Investor anxiety over margin rules drags DSE turnover to four-month low

Turnover on the Dhaka Stock Exchange (DSE) slumped by 26% to Tk350 crore today (22 October), the lowest in four months, as nervous investors retreated amid deepening uncertainty over the newly approved margin loan rules.

The sudden fall in trading volume followed Tuesday's confirmation that the Bangladesh Securities and Exchange Commission (BSEC) had given final approval to the long-debated margin rules. 

A BSEC source confirmed that the commission had finalised the rules at a meeting earlier this week and that they now await gazette publication. 

But the news, instead of bringing clarity, triggered further anxiety across the market as the regulator has yet to officially disclose the contents of the new rules. This nontransparency has left both investors and brokerage firms in a state of confusion and speculation. 

"We are surprised that the BSEC approved the margin rules but did not publish them or even mention the approval in its official press release," said the managing director of a leading brokerage firm, requesting anonymity. 

"The lack of communication is creating unnecessary panic. Investors fear the new rules could drastically tighten eligibility for margin loans and force brokers to liquidate positions," he added.

Margin loans, which allow investors to borrow money to buy shares, are a crucial liquidity lifeline for the capital market. Any sudden restriction could shrink trading activity, trigger forced selling, and intensify volatility – a scenario market participants are now bracing for.

Despite the subdued investor sentiment, the benchmark index DSEX managed to stay marginally positive, edging up 5.4 points to close at 5,095. Out of 397 traded issues, 140 advanced, 177 declined, and 80 remained unchanged.

In its daily market review, EBL Securities noted that the capital market found "some breather amid the prolonged bearish spell," aided by selective blue-chip buying. 

However, it added that "lingering apprehensions over unsettled issues, especially the new margin rules, continue to restrain investor confidence and trading enthusiasm."

The Chittagong Stock Exchange (CSE), however, remained under pressure, with the Selective Categories Index (CSCX) and All Share Price Index (CASPI) falling by 8.1 and 13.5 points respectively.

According to DSE data, the pharmaceutical sector dominated turnover, accounting for 15.4% of the day's total, followed by general insurance (10.2%) and engineering (9.6%). 

Sectoral performance was mixed – cement (2.5%), general insurance (1.5%), and life insurance (0.8%) were among the gainers, while IT (-1.0%), jute (-0.8%), and food (-0.8%) sectors slipped into the red.