 | Liquidity shortage still hurting stock market
28 December, 2010
Most merchant banks and brokerage houses are still facing 'acute' fund crisis, affecting the share purchasing power of both general and institutional investors, market insiders said.
Although the Securities and Exchange Commission (SEC) recently raised the margin loan ratio to 1:1.5 from 1:1 following the steepest ever fall in the country's stock market, most brokerage firms and merchant banks are still providing loan at a much lower ratio than the enhanced one.
"Dearth of funds is still undermining performances of institutions and general investors in the capital market. Fund crisis limits the buying power of both general investors and institutions, creating short-term slump in the market," a top official of a private commercial bank's brokerage house told the FE.
"We aren't even able to provide loan at the ratio of 1:0.6 due to severe fund crisis. Despite efforts to collect fund for the general investors there exists liquidity crisis," said the brokerage firm executive.
A section of investors, however, blamed brokerage houses and merchant banks for creating `artificial crisis' in the capital market on the plea of fund shortage.
"Many institutions are deliberately creating liquidity crisis which is hurting the confidence of investors," Rafiqul Alam, an investor said.
Release link:http://www.thefinancialexpress-bd.com/more.php?news_id=121216&date=2010-12-28
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