Shares on the Dhaka Stock Exchange soared Tuesday when the market re-opened after weeks of plunges that forced repeated trading halts and triggered clashes between investors and police. Trading in the Bangladeshi capital had been suspended since Thursday after the benchmark DGEN index slumped again, but it rose nearly eight percent during the day as business resumed.
The volatile market closed at 6821.08, up 495 points, or 7.82 percent, the second highest one-day gain after a 15.58 percent rebound on January 11. Tuesday's upswing followed the government's announcement of a "reform package" on Sunday aimed at restoring investor confidence after angry street protests over steep market falls.
Thousands of investors have pelted police with rocks and vandalised cars in recent weeks, demanding the resignation of the head of the central bank and the finance minister. The DGEN index has shed 30 percent from a historic high of 8,918.51 on December 5, and in the face of mounting public anger the government has admitted "mistakes" by regulators and ordered a probe.
The market has grown by 400 percent since the start of 2007 and rose more than 80 percent last year. An electronic circuit breaker that automatically halts trading and that many experts blamed for triggering panic among retail investors has been discontinued, finance minister A.M.A. Muhith said Sunday.
Small investors greeted Tuesday's jump with suspicion, saying it was "abnormal" and "artificially engineered". "There are no sellers in the market, which is taking the market to abnormal heights. I think manipulators are at it again. They are just fooling us," said Fazlur Rahman Shuvo, one investor. Mahmud Osman, a professor of finance at Dhaka University, said the market's behaviour remained "abnormal".
"The gains do not show that normality has returned. The volume of sales has reached a two-year low and some weaker stocks have also gained along with fundamentally strong companies," he said. "It shows investors' ambivalence about the reform package."
Conditions for a crash have been building for some time, experts say, as the number of retail investors nearly doubled over the past 15 months to 3.3 million, lured by the record gains.
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