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Stocks keep plunging

  • Published at 05:20 pm October 13th, 2019
web-DSE-File photo of Dhaka Stock Exchange Limited
File photo of Dhaka Stock Exchange Limited Mehedi Hasan/Dhaka Tribune

DSE sheds 48.34 points, 176 points in last five days

The government’s short-term measures have failed to pamper investors’ confidence as they are not yet optimistic about stock market, market operators and analysts have said.

Dhaka bourse has continued to bleed for the fifth consecutive session amid continuous selling pressure following investors’ panic-driven sale.

All 19 sectors but one were negative on the first day of the week’s trading.

DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), yesterday dropped 48.34 points. 

At the end of the day, the index closed red at 4761.88 points with 1% decrease from the previous day. The DSE lost 176 points in the last five consecutive sessions.

To prop up the market, Investment Corporation of Bangladesh (ICB) yesterday sought Tk2,000 crore emergency fund from Bangladesh Bank and five state-run banks.

ICB Managing Director Md Abul Hossain told Dhaka Tribune that they sought Tk2,000 crore from Bangladesh Bank and five state-run banks for investing in the capital market.

He also said that they would invest the fund in the stock market to support the market with liquidity and restore confidence of the investors.

The money would be taken as a term deposit, he added. 

Market operators have said both retail and institutional investors are yet to regain confidence for reinvestment amid steep fall of stocks.

DSEX, the key benchmark index of the prime bourse, dipped below the 4,800 mark yesterday, hitting a 34-month low since November 2016. Turnover plunged 9% to Tk298 crore.

Seeking anonymity, a senior merchant bank official told Dhaka Tribune that the depressed market outlook kept the investors worried, which resulted in poor market participation and dragged it down below Tk300 crore.

According to the DSE data, all of the large cap sectors showed negative movement yesterday except stocks in pharmaceutical sector. Pharmaceuticals exhibited highest positive movement with 0.11% gain. 

The Grameenphone led the fall of index as investors remained cautious about the ongoing dispute over audit claim between GP and the telecom regulator, said UCB Capital Management Ltd in its daily market analysis.

The shares in GP closed the day at Tk325.40, down by 2.10% from Tk333 per share in the previous session on DSE.

A stock broker has said that the downtrend in the stock market is due to confidence crisis. Financial institutions are suffering from liquidity pressure, so their participation has remained low.

Meanwhile, foreign investors are selling off their shares due to the lack of confidence and depreciation of local currency against the US dollar.

The port city bourse CSE decreased by 145.2 points in its broad based index- CASPI.

Recently the government took some initiatives to revive the stock market, but the measures failed to generate any enthusiasm in the falling market, market operators have observed.

Earlier, the central bank announced fresh liquidity support for banks to raise their respective portfolios in the capital market up to the regulatory limit directly or through subsidiaries.

The Bangladesh Bank last month eased advance-deposit ratio (ADR) of banks by 1-1.50 percentage point, apparently to increase cash flow of banks to kick start gloomy investment scenario for both real economy and stock business.

Last month, Finance Minister AHM Mustafa Kamal made some lofty promises about fixing the market and addressing its deep-rooted problems.

The Bangladesh Securities and Exchange Commission (BSEC) in July amended a number of security rules on capital raising through initial public offerings (IPOs) and quota facility for the general investors, targeting to revive the market.

Former finance adviser to a caretaker government AB Mirza Azizul Islam told Dhaka Tribune: “A series of meetings took place in the past; nothing will happen with the meetings. If we do not identify actual hindrances and fix the system, nothing will be solved in the capital market.”

Mirza Azizul Islam, also a former chairman of BSEC, said that good companies were reluctant to be listed with the stock market, but they should come forward.

EBL Securities in its daily market commentary said that institutional investors’ liquidity pressure seemed to have effect on the market turnover since their participation remained shy in recent time. 

Meanwhile foreign investors liquidated stocks of the listed securities due to their expectation of further decay of local currency.

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