BD police, investors clash as stocks go into free fall

Bangladesh police fired tear gas and water cannon to break up violent protests by investors on Monday after stock trading was halted for a second day when prices went into a free fall.

The benchmark index shed 9.25 percent in less than an hour of trading, its steepest-ever slide. That followed a 6.7 percent drop on Sunday after the market had been battered for weeks.

Hundreds of angry investors vandalised cars and blocked roads around the Dhaka Stock Exchange, the main bourse, before police moved in.

Investors chanted slogans complaining of manipulation of stock prices by dishonest brokers and traders. Stock market executives and regulators declined to comment on the accusations but were due to give a news conference later in the day.

Prices of shares have suffered a series of slides since early last month after the stock regulator and the central bank took measures to cool the market, prompting some street protests.

The benchmark index has lost more than 27 percent since Dec. 5.

The central bank had raised banks’ cash requirement ratio from 5.5 percent to 6 percent, effective Dec. 15, to rein in inflation and to curb runaway credit flow, especially to the volatile capital markets. Call money market rates also hit a record high last month.

Some banks have invested 75 percent of their deposits in the stock market against a ceiling of 10 percent and had been told to get back under the limit by Dec. 30.