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A group of aggrieved investors staged demonstration again Monday in and around the Dhaka Stock Exchange (DSE) amid continuous fall of share prices.
DSE General Index (DGEN) shed 30.83 points to close at 1518.34 while all share price index (DSI) shed 22.82 points to peg at 1162.35.
Witnesses said the investors began demonstration at 12-00 pm when the DGEN shed 20 points from the previous day's closing point.
The demonstration continued until 1-20 pm when the DGEN shed 26.02 points.
Market sources said institutional investors and other market players remained idle in the recent period to jack up the market.
Market analysts held the government's current policy responsible for the fall.
This was the second demonstration by the investors against the share price fall after February 13. On Monday, of the total 188 issues traded, the price of 139 issues declined, 29 increased while price of 20 issues remained unchanged.
The DSE general index lost 66.18 points in last 15 days from February 13 to Monday.
The market capitalisation declined to $ 3.116 billion in February, 2006 from $ 3.694 billion of January of 2005 though 16 new issues were listed with the DSE between this period.
"Many reasons can be cited for the crisis in the stock market, but the single most important reason is perhaps the government's action regarding the rate of return to bank deposits and saving instruments," said economist Ayubur Rahman Bhuiyan.
He said the central bank's directive to commercial banks to raise their lending rates and government's decision to withdraw restrictions on the limit of investments on saving instruments and enhancement of interest rates on the same have come as a serious blow to the stock market.
"The policy makers are not serious over the issue of improving the overall strength of the capital market," said Abu Ahmed of Dhaka University.
He said the overall investment and share market have been affected by the contractionary monetary policy of the government.
"The government is executing the International Monetary Fund's (IMFs) prescriptions for curbing inflation through raising interest rate," he said.
He said the whole market is witnessing outflow of liquidity from the share market due to increasing interest rates of bank and savings certificates.
DSE Vice-president Ahmad Rashid Lali said a large volume of money has been diverted to banking sector due to higher interest rate over the months. "The present distribution process of primary shares also discourages institutional investors from investing in the share market," he said.
"Institutional investors are inactive in the market this year compared to the previous year," said Saiful Islam, Managing Director of the Equity Partners and Securities Ltd.
He said unless the government reduces interest rate on the savings instruments and changes it monetary policy, the stability in the share marker would not be achieved.
The existing system of primary shares distribution needs reform for providing more room to the institutional investors, he added.
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