Dhaka stocks jump after new rules to regulate price swings

Dhaka stocks have jumped more than 10 percent after a four-day losing streak as the regulator issued new rules to control price swings on both bourses.

The opening price of any listed security on the Dhaka Stock Exchange and the Chittagong bourse have been set at the average of closing prices of the preceding five days, according to a notice issued by Bangladesh Securities and Exchange Commission on Thursday.

If prices go below the five-day average, it will automatically trigger a circuit breaker for an individual stock. Circuit breakers are regulatory measures to temporarily halt trading on an exchange to curb panic-selling.

Trade started on two bourses at 2:00pm on Thursday, instead of 10:30am, for 30 minutes. Since then, it has been a spectacular rebound.

In half an hour, the broad index of Dhaka Stock Exchange clawed back 371 points or 10.29%, the highest jump since the gauge was introduced in 2013.

On the DSE, 141 stocks gained, 49 decreased and 152 remained unchanged.

The pharma sector continued to dominate the turnover board and accounted for 47.8% of the day’s total turnover. Renata topped the turnover list with 41.6% of total turnover. At the day’s end, the DSEX, DSES and DS30 added 371 points, 84.7 points and 122.4 points respectively to their previous day’s level.

The broad index of the port city bourse CSE lost 170.3 points. 

The capital market, which was already volatile, collapsed after the global coronavirus created a wave of panic across the country.

Virus forced the authorities to cut trading time by an hour to close the markets at 1.30pm. That decision was not implemented on Thursday, but the two bourses instead delayed the start of trade initially by an hour citing “unavoidable circumstances”. The markets eventually opened at 2pm.  

The capital market should be closed down amid uncertainty, Meer Raihan Siddique, an investor, told bdnews24.com. “We’re losing everything as the time passes. All of our money is gone.”

“BSEC took a historic decision. People were frustrated over losses. Many of them shut down their markets due to the global virus outbreak. But the regulator has taken appropriate steps for the investors’ benefit,” said Rakibur Rahman, a director of Dhaka Stock Exchange.