Investment 'confusion' pauses trading

Dhaka, Jan 16 (bdnews24.com)—Fears of negative impacts on the capital market by the 'confusion' over investment in the stocks by public servants forced authorities to suspend trading on the twin bourses on Tuesday.

Dhaka Stock Exchange (DSE) board said the decision to stop Tuesday's trading was taken in the 'interest of the investors' after two weeks of bearish trend. The board sat in an emergency meeting at 10am and the decision to pause trading came immediately afterwards.

Trading on Chittagong Stock Exchange (CSE) also paused around five minutes after the start.

After the meeting, Mosharraf Hossain, chief executive officer of the DSE, said the suspension order was issued as the confusion over investment could impact the market negatively.

He said the order was intended to avoid any further confusion.

"Bewilderments have been noticed in news reports published in several media on investment in capital market by government officials (civil and military). DSE authorities think this may create confusion among the investors and impact the capital market negatively," Mosharraf Hossain told bdnews24.com.

"So, trading has been halted in the interest of the share market and the investors," he added.

The DSE CEO said they would discuss the issue with Securities and Exchange Commission (SEC) chairman M Khairul Hossain. A letter was sent to finance minister A M A Muhith, too, for a meeting with him, he added.

Mosharraf said, "DSE board thinks government officials should be given the opportunity to invest in the capital market."

He, however, could not be say for how many days trading will be halted.

"The decision in this regard will be taken considering overall situation," he said.

A DSE website notice said around 11am, "DSE Board in the interest of the capital market and investors has decided to keep the market closed today (17th January, 2012)."

The CSE on its website also gave a similar notice some five minutes into trading.

Chief executive officer of CSE Syed Sajid Hossain said, "We got the news of suspension of trading in Dhaka later. We decided to suspend trading in Chittagong, too, as it may have impact on the CSE."

CSE president Al Maruf Khan said trading on the bourse postponed minutes after the opening with permission of the SEC.

The cabinet on Monday cleared a proposal to amend income tax law to reduce income tax on investments. Abul Kalam Azad, the press secretary to prime minister Sheikh Hasina, later said, "We know the capital market is risky. It is inappropriate for those in government service to be in such business."

The comments created confusion as to whether the government was trying to prevent state officials from investing.

Later Azad told bdnews24.com that he had made 'off the record' remarks about the government officials and employees investing in the market were and there was a misunderstanding with journalists on the matter.

The law in force stipulates that public servants cannot be involved with any other profitable ventures, but they have been investing in the capital market thanks to legal loopholes.

The Khondoker Ibrahim Khaled-led panel formed to investigate stocks crash between Dec 2010 and Jan 2011 had also proposed shutting the door on the opportunity for government officials to put their money into stocks.

The income tax law amendment endorsed by the cabinet proposes cutting taxes on mutual fund investment income. Also, the 10 percent tax on foreign investors' profit would be removed.

Tax on source on brokerage house commissions is proposed to be reduced to 0.05 percent from 0.1 percent.

After Tuesday's trading halt, retail investors demonstrated in front of both the stock exchanges. Protesters took position on the street in front of the DSE around 11am blocking traffic on the street. Some more gathered in front of the Shapla Square.

A group of small investors in Chittagong started to demonstrate around 11:30am.

After the National Board of Revenue (NBR) issued a notice, saying money earned through criminal acts will not be allowed in the capital market, the benchmark index of DSE lost 82 ppints on Sunday. On Monday, the index dropped 167 points.

Individual investors demonstrated on Monday blaming the finance minister, the NBR and the government for the sharp fall in share prices. They blocked the street in front of the DSE for around three hours.

The DSE called a meeting to discuss the market situation.
 

News Source:  BDNEWS24