Editorial
Stock market freefall
Weed out shady elements to stem it
It is almost a month since the prime minister met in an emergency meeting with all stock market stakeholders to think a way out to stymie the continuous plunge of the index. A week thereafter, a number of decisions were taken whereby it was thought that these would be able to stop the freefall. The market rose a little and then the downfall began again.
The meeting had failed to distinguish between the cause and the effect of the stock market situation. It was not a factor of shortage of fund but of confidence.
The same theme was echoed yesterday at a Centre for Policy Dialogue discussion by Khandker Ibrahim Khaled who had led a probe into the share market manipulation earlier this year. His team came up with a comprehensive report. And then what?
No action was taken on his report. Rather the man was vilified. The people who were in perception behind the manipulators took up the sacred task of 'fixing' the market woes. Hardly any action was taken against the chief of the Securities and Exchange Commission.
So what the government was skirt the real problem of confidence building and rather thought of pumping in money. No questions will be asked for investing black money. Banks will not have to account for the loans given to their subsidiaries for stock operation, and so on. And now, Khaled has said the government is highlighting the so-called liquidity crisis to hide something.
There is no liquidity dearth in the market as reflected in the oversubscription of primary shares. So if the market is to be put on track, one has to look elsewhere -- implementing the recommendations of the Khaled report, taking actions against the manipulators and not allowing people carrying scam perception to indulge in stock matters. Unfortunately we have seen some such shady people talk to the regulator as lately as this week.
So unless actions are taken with sincerity it would be unwise to expect the market to stabilize. And there would be no guarantee that another scam would not happen in future.
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