) party" while the same businessman was also linked with the 1996 share market scam but remained "scot-free due to what the government said lack  of evidence".
 
The report came as investors and analysts earlier said at least 11 people were very active in manipulating the market who earlier referred to as "those 11".
 
Bangladesh's stock market was closed Sunday and Monday for a crash that caused fund losses of millions of small investors as the benchmark Dhaka Stock Exchange general index fell nearly 1,800 points between December and January.
 
The report, however, did not name the businessman but he reportedly told the meeting "I feel insulted and am a successful businessman".

Meanwhile, several business analysts called the bailout measures "not adequate" unless stern measures were taken against the "manipulation culprits" and the reconstitution of the SEC.
 
"These influential culprits can do and undo many things, they can even murder people for their interests ... on the other hand unless the regulatory body is reconstituted with appointment of competent people," former central bank deputy governor Ibrahim Klhaled told a television talk show.
 
Former Bangladesh Bank governor Salehuddin Ahmed also suggested "immediate" punitive actions against the stock market manipulators saying "now shares are being traded through automated system and so the culprits could be detected easily".
 
The finance minister earlier also alleged that the "big fishes" now went into hibernation drawing millions of taka manipulating the market exposing small investors to miseries.
 
But he said the cases filed after 1996 stock market scam could not be continued as no witness was found.
 
"Next time (this time), we will not require any witness. The records at the central depository of Bangladesh will be the witness," he said.

PTI

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