Global financial crisis fear rattles local investors

The stock market yesterday suffered a heavy decline as fears of fallout from the global financial meltdown ran deep on the home front.

In yesterday's trade, retail investors were nervous, paving the way for institutional investors to buy heavily into the market.

The Securities and Exchange Commission (SEC) and Dhaka Stock Exchange (DSE) held a joint news briefing at the DSE premises to calm the market jitters.

“Historically, there is no relationship between our capital market and global capital markets,” said Farhad Ahmed, executive director of SEC.

DSE Chief Executive Officer Salahuddin Ahmed Khan said investors should not worry too much about any fallout from the global financial crisis on the local stock market.

The DSE General Index, the benchmark index of the premier bourse, slipped 80.63 points, or 2.74 percent, to 2855.93 points. The DSE All Share Price Index dropped 68.99 points, or 2.83 percent, to 2366.46 points.

Earlier in a letter to the World Bank, the central bank discounted the impact of the global financial crisis on local banks, but said a prolonged turmoil would adversely affect the economy.

The total direct deposits of Bangladeshi banks in banks abroad have been estimated at $569.28 million, Bangladesh Bank (BB) said in a recent reply to the World Bank's queries about risks to the economy in Bangladesh.

The BB told the WB that a lingering crisis would weigh on exports and foreign investments.

The WB sought to keep itself posted on six points: exposure of local banks to troubled banks abroad, liquidity constraints, solvency positions and non-performing loans, potential losses of foreign operations of banks, short-term capital inflows and stock market.