Bangladesh Plunge Protection Team Arrives, Stock Market Rises 15%

Tyler Durden's picture

For all cowards who did not put their life savings in the Banlgadesh stock market after yesterday's record plunge and subsequent halt, and obviously have no clue how modern markets work, we have one acronym for you: BTFD. To everyone else, who made 15% in one day and can now close the books for 2011, congratulations. A day after Brian Sack was rumored to be seen tweaking the Bangladesh stock exchange's 3 16 MHz 286 High Frequency Trading machines, which can execute a whopping 0.5 transactions per second, and lifting all 2 offers in Level 2 when put in Designated Market Maker mode, the Bangladesh stock exchange is surging, and 1,000% margin debt-laden speculator protesters who were rioting as recently as 24 hours ago, are basking in their newly rediscovered wealth effect.

More from the Examiner:

Bangladesh shares rose sharply in early trading today, a day after a steep plunge forced the bourse to suspend trading and sparked violent street protests by angry investors which were broken up by the police.

The Dhaka Stock Exchange's benchmark General Index rose 15 percent, with 226 shares rising and only three declining in early trade. The bourse suffered its biggest crash ever yesterday which led authorities to suspend trading after 50 minutes in response to a 8.9 percent decline.

Shares, battered for weeks, had sunk 6.7 percent on Sunday.

"We are seeing peaceful, normal business conditions back at the bourse with many shares traded in the first hour after trading opened," one investor said.

Analysts said investors had been encouraged by measures taken by the Securities and Exchange Commission, the market regulator, to relax the limit on how much buyers can borrow from their brokers to invest.

Sentiment was also boosted by the central bank's extension of a deadline for banks to adjust the vast amounts of loans that had been diverted from the industrial sector to capital markets.

"All these decisions have encouraged investors to inject funds into the market and that helped the rise in the market today," said Mostaque Ahmed Sadeque of Investment Promotion Services Limited.

Many investors in the Bangladesh's Dhaka and Chittagong exchanges are individuals with modest means who have taken out large loans to invest in shares to improve living standards.

Individual investors numbered fewer than 500,000 in 2006, with the number since rising to more than 3 million.

"The income from share trading helped to run my family, send my children to schools and meet other requirements," Raqibul Haque, a small investor who funded stock purchases by selling his wife's jewellery, told Reuters.

"But I felt so helpless as prices fell sharply over the past weeks."

Luckily, the US stock market will never suffer the same fate. After all the San Francisco Fed is about to issue a paper, confirming that Bernanke-style central planning can avert the forces of physics and nature until perpetuity, or the endless printing of money grinds to a halt, whichever comes last.