Bangladesh suspends 6 share trading houses

[January 21, 2011]  DHAKA, Bangladesh (AP) -- Bangladesh has suspended six brokerage houses at its main stock exchange after another market plunge in less than two weeks saw thousands of angry investors clash with police and smash vehicles.

Bangladesh's Securities and Exchange Commission slapped a monthlong ban on the six companies on charges of manipulating the market, commission member Muhammad Yasin Ali said.

The Dhaka Stock Exchange's benchmark index fell by about 9 percent Thursday just minutes after trading started, Ali said.

"We have found that these brokers have sold huge shares at abnormally low prices just after the market opened," said Ali. "This unfair sale has led to another big fall in the prices," Ali told The Associated Press.

Officials from the companies were not immediately available for comment on Friday -- a public holiday in Muslim-majority Bangladesh.

The plunge on Thursday forced the authorities to suspend trading at the stock exchange until Sunday, a working day in Bangladesh.

The second market plunge this month sparked protests by thousands of investors who threw stones at police, smashed vehicles and put up roadblocks in central Dhaka, the site of Dhaka Stock Exchange, police said.

Police said they used tear gas and batons to break up the protesters. No injuries were reported.

Share trading in Bangladesh has seen dramatic swings in recent months.

In 2010 the benchmark index rose 80 percent, but has fallen steeply several times over the last few weeks.

While its economy is growing, Bangladesh remains deeply impoverished and officials have said novice investors may not understand the nature of shares or how to evaluate quality.

"Inexperienced investors are coming to the market without knowing basics of the trade," Finance Minister Abul Mal Muhith told reporters Thursday.

Some experts blame the crisis on short supply of shares in the market with too many traders in business.

Bangladesh's central bank has recently put limits on banks' stock market investments -- a measure that has forced many banks and other financial institutions to withdraw from the market.

"There are shortage of shares in the market," said Abu Ahmed, an economics teacher at Dhaka University. "The government should take measures to increase fund supply."

Bangladesh's economy has grown by nearly 6 percent in each of the last few years. Per capita income in the nation of 150 million people crossed the $700 mark last year.

[Associated Press]

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