Bangladesh’s bourse is the only one on the globe in recess
Bangladesh is the only country on the planet where trading has remained closed due to the coronavirus pandemic.
Until this week, Bangladesh, Sri Lanka and Jordan were the three countries where stock markets had been shut.
Sri Lanka started the trading yesterday and witnessed an enormous sale pressure.
The Colombo stock market's index of the very most liquid shares, S&P SL 20, plunged a lot more than 10 per cent on the first day of the trading since March 20.
Jordan, where trading have been suspended since March 16, also experienced the same when it reopened on Sunday. The Amman Stock Exchange's ASE Index dropped a lot more than 15 per cent.
The Dhaka Stock Exchange (DSE) and the Chittagong STOCK MARKET (CSE) have already been closed since March 26 good government's general holiday targeted at stopping the spread of the virus. zThe longest closure of the currency markets since the Liberation War would hurt the image of the markets, according to analysts.
"The impact of the shutdown will be clear in the long-run," said Mohammed Rahmat Pasha, ceo of UCB Capital Management.
"The setting of the ground price turned the markets into illiquid kinds and it might be costlier to regain the image internationally."
Prior to the shutdown, the currency markets regulator fixed the floor price of most stocks by calculating the prior five days' average prices as a way to prevent fall.
But following the floor price was fixed, almost all of the stocks did not find buyers. The shutdown further signifies that none can sell shares regardless if they need to.
"Many foreign investors are getting ready to sell shares in large volume after the market reopens," said a high official of a stock brokerage house that deals foreign portfolios.
The currency markets has been suffering as a result of the COVID-19 worldwide, nonetheless they would bounce back strongly when the economy makes a turnaround. However, there is absolutely no such hope in Bangladesh and it will suffer more as a result of wrong policy, he said.
The primary blow would come if the country's capital market is kicked out from the MSCI Index.
The index captures mid- and large caps across more than two dozen emerging markets. This is a float-adjusted market capitalisation index. The MSCI Bangladesh Index premiered on Dec 1, 2009.
If the shutdown continues, it may be kicked out of the index within the next rearrangement, said a broker.
If Bangladesh is taken off the index, an enormous sell pressure would occur naturally, as much foreign index fund managers invest by looking at the index, said an institutional investor.
The ongoing market closure may be the longest because the last shutdown in 1969 when the mass upsurge occurred. The market resumed in 1976.
Trading was closed for four days at a stretch in 2004 because of massive floods. Apart from these, the market was largely closed due to technical glitches.
"When all of the stock markets are open everywhere, the closure of our market would provide a negative signal to investors," said a merchant banker.
"The marketplace should resume operations as soon as possible," Pasha said.
A share trading has two parts: one is share transfer and another is transferring money. Central Depository Bangladesh Ltd (CDBL) carries out share transfer and a department of the DSE transfers the money.
"We perform the share transfer through online and it is possible to continue trading with this limited presence at work," said Shuvra Kanti Choudhury, managing director of CDBL.
The money transfer system of the bourse continues to be manual, so DSE officials have to go office and brokers also need to reopen, said an official of the bourse.
Recently, the Dhaka bourse sought permission from the regulator to open the marketplace.
However, there is little likelihood so you can get the consent as two commissioners left the Bangladesh Securities and Exchange Commission recently and the tenure of the chairman can be going to expire this month, said an official of the commission.
