 A Bangladeshi man smashes a car during a clash between investors and security officials at the commercial town of Motijeel in Dhaka, Bangladesh, on Jan. 10, 2011. AP photo |
Bangladesh's volatile stock market rose more than 15 percent Tuesday, rebounding a day after a plunge triggered violent clashes between angry investors and police.
The benchmark Dhaka Stock Exchange general index, or DGEN, gained 1,005 points, or 15.47 percent, to 7,507 points from Monday’s 6,499 points. But analysts said the market could still face trouble as the bounce was led by government intervention.
The huge gain came after the market slumped 7.76 percent on Sunday while Monday's trade was suspended within an hour when the index dived a record 9.25 percent.
"This is a government-led rebound driven by market-boosting measures from the Securities and Exchanges Commission, or SEC, and the central bank that have increased liquidity," Mahmud Osman, professor of finance at Dhaka University, told Agence France-Presse. "It is not good for the market and the question is how much of these gains will be retained."
Anti-hot money measures
Many analysts say the heavy losses were caused in part by the central Bangladesh Bank raising the cash reserve requirement last month by 0.5 percentage point in a bid to tighten money supply and rein in inflation.
The bank, which is controlled by the government, softened its stance late Monday and urged state-owned and private lenders to buy shares to offset the crisis, Bangladesh Bank spokesman M. Asaduzzaman said.
It also relaxed rules on dealers taking out special loans to invest in the stock market.
At the same time the SEC moved to boost loan facilities for retail and institutional investors.
Many new small-time investors blamed the falls Sunday and Monday on the government and regulators.
Mohammad Masum Bepery, whose shares lost 1.2 million taka ($150,000) of their value over two days, said market swings and intervention by authorities had destroyed confidence. "The authorities are behind this rally. They have artificially boosted share prices to save their skins," he said.
The losses led to massive street protests by investors and police used tear-gas and baton-charges Monday to disperse people chanting slogans against the government and regulators outside the stock exchange, where they set alight tires and office furniture.
On Tuesday officers with water cannon were stationed outside the exchange to prevent a repeat of the unrest.
The benchmark Dhaka Stock Exchange general index, or DGEN, gained 1,005 points, or 15.47 percent, to 7,507 points from Monday’s 6,499 points. But analysts said the market could still face trouble as the bounce was led by government intervention.
The huge gain came after the market slumped 7.76 percent on Sunday while Monday's trade was suspended within an hour when the index dived a record 9.25 percent.
"This is a government-led rebound driven by market-boosting measures from the Securities and Exchanges Commission, or SEC, and the central bank that have increased liquidity," Mahmud Osman, professor of finance at Dhaka University, told Agence France-Presse. "It is not good for the market and the question is how much of these gains will be retained."
Anti-hot money measures
Many analysts say the heavy losses were caused in part by the central Bangladesh Bank raising the cash reserve requirement last month by 0.5 percentage point in a bid to tighten money supply and rein in inflation.
The bank, which is controlled by the government, softened its stance late Monday and urged state-owned and private lenders to buy shares to offset the crisis, Bangladesh Bank spokesman M. Asaduzzaman said.
It also relaxed rules on dealers taking out special loans to invest in the stock market.
At the same time the SEC moved to boost loan facilities for retail and institutional investors.
Many new small-time investors blamed the falls Sunday and Monday on the government and regulators.
Mohammad Masum Bepery, whose shares lost 1.2 million taka ($150,000) of their value over two days, said market swings and intervention by authorities had destroyed confidence. "The authorities are behind this rally. They have artificially boosted share prices to save their skins," he said.
The losses led to massive street protests by investors and police used tear-gas and baton-charges Monday to disperse people chanting slogans against the government and regulators outside the stock exchange, where they set alight tires and office furniture.
On Tuesday officers with water cannon were stationed outside the exchange to prevent a repeat of the unrest.
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