Bangladesh creates $700mn fund to prop up stocks

DHAKA, March 7, 2011 (AFP) – Bangladesh will create a $700 million mutual fund, the country’s biggest ever, in a bid to stabilise the highly volatile Dhaka stock exchange, the head of a state-owned investment bank said Monday. The plan is part of the government’s drive to restore calm to the market, after sharp falls triggered angry protests by investors in the capital Dhaka and across the country.

Eight state-run financial institutions will invest cash to create the planned 50 billion taka ($700 million) Bangladesh Fund, said M. Fayequzzaman, chief executive officer of the Investment Corp. of Bangladesh.

“It is the largest ever mutual fund in the country’s history. It is aimed at stabilising the country’s stock exchange and boosting liquidity in the crisis-hit market,” Fayequzzaman told AFP.

The Dhaka Stock Exchange has shed more than 40 percent in the past three months, wiping over billion off the share market’s capitalisation since its benchmark index hit a record high of 8,918.
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51 points on December 5.

Tens of thousands of small investors have been worst hit as they started buying shares when prices were peaking.
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The benchmark DGEN index was trading up 2.90 percent, or 160 points, at 5,697 points in m

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