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Deeper in the red

  • Published at 10:38 pm July 15th, 2019
Dhaka Stock Market protest
Investors protest outside Dhaka Stock Exchange, after its broad index shed 88.01 points or 1.70%, on Monday Mehedi Hasan/Dhaka Tribune

DSE sheds 771 points in last six months, lowest level index in 30 months

The broad index of Dhaka Stock Exchange (DSE) kept falling streak for the seventh consecutive session with the indicator shedding 88.01 points or 1.70% on Monday, triggering demonstration by investors who took to the streets in the capital.

The free fall of stock prices caused the broad index-DSEX of the prime bourse to drop to the lowest level in the last 30 months. The index lost 289 points in last seven consecutive sessions as spooked investors continued their selling fearing further fall in the market, say market operators.

The market began to dip sharply since the beginning of 2019, losing 771 points as of Monday.

After the trading closed at 2:30pm on the day, small investors held a rally in front of the Dhaka Stock Exchange building at Motijheel under the banner of Bangladesh Pujibazar Biniogkari Oikya Parishad.

At the end of the day, the DSEX index of DSE closed red at 5091.48 points. Most of the large cap companies ended negative, with the market turnover hitting at Tk306 crore.  

The DSE’s benchmark index, the DSEX, lost more than 771.79 points in the last six months while the market value of stocks dropped by about Tk30,000 crore during the period.

Besides, the port city bourse CSE also closed red on the day, shedding 262 points.  

A leading merchant banker has told Dhaka Tribune that stock investors who have already been grappling with several issues such as penalty tax on listed companies and gas price hike got panicked by the news of liquidation and trading suspension of People’s Leasing and Financial Services Ltd, a non-bank financial institution..

Besides, share prices of Grameenphone plunged by 5.84% as investors became disheartened by the financial declaration of the company. The plunge impacted 43 points negative on the DSEX yesterday.

Profit of GP declined by 8% in April-June compared with the same period last year and the company declared interim dividend at the rate of 90 % of paid up capital which was lower than previous year, and less than the investors’ expectations, say market observers.

EBL Securities in its daily market commentary said: ‘Earning declaration of GP has not met the investors’ expectations amidst the ongoing regulatory issues which resulted in 5.86% fall of GP share price, contributing further fall in the index."

Pujibazar Biniogkari Oikya Parishad President Mizan-ur-Rashid Chowdhury said at the protest rally: “We formed human chains and held rallies before Eid-ul-Fitar for regulatory actions to stop the free fall of stock prices. But none in the administration seems serious about it. We have our back against the wall.”

He said Prime Minister Sheikh Hasina through the current budget announced a number of steps for the stability of the market, but the securities regulator was reluctant to execute the steps.

He warned that they would go for tougher programs if BSEC took no initiatives to address their demands.

Stock stakeholders said that the small investors, muddled by the continued falling trend in the market and haphazard environment in the financial market, kept selling shares amid volatility at the market.

They said the investors were going through a volatile situation amid financial scams, soaring non-performing loans, and poor banking management dampened their moods.

Liquidity crisis in the country’s banks also made local and foreign investors wary of investing in Bangladesh’s capital market, they added.

Stock market expert, and a former Dhaka University teacher Professor Abu Ahmed told this correspondent: “Many initiatives have been taken for capital market. But they are not implemented yet. Again, there was nothing meaningful in the budget to prop up the market. On the other hand, there is no one to support the market with liquidity; even the Investment Corporation of Bangladesh (ICB) is not giving the support.”

He recommended good companies get listed in the capital market for a turnaround.

Meanwhile, there are allegations that the state-owned ICB remains reluctant in injecting enough liquidity to prop up the ailing market.

Asked,  ICB managing director Kazi Sanaul Hoq told Dhaka Tribune: “We have been playing meaningful role as regards liquidity to make the market vibrant. We have already invested Tk404 crore out of 760 crore of government fund.”