Bangladesh police, investors clash as stocks dive

Police fired tear gas and baton-charged thousands of investors in the Bangladeshi capital as crowds vented their fury after the stock market tumbled nine percent in an hour.

Bangladesh police, investors clash as stocks dive

Police fired tear gas and baton-charged thousands of investors in the Bangladeshi capital Dhaka on Monday as crowds vented their fury after the stock market tumbled nine percent in an hour.

The benchmark index shed 8.9 percent in less than an hour of trading, its steepest-ever slide, according to updated figures from the stock exchange. That followed a 6.7 percent drop on Sunday after the market had been battered for weeks.

Police clashed with protesters outside the stock exchange building, where tyres and office furniture were set alight as crowds chanted slogans against the government and market regulators around the Dhaka Stock Exchange, the main bourse.

The Securities and Exchange Commission (SEC), after an emergency meeting with the central bank, said trading would resume on Tuesday at 11 a.m. local time (0500 GMT) as normal.

Prices of shares nearly doubled in 2010, encouraging a stream of new investors into the markets, but prices have crumbled since early last month after the market regulator and central bank took measures to cool the market, prompting frequent street protests.

The benchmark index has lost more than 27 percent since Dec. 5. The value of the market, which surged by more than 80 percent in 2010, fell by a total 427 billion taka ($6 billion) on Sunday and Monday. Market capitalisation was $41 billion on Monday, the stock exchange said.

"Authorities must take steps to protect the rights of the small investors and also to save the stocks from being pulled down or up whimsically," investor Mehedi Hasan said.

"Investors should refrain from panic selling of their shares while regulators should have intervened when the market started rising abnormally," former SEC chairman Faruk Ahmed Siddiqi said.

The central bank has raised banks' cash requirement ratio from 5.5 percent to 6 percent, effective Dec. 15, to rein in 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 percent of their deposits in the stock market against a ceiling of 10 percent and had been told to get back under the limit by Dec. 30. This deadline has now been extended to Jan. 15.

Agencies

Last Mod: 11 Ocak 2011, 10:29
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