DHAKA – Police fired tear gas and baton-charged thousands of investors in the Bangladeshi capital Dhaka as crowds vented their fury after the stock market tumbled nine percent in an hour. Trading on the Dhaka Stock Exchange (DSE) was halted when stocks fell a record 9.25 percent soon after opening in a plunge that sent outraged investors onto the streets.
The benchmark Dhaka Stock Exchange general index (DGEN) rose 80 percent in 2010, with small investors piling into the market, but has suffered falls in the past three weeks in what analysts described as a much-needed correction.
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. Similar protests broke out elsewhere in the country, with at least 500 investors rallying in the southwestern port city of Chittagong, local police chief Rafiqual Islam said. In Dhaka, riot police reinforcements were called in to break up demonstrations as offices barricaded their gates and windows to avoid being attacked.
“Up to 5,000 investors held protests on the streets in front of the exchange building. Some of them have been violent,” police inspector Azizul Haq told AFP. “They started vandalising government property, which forced us to use batons against them.” Television channels showed badly bleeding protesters trying to escape after police wielding sticks beat back the crowds. “I lost five million taka ($70,000) out of a 10 million taka investment. This is insane, my whole savings are gone,” investor Monirul Islam said.
Since December 5, when the DGEN hit a record high of 8,918.51, it has fallen by 27.4 percent. “The exchange has halted trading as per orders from the Securities and Exchange Commission (SEC) after the benchmark index plunged 660 points, or 9.25 percent, in the first 54 minutes of trading,” spokesman Shafiqual Islam revealed. The fall was the largest single-day loss in the bourse’s 55-year history. Trading is set to resume Tuesday after regulators approved a raft of measures aimed at restoring investor confidence, SEC chairman Ziaul Hoque Khandkar told reporters.
“We have repealed some curbs we introduced last month on the maximum market exposure of banks,” he said. On December 15, the Bangladesh Bank had raised the cash reserve requirement (CRR) by 50 basis points, tightening money supply in a bid to rein in soaring inflation.
Analysts, protesters and the SEC say this is what triggered the collapse as some banks, which had invested heavily in the market, tried to offload their shares quickly in an attempt to meet the new requirements. The DSE’s market capitalisation hit a record 50 billion dollars in early December, but has since shed over 10 billion dollars as regulators moved to cool the over-heated bourse.
