—An association of managing directors of banks will sit on Thursday to decide on raising exposure of banks in the stock market.
The meeting will call on commercial banks to raise their stock market investments within the legal limit, Association of Bankers, Bangladesh (ABB) president K Mahmud Sattar told on Wednesday evening.
"We'll ask banks with exposure below the legal limit to raise investments," he said.
"The PE is quite low in the market…it's a good time for investment."
ABB's meeting follows a call from the Bangladesh Bank governor for private banks to 'do what they can for the share market.'
At a meeting with ABB vice-president Nurul Amin, Atiur Rahman urged private banks to invest more in the market.
The exposure limit for banks in the capital market is up to 10 percent of their liabilities. Many banks were, however, investing well above this limit last year.
They pulled out in swarms as the market slumped at the beginning of this year. At present, the banks are investing three percent of their liabilities on an average.
Analysts think banks were the chief cause of the share market bubble and they should now help revive it.
Dhaka Stock Exchange (DSE) senior vice-president Ahsanul Islam told : "In 2010, banks and non-bank financial institutions made a Tk 34 billion profit from the stock market.
"This is public money and they are obliged to bring it back to the market," he added.
He said the banks currently had about Tk 190 billion in investments, of which Tk 70 to 80 billion were in margin loans distributed through brokerage houses.
When asked how much more was required to bring back stability to the market, he said another Tk 70 to 80 billion would be enough.
"But they cannot be allowed to give margin loans from that money. Either they'll have to go to portfolio investment or increase the capacity of their subsidiaries," Ahsanul added.
On Dec 5 last year, the DSE general index reached a record 8918 points. Unrest began in the market from the following day. December and January saw rapid freefall.
Following the budget in June where the government allowed undisclosed income into the market, it saw a month of improvement. The seesaw returned by the end of July.
In the last three months the index has fallen about 1452 points.
The meeting will call on commercial banks to raise their stock market investments within the legal limit, Association of Bankers, Bangladesh (ABB) president K Mahmud Sattar told on Wednesday evening.
"We'll ask banks with exposure below the legal limit to raise investments," he said.
"The PE is quite low in the market…it's a good time for investment."
ABB's meeting follows a call from the Bangladesh Bank governor for private banks to 'do what they can for the share market.'
At a meeting with ABB vice-president Nurul Amin, Atiur Rahman urged private banks to invest more in the market.
The exposure limit for banks in the capital market is up to 10 percent of their liabilities. Many banks were, however, investing well above this limit last year.
They pulled out in swarms as the market slumped at the beginning of this year. At present, the banks are investing three percent of their liabilities on an average.
Analysts think banks were the chief cause of the share market bubble and they should now help revive it.
Dhaka Stock Exchange (DSE) senior vice-president Ahsanul Islam told : "In 2010, banks and non-bank financial institutions made a Tk 34 billion profit from the stock market.
"This is public money and they are obliged to bring it back to the market," he added.
He said the banks currently had about Tk 190 billion in investments, of which Tk 70 to 80 billion were in margin loans distributed through brokerage houses.
When asked how much more was required to bring back stability to the market, he said another Tk 70 to 80 billion would be enough.
"But they cannot be allowed to give margin loans from that money. Either they'll have to go to portfolio investment or increase the capacity of their subsidiaries," Ahsanul added.
On Dec 5 last year, the DSE general index reached a record 8918 points. Unrest began in the market from the following day. December and January saw rapid freefall.
Following the budget in June where the government allowed undisclosed income into the market, it saw a month of improvement. The seesaw returned by the end of July.
In the last three months the index has fallen about 1452 points.
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