Bangladesh markets rebound as trading resumes

(Reuters) - Bangladesh’s bourses reopened on Tuesday with stock prices rebounding from recent plunges that had triggered violent protest by angry investors and forced trading to halt.

Shares on the benchmark Dhaka Stock Exchange .DGEN gained 7.8 percent to close at 6,821.08 points on Tuesday.

“The market is likely to be stable as the government has taken a series of measures to restore the confidence of investors,” a stock broker said.

The central bank asked the banks not to provide dividend on profit they earned from share markets and instead to reserve the fund for future investment.

Banks and other financial institutions, some of which had invested 75 percent of their deposits in the stock market against a cap of 10 percent in the past and made huge profit in 2010, held back on further investments recently.

Last month, the International Monetary Fund warned banks they had too much exposure to the stock market and urged the central bank to take corrective action, which it did by asking banks to reduce their exposure significantly.

The central bank has since largely backed down on this demand after the market crashed.

On Tuesday, the government appointed a three-member committee headed by a bank chairman and former deputy governor of the central bank Khondkar Ibrahim Khaled to investigate the recent series of collapses in share prices.

“The committee has been tasked to find out the exact reasons of the stock market debacle and give its report in three months,” Finance Minister Abul Maal Abdul Muhith said.